Today, TigerDirect joined the ranks of such companies as Overstock and Zynga who have started to accept bitcoins as legal tender.  With more and more companies accepting bitcoins, and individual bitcoins now being valued at over $800 each (with a high of over $1000), it is time to have a better understanding of bitcoins, and how you can actually mine some yourself.

A little history courtesy of Wikipedia: Bitcoin is a peer-to-peer payment system and digital currency introduced as open source software in 2009 by pseudonymous developer Satoshi Nakamoto (to this day, no one know who he really is). It is a cryptocurrency, which uses cryptography to control the creation and transfer of money. Conventionally "Bitcoin" capitalized refers to the technology and network whereas "bitcoins" lowercase refers to the currency itself.

Bitcoins are created by a process called mining in which participants verify and record payments in exchange for transaction fees and newly minted bitcoins.  To read more about the history of Bitcoin, check out its Wikipedia page.

Before you can begin to get bitcoins, you first need a wallet. If you don't have one, you can get one free here.

A Bitcoin wallet is a digital wallet which keeps track of your Bitcoin balance and allows you to transact with other users online and offline. All wallets can communicate with each other similar to emails, so you can send and receive bitcoins to anyone regardless of the type of wallet they use.

You can get bitcoins in one of three ways: By accepting bitcoins as a form of paying for goods or services rendered, by buying bitcoins on a Bitcoin Exchange or you can mine for bitcoins.

Mining Bitcoins

Bitcoin miners run specific software on their computers to help collectively solve very large and complex problems.

Every transaction that takes place using bitcoins is recorded in a public ledger called the blockchain. Basically, the block chain is a history of all confirmed transactions and a record of how much each bitcoin wallet has. The process called bitcoin mining confirms each of these transactions before it is saved into the blockchain. On a few occasions, a transaction is really a reward of several bitcoins. This reward is what gives bitcoin miners the incentive to mine. Because the process of searching for bitcoin takes a lot of effort for computers, it is has come to be called "mining".

Though for the most part, high-end computers will have the most success, it doesn't mean you can't mine with your home PC. In fact, this enterprising individual built a bitcoin miner out of his old Nintendo NES 8-bit gaming system. Since there are a finite number of bitcoins to be found, and with the initial gold rush craze period over, your best bet may be to join a mining pool.  A collective of miners who pool their computing power and in exchange share any bitcoins found.  You can find a list of mining pools here.

But bitcoin algorithms dynamically change in difficulty based on how frequently bitcoins are being awarded. This ensures a smooth, steady flow of virtual currency into the network. If mining drops off, Bitcoins will become easier to mine. If mining becomes exceedingly competitive—as it is now, the algorithms will become increasingly complex, and in turn, you will need a far more powerful computer to compete.

Mining isn't for everyone, before you decide whether to get in on the mining craze, use this online calculator to determine if its worth your while. The more powerful your graphics card, the faster you can mine (your hash rate). As you can see from this mid-level PC user's calculator results below, it would be nearly 12 years before he "strikes gold" by finding a block of 25 bitcoins. Until then, even as part of a pool receiving regular payments, he would actually lose money after factoring in the electricity costs of running his computer at full capacity 24/7:

For an animated description of bitcoin mining, watch the video below and you can then decide if bitcoin mining is for you: