Site Review: Mt.Gox

After setting up your digital wallet, mining a bit and gambling away your first free bitcoins, you are ready to enter a Bitcoin exchange and buy a couple of shiny coins with real world currency. With them you'll be able to speculate, gamble more or "expend them on tons of products and services", as the Weird Hippie CoinTube Woman says. There are several Bitcoin exchanges around, but the largest is Mt.Gox:

The virtual Forex: https://mtgox.com/

How It Works:

• Mt.Gox allows you to buy/sell Bitcoins with/for real world currency (dollars or euros).
• You must first create an account to use it. Since you will deal with money here, make sure to choose a good password and all that security stuff you already know.
• Once you are logged in, you should explore a bit the website so as you see how it works and all the options you have.
• For example, you can TRADE Bitcoins (duh). Mt.Gox will keep a 0,6% of all your market operations. You cannot sell or buy less than 0,01฿:

Placing market orders, do not disturb...

• In case you want to buy coins, you'll have to deposit some money on your account first. In case you want to sell bitcoins, you'll have to deposit them as well. There are several FUNDING OPTIONS available for that:

Several ways to put money into your account

• For using some of the funding options you'll have to GET VERIFIED (from SETTINGS). In order to be verified you'll have to give Mt.Gox your personal data and send a scan of an official document such as your National Identity Card or your Passport. Additionally, you'll need another document that certifies your residence (a Utility Bill, a Tax Return, a Voter's Registration Form...) that's been issued within the last three months. Yeah, I know. Not even PayPal requires so much information to give you an account.

Documents are attached directly as image files

• There are also other resources, like MERCHANT TOOLS. Check them out if you plan to sell stuff for bitcoins on your website.

How To Proceed:

• Create an account (you need an email).
• Log in (you need the user and password you chose on the previous step).
• Get verified (you need a National Identity Card or similar and some other document to certify your residence issued less than three months ago; it can't be a bank statement).
• Deposit some money and buy bitcoins (you need dollars or euros). Or deposit some bitcoins and sell them for traditional money (you need at least 0,01฿).
• Speculate, gamble, use the bitcoins.
• PROFIT!!!

This girl didn't have any clue she would become the image of a virtual currency exchange market when they took her this photo. Now all geeks want to date her

Site Review:

• Ease of use: 5/5. It's very professionally made and it has all the options you can wish for at the distance of a click. Or two.
• Options: 5/5. There's nothing you could wish for that you can't find on Mt.Gox. It even has Merchant Tools, something not found often on other currency exchanges.
• Requirements: 1/5. It requires too much information. The document to certify your residence is difficult to get if you don't pay yourself for electricity and water at your house.
• Market size: 5/5. Huge. After all, it is the largest Bitcoin exchange and handles over 80% of all Bitcoin trade. Or so they claim.
• Final Score: 9/10. If you are bored of getting small amounts of free bitcoins by visiting several websites every day, or if you consider it too slow and wish to take the step and get Bitcoins paying with real money, Mt.Gox is your place. Have ready a ton of documents though, because they'll ask for them.

Site Review: SatoshiDice

You set up your digital wallet. You earned your first free bitcoins. You joined a mining pool and got some freshly-generated coins. Now it is time for you to venture into the most developed Bitcoin industry: Gambling! And for that, what better place than the most popular Bitcoin betting game in the universe? Ladies and gentlemen, brace yourselves because it is very addictive! Beware, ludopaths! I present you... SatoshiDice!

http://satoshidice.com/

How It Works:

• SatoshiDice is a very simple betting game: imagine a die with 65536 faces. You decide a threshold. For example, 12000. The die is thrown. You win if the number it shows stays under the threshold you chose. You lose otherwise.
• The lower the probability to obtain a number under the threshold, the higher your reward will be if you win.
• You can place bets by sending bitcoins to one of the bitcoin addresses shown at the homepage of SatoshiDice. Each one of those addresses is assigned a threshold. So, if you send 1฿ to the address 1dice97ECuByXAvqXpaYzSaQuPVvrtmz6, which is the one for a threshold of 32768, you are betting that the number shown by the die will be under 32768. If this happens, you'll win 1,957 times 1฿, or 1,957฿, minus 1,9% that keeps the house, minus bitcoin network transaction fees (in case they are applied). If the number is over the threshold, you lose and to add insult to injury SatoshiDice sends you a satoshi (which is 0,00000001฿).
• Being the most popular Bitcoin betting game, there's a lot of conversation about it among bitcoin users. Check this thread. And this one too.

