Bitcoin Pooled mining tutorial - for beginners

Pooled mining is briefly described in the previous post, and I assume that now you’re ready start mining and you know the basics. In this post I will be explaining about pooled mining with ozcoin, if you’re not living in Australia or if you want to choose a different pool visit https://en.bitcoin.it/wiki/Comparison_of_mining_pools or https://en.bitcoin.it/wiki/Category:Pool_Operators

1. Create a Bitcoin address - You will need a Bitcoin wallet to store your newly mined coins, download the Bitcoin client from the official Bitcoin website. Your Bitcoin wallet contains all of the private keys necessary for spending your received transactions.

Download bitcoin wallet here: http://www.bitcoin.org/

2. Register with ozco.in - This is so you can keep track of your share of the mined Bitcoins. You will need this to set up the mining program too. https://ozco.in/register.php

3. Download and install a miner – We recommend using Guiminer using this link: https://github.com/downloads/Kiv/poclbm/guiminer-20110701.exe

Alternatively you can try other miners here: https://bitcointalk.org/index.php?board=42.0

4. If you don’t have a Graphics card you will get an error message click OK to continue with CPU mining or install a graphics card.

5. Configure your miner with these settings: Server: Other

Host: ozco.in

Port: 8332

Username: .

Password:

Device: Select the graphics card/cpu you would like to use

Extra Flags: Can be blank, but usually "-v -w128 -f 60" works well.

6. Click start mining :)

7. Once you successfully mined some coins read our trade bit coins sections to trade with your bit coins

How to mine bitcoins? (For beginners)

There are several different pool mining methods currently in practice to avoid cheating; shares will be divided according to your effort. Shares will be divided between the clients who produce the proof of work. Click here to learn more about proof of work(https://en.bitcoin.it/wiki/Proof_of_work).

Pooled mining approaches

The slush approach

The puddinpop approach

The Pay-per-Share approach

Luke-Jr's approach ("Eligius")

The Triplemining approach

P2Pool approach

Pooled mining

Pooled mining is described in detail with step by step tutorials in next section, you can more details about pooled mining here: https://en.bitcoin.it/wiki/Why_pooled_mining

Reward types and explanation:PPS – Pay Per Share. Each submitted share is worth certain amount of BTC. Since finding a block requires shares on average, a PPS method with 0% fee would be 50 BTC divided by . It is risky for pool operators, hence the fee is highest.

SMPPS – Shared Maximum Pay Per Share. Like Pay Per Share, but never pays more than the pool earns.

ESMPPS – Equalized Shared Maximum Pay Per Share. Like SMPPS, but equalizes payments fairly among all those who are owed.

Prop. – Proportional. When block is found, the reward is distributed among all workers proportionally to how much shares each of them has found.

PPLNS – Pay Per Last N Shares. Similar to proportional, but instead of looking at the number of shares in the round, instead looks at the last N shares, regardless of round boundaries.

Score – Score based system: a proportional reward, but weighed by time submitted. Each submitted share is worth more in the function of time t since start of current round. For each share score is updated by: score += exp(t/C). This makes later shares worth much more than earlier shares, thus the miner’s score quickly diminishes when they stop mining on the pool. Rewards are calculated proportionally to scores (and not to shares). (at slush’s pool C=300 seconds, and every hour scores are normalized)

See details here: https://en.bitcoin.it/wiki/Comparison_of_mining_pools

What is bit coin mining?

Bit coin mining is generating new bit coins using the process of computation power. Bit coins can be mined through some software’s, you can download these software’s for free and check the how to mine bit coins section for step by step detailed information.

When the miner generates a new block it produces 50 bit coins, but with the increasing generation difficulty, mining can take up to two years to generate a new block. When you using your normal desktop or laptop to generate bitcoins we recommend to use a pooled miner, several different people contribute to create a new block and then they share it according to the contribution. Read how to mine bit coins to join a pool and enjoy mining.

Future of bit coin

Bit coin uses a well known industry standard cryptography called SHA256 and ECDSA, currently used by banks and credit card companies. Bit coins are stored digitally in a wallet but copying the wallet will not copy your bit coins. Losing the digital wallet or losing access to wallet basically takes all your coins away, and it raises the value of a bit coin. One Bit coin is divisible down to eight decimal places. There are really 2,099,999,997,690,000 (just over 2 quadrillion) maximum possible atomic units in the bit coin design. According to this design only 21 million coins can be mined.

Digital wallets can be hacked or stolen?

Security is one the important issue in all aspects, as cyber crime has just sky rocketed in the last few years, as we all we know, no technology is hack proof. Symantec discovered a Trojan horse that locates the bit coin wallet and email the details to the hacker, by encrypting your digital wallet with a strong password you can protect your wallet even if it’s compromised (read full article here ).

Users can transfer bit coins to anyone and there is no centralized authority to monitor the transactions, this can make bit coins as a medium to buy illegal drugs and weapons online and some people predicts that bit coins will be shut down by the authorities for this reason like flooz and e-gold. Bit coin transactions can be traced and tracked by block-chain data base (Learn more about Block-chain database).

Interested in investing in bit coins?

Gavin Andresen, one of the "core developers", is explicitly advising people "not to make heavy investments in Bitcoins", as it is "kind of like a high risk investment, so we recommend it’s worth giving a try, not to invest.

Difference between bit coins vs money (currency)

The main functions of money are a medium of exchange, a unit of account, a store of value. Any kind of object that can be used to full fill these functions can be defined as money.

Bit coins basically fulfill the first to needs with no doubt, since you can use bit coins as a medium of exchange and a unit of account. Even though to serve as a store of value these coins should be able to saved and retrieved at a later time for example: gold. Bit coins can be saved digitally in computers with digital wallet software but when we retrieve these coins after a specific period will it be predictably use full?

Currency is created by The central bank of a country, money (currency) can be measured using a method called M0, M0 is base money or the amount of the money issued by the central bank. This base money is typically controlled by the finance ministry or central bank of a country; these institutions print currency and release in to the economy.

Unlike the conventional flat currency bit coin has no centralized issuing authority to issue or control. The money supply or bit coin miner is programmed to develop every 210,000 blocks around every four years and by 2017 , ¾ supply will be generated.

Unlike gold, bitcoins are:

• easy to transfer
• easy to secure
• easy to verify
• easy to granulate

Unlike fiat currencies, bitcoins are:

• predictable and limited in supply
• not controlled by a central authority(Ex. Fed)
• Unlike electronic fiat currency systems, bitcoins are:
• potentially anonymous
• freeze proof
• faster to transfer
• cheaper to transfer

What is bit coin?

Bit coin is a digital currency created in 2009 by Satoshi Nakamoto. Same like the other currencies, bit coins can be used to trade online for example buy digital books, audio and games (click here to read trading with bit coins). However bit coins are not created by government organizations, bit coins are created using software’s called bit coin miners. (Read more about mining bit coins).