Well, now you can wonder no more! I have a brief intro that will tell you everything you need to know!
Well not everything you need to know, but enough to get your feet wet.
Bitcoins are created out of thin air! Well not really, but sort of.
Bitcoins are created by a process called mining.
Cool, what's mining?
Well, mining is very similar to what the word implies, work is put in to obtain a certain amount of coins. Just like in the real world where miners put in resources to hopefully pull more resources out of the ground, in the same way inputs are put in to create each Bitcoin.
For this reason it is often compared to gold.
Similarly to gold, there is only a finite supply of Bitcoins. In fact, there can only be 21 million coins ever created. Currently about 17 million Bitcoins have already been mined.
I've gotten off topic a bit, what is mining more specifically?
In terms of Bitcoin, mining involves a computer and a computer program that is designed to use a computer's resources to perform complex mathematical calculations.
Once the miner succeeds in solving their mathematical calculation, they get to create a new "block" and receive a reward for their contribution.
This is known as the "block reward."
Every 210,000 blocks the block reward is halved, which works out to about every 4 years.
Cool, what's a block?
Basically blocks are a chunk of data. Specifically, transactions over that period of time.
Blocks are defined as:
"Files were data pertaining to the Bitcoin network are permanently recorded. A block records some or all of the most recent Bitcoin transactions that have not yet entered any prior blocks. Thus a block is like a page of a ledger or record book."
http://www.investopedia.com/terms/b/block-bitcoin-block.asp
Back to Mining...
Overall, Bitcoin mining is the process of adding records of new transactions to the blockchain. These new transactions are added in segments called blocks roughly every 10 minutes, which is why it is called a blockchain in the first place.
In 2009, the reward per block was 50 Bitcoins. Then in 2014, it was halved to 25 Bitcoins per block. More recently it was halved again to 12.5 Bitcoins per block.
The reward is what miners hope to get from mining.
Mining sounds great and profitable right?
Not exactly.
Mining on personal computers was only feasible in the very early years of Bitcoin. The network is so competitive now that specialized hardware is the only way to make a profit.
New Bitcoins are created at a predictable and fixed rate, which means that as more and more miners join the network the more difficult it becomes to get a slice of the block rewards pie.
This defined rate of creation was set forth by Satoshi Nakamoto when he created Bitcoin back in 2008.
The difficulty in mining mentioned above doesn't even take into account the problem of utility costs, or stated more clearly, your electricity bills.
In conclusion:
Bitcoins are created by a process called mining.
Miners use specialized hardware to solve complex mathematical problems and verify valid transactions. Pack those transaction into blocks, and then once the problem is solved, add new blocks to the blockchain.
Each block generates 12.5 new bitcoins, and on average a block is mined every 10 minutes. (that number is actually closer to 9 minutes but that is a topic for another day)
Poof! Bitcoins are born.
Stay informed my friends!
Sources:
http://www.investopedia.com/terms/b/block-bitcoin-block.asp
https://www.quora.com/How-many-new-bitcoins-are-created-on-average-per-day
https://cointelegraph.com/news/how-are-new-bitcoins-created-a-brief-guide-to-bitcoin-mining
Image Sources:
https://think.startupflux.com/what-is-bitcoin-how-bitcoin-works/
https://www.coindesk.com/information/how-bitcoin-mining-works/
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