Here I sent 0,01BTC for a threshold of 32768...

Transaction sent (with a hefty 1500µ฿ fee...)! Now my luck is on Satoshi's hands!

Best Strategy:

• Send at least 0,01฿ to one SatoshiDice address and pray. That's it. Good luck!
• There's a lot written about how to bet at SatoshiDice, but the truth is that, in case it's a fair game, which it seems to be, in the long run you'll lose at least 1,9% of your investment.
• It's typical to see between the recent games that are continually posted at the website people who bet 0,01฿ for a threshold of 32000. In case they lose, they double the bet. Now they bet 0,02฿ for the same threshold. They lose and double the bet. And so on... Until they win (or run out of money). It's not probable that you lose a lot of times one after the other, is it?... Well, this is true, but remember, assuming you bet for this threshold of 32000, for every 1023 people who do not lose ten times in a row, there's one who does and pays the bill for the rest. And that could be you (this is an approximated calculation, since you don't get a perfect 2.000x reward in case you win when you bet for lessthan32000).

A few seconds later this message pops up!

I WIN!!!   YEEAAAAH!!!

Site Review:

• Expected profit: 2/5. You could get rich or lose all your money. The latter is a little bit more likely.
• Convenience: 5/5. The website is beautifully designed, comprehensive, understandable and has plenty of information to explain how it works. You only need to send some bitcoins to one of its betting addresses.
• Payment speed: 5/5. You bet. You blink. You receive the results of your bet.
• Risk: 3/5. You choose how risky you want your bet to be. It could be 1/5 if you bet for a threshold of 64000. Or 6/5 5/5 if you bet for a threshold of 1.
• Final Score: 9/10. SatoshiDice is the king of Bitcoin betting games. It's simple, fast, elegant and doesn't try to scam you or hide information from you. Somehow, it makes you feel lucky. And then, you send 0,01฿ to one of their addresses. When the House Percent drops to 1% or less I'll give it a 10/10.

Next step: Site Review: Mt.Gox

How To Join A Mining Pool (CPU Edition)

Update 1, 09/11/2013: Download this Bitcoin Mining Package I prepared, read the README.txt inside and then read this tutorial. (Note: browsers and antivirus software consider miner programs are malware, so you might get a warning. Ignore it!)

Have you got your digital wallet set up? Nice! Have you collected your first bitcoins from some of these websites? Great! Then I guess your next logical step is to get a first taste of Bitcoin Mining!

Become a happy Bitcoin Miner!

What Is This All About?

• Conventional money is made out of thin air. Bitcoins are created by computers running a special program called a "Bitcoin Miner". 
• Without getting too much into details, let's say that this program solves computationally difficult problems, and if it succeeds, you get rewarded by a certain amount of bitcoins (25฿ at this moment). Read more about this here.
• As you can expect, there's a huge competition between miners to be the ones who solve this problem and get the full 25฿. Nowadays it's pretty difficult to invest on bitcoin mining hardware (and electricity!) and turn a profit. Read more here.
• Here's where Mining Pools come in handy. A mining pool is a group of computers running the bitcoin miner program. When one of them solves the computationally difficult problem and gets the 25฿, the bitcoins are shared between all the computers of the pool; this way, each participant gets a share of the bounty, even if it wasn't the one which solved the problem. More information here.

Arrrrrrr! I got this bounty of Bitcoins with my friends!

That Sounds Cool. How Do I Join One Of These Pools?

