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Can You Really Make Money on Bitcoins? Or is it a Fad? - Valley News Live - KVLY/KXJB - Fargo/Grand Forks

Can You Really Make Money on Bitcoins? Or is it a Fad?

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Today an electronic currency known as bitcoins plunged in value by nearly 30 percent. A virus or bug is likely to blame which may have allowed transfers of funds, real money, to be sent without the owners knowledge.

Bitcoins are the newest form of currency online and they can be collected by just about anyone. They were once worthless but now can fetch hundreds of dollars each. Some are even considering adding them to retirement portfolios. Valley News team's Eric Crest shares the story of some young entrepreneurs in the valley who have made thousands as 21st century miners, without ever leaving their chair.

In the world of Bitcoin mining you won't find any helmets, axe picks, or seasoned men with dirty faces. This mining is done right from the comfort of home, exclusively online and you won't have to do anything but pay your electric bill once it's up and running.

"Anyone with a computer can technically mine. Higher end computers and specialized computers do better," says a Computer Science NDSU student, Alex Larson.

"You basically have to download something and run it, and your computer makes money for you," agrees his fraternity brother Austin Lambert who's also in on the mining.

Making money, at this young mans estimate, thousands of dollars in just about a year of work...

"Right now I have about 3000 dollars," says Larson.

All by downloading free software found online? With a couple of upgrades in hardware depending on how serious you are.

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"What was your investment?" "720 dollars," says Larson.

All of a sudden you're computer's new job will be to figure out complex math problems on the internet. Each time it does so you'll make a bit of coin yourself.

"People talk about where does the value of bit coin come from," asks Greg Wettstein a Principle Engineer for the Division of Information Technology at NDSU.

A Bitcoin is a form of electronic currency. A network of teams out there on the internet known as pools will group up and have their computers try to tackle those complex math problems together.

"Once you get your settings together find what pool they want to mine on. They can really just hit start," says Larson.

But every time a bitcoin is found by these miners, the next coin will be more difficult to acquire. The math problem or barrier to the coin gets more complex.

"I think the easy money has passed at this point," says Dr. Wettstein.

The first purchase ever using bitcoins was for a pizza. One guy gave another guy "x" amount of bitcoins to buy him a tasty delivery. So many coins were used for the transaction today that pizza would be valued at 750 thousand dollars! But without that purchase being made it's hard to say how bitcoins would have any perceived value. So how do bitcoins make it in the world of a respected currency.

"The value in them is that it becomes increasingly more difficult to create them until you reach the limit of 21 million bitcoins... that's the value," says Dr. Wettstein.

The trend is going the right way for a couple of low budget college students.

History of Bitcoin's Value

Early 2011- $ 00.75

Early 2012- $ 5.00

Early 2013- $13.50

Late 2013- $130.00

Early 2014- $900.00

"Coin price fluctuates and you can just buy it low sell it high," says Lambert.

"It will become legitimate when major markets that are involved in hard commodities and trading those commodities begin to dominate their transactions in bit coins," adds Dr. Wettstein.

"If Bitcoin fails then everything I put into it is lost. I can't recover that," admits Lambert.

"Will it be excepted or is it a fad that will die out," wonders Larson.

"It will work as long as people feel there is value in it," says Dr. Wettstein.

While that value has absolutely increased over the years, the fact that there is no oversight or protection by the federal government on bit coins may deter many from getting involved.

That NDSU professor who contributed to this piece, Greg Wettstein, actually predicted that hackers were already trying to figure out how to get to miners digital wallets to take their bounty. And that might be part of the reason for the massive drop in Bitcoins value which occurred today. If you want to find out a bit more about Bitcoins, we've included a more in depth look at the topic which you can find exclusively on valleynewslive.com, just click on this story.

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