Bottom Line Up Front:

Upgrade your Windows 7 and 8.1 systems to Windows 10 first so that your activation is taken care of.

Clean installs can follow afterwards if necessary.

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All of the information to follow is based on what I have learned over the last couple of days in performing my own upgrades from Windows 7 and 8.1 to Windows 10 and talking with other industry experts. Before you read this, keep the following four things in mind.

First:  if you are not on Windows 7 (with SP1) or Windows 8.1 there is no free upgrade option to Windows 10.

Second: you must be upgrading to the same edition (Home/Pro) and architecture (32/64 bit) that matches the Windows 7 (SP1) or 8.1 system you are updating.

Third: Backup your data before attempting any upgrades because you never want to discover you do not have a backup when you actually need one.

Fourth: The process I am detailing below is for consumer versions of Windows (both retail and OEM). Volume Licensing customers have their own keys that are used to activate their upgrades to Windows 10. 

The process below has worked for me on a Windows 7 desktop (home built) and a Windows 8.1 laptop (HP Spectre x360).  The key step in each of these installations: I did an in place upgrade to Windows 10 first.

This is because Microsoft is handling the activation of your free Windows 10 upgrade differently. That initial upgrade is apparently a key element of the activation and validation process. This is why we are not seeing Windows 10 product keys being distributed to activate the new installations. 

I may be oversimplifying this but keeping it simple is usually the best option.

The basic process is that when you perform an upgrade to Windows 10 (over a genuine Windows 7 or 8.1 system), an anonymous and unique hardware hash is generated that is based on your systems hardware configuration. Since it is anonymous, you do not have to use a Microsoft Account. This hardware hash is generated even if you choose to install Windows 10 with a Local Account.

That same hardware hash is sent to Microsoft servers and a corresponding certificate is created to validate your systems activation status. From this point forward any future installs, including one where you delete all partitions and install Windows 10 from scratch, will be activated because of that unique hardware hash and the corresponding certificate. Since it is all stored on Microsoft’s servers there is no reason for us to keep a backup either.

On both of the systems I mentioned earlier I accomplished this by first downloading the Windows 10 Installation Media creation tool from Microsoft and selecting Upgrade this PC option to begin an in place upgrade. The Windows 10 update that downloads from Windows Update using the Get Windows 10 app performs an in place upgrade as well. Just keep to the same edition and architecture as I mentioned in my second point earlier.

For those of you worried about clean installs at this point there is an option with both of these methods to choose what you keep on your system – all of your files and apps, personal files only or nothing.

Selecting nothing will give you a brand new activated Windows 10 install that does not contain any of your previous operating system in it – a clean install for all intents and purposes. Plus it is an upgrade that will create the hardware hash for activation now and in the future.

After letting that upgrade run its course each of those systems were now properly activated with Windows 10.

For most of you that will be the end of the upgrade road since you are activated with Windows 10. Your unique hardware hash has been created so in the future, if you have to reinstall Windows 10, you do not need to go backwards to Windows 7 or 8.1 and then to Windows 10 to be activated.

Those of you interested in a clean install onto clean hard drives keep reading: Right after upgrading these same systems, I grabbed my Windows 10 installation media USB drive and I performed the ultimate in clean installs on each of them by removing all of the system drive partitions. That meant no residue of my past installation of Windows 7, 8.1 or the upgrade to 10 were left behind. That also meant no activation certificate based on my hardware hash was left on the hard drive as well.

I proceeded with the Windows 10 installation and anywhere it asked me for a product key I selected the Skip this step option to continue. You will go through the normal Out of the Box Experience (OOBE) through this to set some of your options including connecting to a network, using a Microsoft Accounts, setting a PIN and a few other items.

Once I was in the fresh and clean Windows 10 install I headed into Settings>Update & security>Activation to find the system properly activated. That means my hardware, because it had not changed of course, generated the same hardware hash as before and subsequently allowed the system to be activated.

Future hardware updates may require that you need to reactivate Windows 10 because the hardware hash will have changed but we used to do the same thing in Windows 7 and 8.1 so I expect that will be a similar process in Windows 10. Reactivation should also update your hardware hash for future installs and activations.

This activation process should work for the lifetime of that device and allow you to reinstall Windows 10 if necessary without activation issues or the need for a product key.

Of course I have broken this down to very basic elements. Some of you may have variations with this but the vast majority of valid Windows 7 and 8.1 users, whether retail or OEM, should be able to follow this process with success.

As always we are here to answer your questions so feel free to ask away in the comments below and we will endeavor to assist as much as possible.

But, wait...there's probably more so be sure to follow me on Twitter and Google+.