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One of the easiest ways of earning parts of a bitcoin comes in the form of so-called faucets. A faucet is a website that lets users claim a tiny amount of bitcoin in a certain time period, which can range anywhere from minutes to days. Don't expect to get rich overnight by visiting various bitcoin faucets, because most of them will pay next to nothing.

Bitcoin mining is a slightly misleading name. No one swings a pickaxe into rough stones in order to find additional bitcoins. Bitcoin mining actually means adding more bitcoins to the digital currency ecosystem. There will be a total of 21 million bitcoin in circulation by 2140. So, how do new bitcoins come into existence?

Bitcoin is often touted as a global payment network that includes no transaction fees. Up to a certain extent, that statement is true, but it doesn't tell the entire story. No transaction fee is involved for the recipient on any bitcoin transaction coming from another user on the network. But sometimes, there is a transaction fee involved, albeit very minimal.

At its simplest, a bitcoin transaction works by you giving someone else a designated amount of the BTC you own. In order for a bitcoin transaction to be deemed "valid," there has to be at least one input, although multiple inputs are possible as well. An input is a reference to an output from a previous transaction.

In the same way that you wouldn't walk around with your real wallet hanging out of your back pocket, or keep your bank card PIN number on a piece of paper inside that wallet, you need to be security conscious about your bitcoin wallet, too. Secure mobile bitcoin wallets A mobile bitcoin wallet is convenient to use, because it can be installed on either a tablet or smartphone.

Some companies offer bitcoin wallet services. They effectively act as a middleman to hold your bitcoins and allow you to spend and deposit as you want, taking responsibility for the administration and security of your account. It also means that the company will ask you for personal information, thus making this a non-anonymous environment.

Similar to the way e-mail addresses work, a bitcoin address can be used to both send and receive data — or in this case, bitcoins. That said, there is one major distinction to be made between bitcoin addresses and e-mail addresses. People can have multiple bitcoin addresses they can use to send and receive transactions.

Owning a bitcoin paper wallet means the address that holds the bitcoins has not yet been connected to the live blockchain, and so is not "active." Until the wallet is connected to the blockchain, it is considered to be in cold storage (bitcoin jargon for an account being offline).You can always check the balance of any bitcoin address by searching the blockchain, but to spend it you would need to associate the bitcoin address of the paper wallet to a wallet that is online.

A software wallet is a bitcoin application that sits on your computer's hard drive and allows you complete control and great security, because each bitcoin you hold is only accessible on your own computer. This software, called Bitcoin Core, is developed and supported by the Bitcoin Foundation.When your software wallet is installed, it creates the wallet.