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Legitimate miners and buyers have to incur substantial production and energy costs, or have to pay the going exchange rates for bitcoins.

Criminal miners pay nearly nothing for the production of new coins, outsourcing the work to hapless victim machines all over the world. Criminal bitcoin thieves don't incur the exchange rate fee for acquisition of bitcoins. They simply rely on hacking and malware to siphon bitcoin wallets from law-abiding owners.

What we've got here, then, is a commodity (I hesitate to call it a currency) that has a current price, is free of regulation (for the moment), allows for completely anonymous ownership, and is both highly rewarding and almost free to create (if you are willing to violate the law).

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There is no doubt the bitcoin has staying power, but if that is just among criminals (and those who would like to traffic with them, like the Silk Road drug sellers and customers), or if it will become a valuable trading commodity for the rest of us is unclear.

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My information to law enforcement is easy: follow the bitcoin. There is no doubt that more and more criminals will be using bitcoin to generate profit as well as pay their tracks. Whenever you find a stash of bitcoin and possess judicial permission to follow the footprints, do so.

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While bitcoin usage is not confined to criminals, there is an undeniably large correlation between bitcoin ownership and criminal action. Notably since bitcoins are becoming increasingly more profitable to criminal malware seeders and botnet operators while concurrently becoming less rewarding for traders that are valid.

Here's the vital take-away: bitcoins are becoming the"national currency" of criminals the world over and are becoming an increasingly inadequate investment for valid miners.

Cryptocurrency mining is painstaking, expensive, and only sporadically rewarding. Nonetheless, mining includes a magnetic attraction for many investors interested in cryptocurrency. This may be because entrepreneurial forms see mining as pennies from heaven, such as California gold prospectors in 1848. And if you are technologically inclined, why not do it

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Well, before you invest the time and equipment, read this explainer to find out whether mining is for you. We'll focus mostly on Bitcoin. (Related: How Bitcoin Works and our helpful infographic, What is Bitcoin)

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By mining, you can earn cryptocurrency without having to put down money for it. Nevertheless, you certainly don't have to be a miner to own crypto.   You can also buy crypto using fiat currency (USD, EUR, JPY, etc); you can trade it on an exchange like Bitstamp using other crypto (example: Using Ethereum or NEO to purchase Bitcoin); you even can earn it by playing video games or even by publishing blogposts on platforms that cover its users in crypto.

In addition to lining the pockets of miners, mining serves a second and critical purpose: it's the only means to release new cryptocurrency into circulation. In other words, miners are basically"minting" currency. For instance, at the time of writing this bit, there were about 17 million Bitcoin in circulation.

In the absence of miners, Bitcoin would still exist and be usable, but there might never be any additional Bitcoin. There'll come a time when Bitcoin mining ends; each the Bitcoin Protocol, the number of Bitcoin will likely be capped at 21 million. (Related reading: What Happens Bitcoin After All 21 Million are Mined).

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Aside from the short-term Bitcoin payoff, being a miner can give you"voting" electricity when changes are proposed in the Bitcoin protocol. In other words, an effective miner has influence on the decision-making process on such issues as  forking.

Bitcoin are home mined in units called"blocks." At the time of writing, the reward for completing a block is 12.5 Bitcoin. At today's cost of about $10,000 each Bitcoin, this means that you'd earn (12.5 x 10,000)$125,000.

When Bitcoin was first mined in 2009, mining one block would earn you 50 BTC. In 2012, this was halved to 25 BTC. In website here 2016, this was halved to the current degree of 12.5 BTC. In 2020 or so, the payoff size will be halved again to 6.25 BTC.

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If you want to keep tabs on exactly when these halvings will happen, you can consult the Bitcoin Clock, which upgrades this information in real time.

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Miners are getting paid for their work as auditors. They are doing the job of verifying preceding Bitcoin transactions. This convention is meant to maintain Bitcoin users honest, and was conceived by Bitcoin's founder, Satoshi Nakamoto. By verifying transactions, miners are helping to prevent the"double-spending problem."