This was really difficult to figure out on my own when I got into the Bitcoin world, even with all the tutorials you can find around. I'll tell you the exact steps you must take in order to join a especific pool. After this, you'll be able to join any mining pool you wish:

1. Update 1, 09/11/2013: Download this Bitcoin Mining Package I prepared, read the README.txt inside and forget about points 2 and 7. Joining a pool works almost the same for every mining pool. (Note: browsers and antivirus software consider miner programs are malware, so you might get a warning. Ignore it!)
2. Download the Ufasoft Coin program and install it. It's one of the most used bitcoin miners in the world.
3. Go to this website and create an account (click on "Register Account" and complete your details).
4. Once you are logged in on this website with your newly created account, go to the "Account" section and change your payout address (enter your bitcoin address so as they know where they must send the bitcoins you mine).
5. Now go to the "Workers" section. Add a new worker with its name (which could simply be "Worker") and its password (for example, "P").
6. You'll see now that at the bottom of the page your worker has been created. Its name will have the format "YourAccount_WorkerName".
7. Now download this file and place it in the Ufasoft Coin installation folder (which will surely be C:/Program Files/Ufasoft/Coin/).
8. Select the file and open it with a text editor.
9. Substitute the field "[WorkerName]" with the name of the worker you just created and "[Password]" with the password associated to your worker (it should be something like "...http://YourAccount_Worker:P@..." after the edition). Save the file (its name should be "StartMining.bat").
10. Double-click the file. If you did everything correctly, a command prompt window will open and your computer will start mining bitcoins. Let this window open and wait until you get some shares. It could take minutes... Or hours. Don't despair. Bitcoin mining is a bit like fishing. You've got to wait.
11. Explore the website where you made your account to learn more about how this mining pool works.

This Is Too Difficult!

Really? Hmmm... May I help you with an image of the whole process? Update 1, 09/11/2013: Download this Bitcoin Mining Package instead of the two files shown on this image:

(Click to expand)

If you still have any problems to make it work, don't hesitate to ask in the comments.

Happy mining!

Next step: Site Review: SatoshiDice

Getting Into Bitcoin

You have heard about Bitcoin. Maybe you even know what Bitcoin is and how it works. And now you want to be part of the increasing Bitcoin user base.

Although there are plenty of tutorials and websites that tell you how to get into Bitcoin, none of them warn you about some details that might make you think twice about the method you'll use to do this. Here I'll present you the two options you have with its advantages and drawbacks:



Option 1: Getting An Online Wallet

Advantages:

• You don't have to download anything; simply visit or create an account on a website.
• It's convenient, fast and easy.
• It doesn't consume your computer resources.

Drawbacks:

• You are not in control of your digital wallet. You must trust the website who manages it. A breach of security on the web could mean you lose your wallet with all its bitcoins.
• Online wallets don't usually allow you to send less than 0.01฿ to any other Bitcoin Address.
• Sometimes you have to pay small commissions every time you operate with your digital wallet from those sites.

If this option suits you, get your digital wallet from Coinbase, InstaWallet or MyWallet. I consider InstaWallet the best of the three for getting a first taste in how digital wallets work.

Option 2: Installing The Bitcoin Client

Advantages:

• You are in control of your digital wallet, since it's stored on your computer.
• You may send and receive as many bitcoins as you wish without paying commissions (transaction fees may apply though).
• You may have several bitcoin addresses to better organize payments on a single digital wallet.

Drawbacks:

• You'll need to download the Bitcoin Client, install it and wait for the program to synchronize with the network. The Client is only a few MB in size, but the data it downloads from the network (called the blockchain) is at this moment 6,63GB in size (and increasing every day). When I installed my Client it took six full days (yes, around 144 hours!) to get fully synchronized.
• The set up process is slow.
• It consumes quite a chunk of your computer's resources for being a single and simple application: over  6,65GB of memory, over 100MB of RAM and around 1% of your CPU time, with some sudden unexpected spikes.

If you prefer this option, download the Bitcoin Client here: Windows, Mac or Linux.

Next step: How To Join A Mining Pool

But first, let's get some free Bitcoins to see how our new wallet works: