When Bitcoins were first invented, they were incredibly cheap to buy, but not many people knew about them. As they became more popular, their value soared. At one point, Bitcoins were worth 5,700 times their initial offering rate.
With the possibility of riches at hand, people are scrambling to get Bitcoins for themselves. This has even impacted computer prices because Bitcoin speculators are snapping up graphics cards, whose fast processing rate is helpful when mine coins.
So how can you get your own free Bitcoins without paying exorbitant prices for them or mining them yourself? Bitcoin lotteries could be the answer. Here's how they work.
What Bitcoins Are
Bitcoins are an alternate currency known as "cryptocurrency."
Cryptocurrency is a token, or chunk of computer code, that has monetary value. It's traded like regular currency. Unlike regular currency, however, it doesn't rely on banks or other financial institutions.
It is anonymous, which means that it can be used for transactions that are dubious in nature. Bitcoins are also accepted by legitimate organizations and retailers.
Bitcoins are produced through a process called Bitcoin mining. Bitcoin mining involves computers working to quickly solve a type of mathematical puzzle that becomes increasingly difficult as more Bitcoins are decoded.
To mine Bitcoin successfully, you need a computer with extremely fast processing power, which means that it is resource-intensive. And the number of Bitcoins is limited, which means that you could spend a lot of money on hardware and electricity costs with no return on your investment.
Why Everyone Wants Bitcoins
Bitcoin mining is attractive despite its risks because the coins can be extremely valuable. For many years, each Bitcoin was worth only a couple of hundred dollars, but in 2017, the price per Bitcoin rose to nearly $20,000.
The meteoric rise in Bitcoin value led to some high-profile rags-to-riches stories, including that of Kristoffer Koch. Koch bought 5,000 Bitcoins for $27 when he was researching his thesis in 2009. In 2013, when Koch remembered that he had the Bitcoins in an encrypted Bitcoin wallet, they were worth over $880,000.
The article states that he used 1,000 of those Bitcoins to purchase an apartment, but if he held on to the other 4,000 and sold them at Bitcoins' peak, they'd be worth nearly $8,000,000.
The jump in value started a Bitcoin craze; as a result, the value climbed even higher.
While it seems everyone wants Bitcoins. trading them is risky, mining them is expensive, and a time machine to go back to 2009 to buy them for pennies hasn't been developed yet. So Bitcoin lotteries are an attractive idea.
How Bitcoin Lotteries Work
A Bitcoin lottery works like Powerball or Mega Millions lotteries: Players purchase a ticket in the hope of hitting a jackpot. The difference is that you can choose to have your jackpot paid out in Bitcoins instead of cash.
If cryptocurrency prices continue to rise, hitting a Bitcoin jackpot is even more valuable than receiving the same dollar amount in cash.
Lottoland.com offered the first Bitcoin lottery. To play, you pay 3.50€ per ticket (you can get discounts for buying tickets in bulk). You then pick six different numbers between 1 and 49 or use the Quick Pick option to have the numbers chosen randomly for you.
Lottoland doesn't draw winners, but rather uses the numbers drawn from Spain's Bonolotto, which ensures that the winner selection process hasn't been manipulated.
Prizes are awarded as follows:
|Prize Tier||Odds of Winning||Payout|
|6 Correct Numbers||1 in 13,983,816||1,000 Bitcoins and Up|
|5 Correct Numbers||1 in 55,492||1 Bitcoin|
|4 Correct Numbers||1 in 1,033||50€|
|3 Correct Numbers||1 in 56.7||5€|
|2 Correct Numbers||1 in 7.6||1.50€|
The odds of winning the Powerball jackpot are 1 in 292,201,338, so about 20 times harder to win (though of course, the Powerball jackpots are larger as well). As with most lotteries, prizes are split among all of the tickets with the correct numbers.
If you're wondering whether Lottoland is a scam, the prizes are awarded regularly — though, as with any lottery, the odds of winning are long). The company has an insurance policy that pays out when winning numbers are selected and the ticket prices cover the cost of the insurance premiums.
Can You Win the Bitcoin Lottery If You Don't Know Anything About Bitcoin?
If you're nervous about dealing with cryptocurrency if you win a Bitcoin lottery, you don't need to be. Lottoland promises that they will help their Tier 1 and Tier 2 winners set up a Bitcoin wallet if they need one.
If you don't want to do that or if you are concerned that the Bitcoin bubble is about to burst, you can also choose to receive the prize at the current cash value at the time you win.
Other Ways to Win Free Bitcoins
If you don't want to go through Lottoland, or you don't live in a country that is eligible to play, Grizzle lists five other reliable Bitcoin lotteries.
You could also use a Bitcoin faucet, which is a profit sharing scheme that pays out a few Satoshis for performing various activities like playing games or entering CAPTCHAs. These payouts are usually funded by advertising, or work as advertising for a site or product.
A Satoshi, named after Bitcoins' creator, is worth a hundred millionth of a single Bitcoin. Obviously, that's not much, but it costs you nothing but time. On the other hand, spending that time simply entering cash sweepstakes might be more lucrative.