Ever wondered, how are Bitcoins created?
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/
Follow me: @jrcornel
Hey @jrcornel... You have explained the mining process in an interesting way that any layman would be able to digest. Kudos to that.!!
When I initially started, I thought this article is again gonna be full of technical stuff such as hash, hash pointers, blocks, pointer addresses etc,which i obviously understand. But your presentation was for the wider audience. Good on you.!
✌️✌️
Great guide on what Bitcoin is underneath the hood @jrcornel. It is important; understanding how many forms of money works empowers us all and enriches the community as a whole.
For anyone holding Bitcoin right now who wants to know what the commotion about the fork in a couple days, I have already created a helpful guide that anyone can use to ensure they get all the free coins coming to them in the fork right here on Steemit:
[How to] A Helpful Guide & Complete Compendium to the whole NEXT WEEK of BITCOIN: From Price to Fork(s) and MORE
My page regularly posts about Steemit, Bitcoin and other crypto related material, check out my well written and easy to read content; follow for the FASTEST active news you can run with!
Thank you,
Jeffrey Anderson
Editor in Chief
The Anderson Report
@cryptoNEWScoins on Twitter
Two years ago I wondered how Bitcoin are made. Then I changed that when I made my own at home.
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http://www.FlippyCoin.com is the #1 Cryptocurrency Exchange!![](https://steemitimages.com/640x0/http://i65.tinypic.com/r2ur9d.jpg)
Nice.i am a new on steemit. I am from Bangladesh. I try to my best to earn on it.so you help is very important for me.i already following you.so i hope kindly you follow and upvote me . @shahaalam
Bring your hard hat !! (-:
![](https://steemitimages.com/640x0/http://bitcoinswithcreditcard.com/wp-content/uploads/2014/03/BitcoinMinerCartoon-300x200.jpg)
Time to do some digging!
Nice.i am a new on steemit. I am from Bangladesh. I try to my best to earn on it.so you help is very important for me.i already following you.so i hope kindly you follow and upvote me . @shahaalam
You won't earn like this. Start by reading people's blogd and posting meaningful comments.
Good article. This is good for beginners.
Those were the days when you could profitably mine using a graphics card. I mined a load in 2011 although to be honest, even then It wasn't that profitable as although difficulty was significantly lower, so too was the value (approx $3 per coin if memory serves) so when it increased dramatically to $13 a coin I dumped a load of it!!
Isn't hindsight wonderful!
Dang... I'm sorry to hear that. I am hoping Steem follows a similar trajectory and I am kicking myself for selling some around $2. :)
Nice.i am a new on steemit. I am from Bangladesh. I try to my best to earn on it.so you help is very important for me.i already following you.so i hope kindly you follow and upvote me . @shahaalam
Pretty traditional explanation for the young little n00bs. Hahahah. It is kind of funny how when we have been around for so long we forget what we didn't know when we started. I remember when I first started and I was looking at videos and someone said they were mining Alt Coins. I thought that was maybe the name of a coin. I was so lost.
It was seriously...... How far does the rabbit hole go on this. The answer is that it never ends. And there is always something new happening. For instance with this fork. Suddenly I had to jump into action and decide what my play was going to be for Bitcoin Cash.
learn something new everyday💯🙂
Interesting ! I never wandered about that.
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Your post is really quite interesting and not just the average post about rich people who are basically bragging about how they got rich and famous off of buying bitcoin. Explaining how mining works takes a lot more intelligence than some rich guy just investing his money in bitcoin and enjoying all the profits. You really did your homework on the post and gave out some fascinating info about where bitcoin actually comes from. I give you a lot of credit man. Upvoted and following you jrcornel. I'm surprised that they have only given you $127.83 so far. I mean that's great, but you deserve more than that. Some of those bitcoin posts get like $800 a post and it's just some dude rambling about stuff most people dont understand. Your post is interesting and gets a lot of people's attention. Keep up the good work on steemit man. Btw, I really liked the first picture in your post of the super computers that are like mining for bitcoins. It looks like something out of that movie "the Matrix" or something. I'm following and upvoting your informative posts bud!!
They were bought with illegal drugs on the dark web.