I thought it was worth to share with you my experiences with Bitcoin, so here it goes!
I’m always keen on learning new things, similar to an eternal student. I like to read and search about new stuff and how it works, especially in the IT security realm. While I do this and, because I have more interests than time, I normally keep notes about something I have seen or have read to further look into it. So, in December 2012 I was reading a new technical paper released by Sophos named Zero Access Botnet – Essentially the details about a botnet for massive financial gain. It was quite interesting how Evil was getting ways to monetize trough fraud and having a economical gain trough Bitcoin mining. It was the first time I have read about Bitcoin. It was novel and creative. I wrote it down on my notebook as something that I would like to further research. Time has passed. In January 2013, while I was doing a research about botnets and how they evolve and emerge, I wrote this article – Step-by-Step Bot Infection process exploiting bad password -. At the time I was writing I came across a great amount of channels dedicated to mining and activity related to bitcoins in different IRC networks. Here it started to raise my interest. It was out of the ordinary and motivating.
But once again other priorities came across and only on the 10th of April 2013 when I was watching CNN that I saw this crazy commentary about bitcoins. They were talking and showing that the bitcoin price had went mad and 1 Bitcoin was valuing more than 250$. It followed by a crash in the next days to 77$ and I thought, OH MY GOD! I definitely had to educate myself more about this. It was going to be a game changer.
From this date onward I started to read more and started to take it serious. I made a deep dive and among others I read the FAQ maintained by bitcoin.org as well as the original paper – Bitcoin: A Peer-to-Peer Electronic Cash System – by Satoshi Nakamoto, who remains anonymous in an intriguing mystery. Then I started to get more familiar with this disruptive and innovative technology that may have an positive impact on payment systems. End result, I figure out that I needed a electronic wallet.
I started registering and creating an online wallet from Blockchain. Then, in order to buy Bitcoins, I needed to use an exchange. So I opened an account on MtGox – the reliable exchange at that time – I sent them a scan of my ID, proof of residence and after 1 long week I got verified – the queues for verification were enormous due to the April boom-. After having my account verified, I started to buy and sell Bitcoins. I could also deposit and withdraw fiat money. In the meanwhile I took a great degree of risk and wired some money from my bank account to MtGox account in Hong Kong. It took me 4 days until the money was available in the exchange for trading. After that I bought a couple of Bitcoins and started to trade them and in the same time was learning myself more about the concept of mining and the whole bitcoin ecosystem. I powered up all my computers at home – including my wife’s laptop – and begun mining with them using CPU. Very soon I realized that was worthless due to the difficulty change and electricity costs. I got further and bought the most powerful GPU available on the market for mining which was a ATI Club 3D Dual 7990. It was hashing at 1.8Gh/hashes per second and making a lot of noise. For mining I had to point the client mining software (cgminer) to the Slush pool which was very reliable and trustworthy. I used the GPU for more or less 3 months and then it also became obsolete. In parallel with some price crashes, DDOS to the exchanges and pools plus all the exciting ride I never got to make the money I invested in the GPUs. However, I believe that the bitcoin protocol can have an impact in the future even if it’s not the “bitcoin” we are definitely going to have electronic cash protocol. Following this, I bought a specific machine to mine Bitcoins using ASICs from KncMiner which arrived last October and was worth it. During the summer/autumn 2013 It has been a hell of a drive, extremely interesting and rewarding.
At the moment I am more aware how the system works from a user perspective for the good and the bad. More recently I also read this good explanation on how the protocol works. Noteworthy, are these 3 great videos on C-Span library that were recorded back in November 2013 when different key people in the US testified on digital currencies with remarkable questions and answers.
Furthermore, to follow the price volatility and go into trading mode I use Bitcoinitity charts . At the moment to be part of the mining community and to be worth of you need to buy specialized hardware e.g, from KncMiner, a client miner like cgminer and then mine in a pool like Slush.
Bottom line, to start create an online wallet, register yourself and get verified with a exchange such as Bitstamp. Wire some money – the one you afford to lose – and buy some Bitcoins. Store them on the online wallet or buy some stuff. Keep in mind that if you store money or Bitcoins in a exchange or on a online wallet you accept the risk of losing it due to a breach like many others that have occurred in the past or being seized by a government since Bitcoin is still an experiment without regulation backing it up. If it is a significant amount of Bitcoins you can store them in a offline wallet or even a paper wallet. After you are familiar with the basics you can move up to trading or mining 24/7.
Have fun and enjoy the experience!