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
Bring your hard hat !! (-:
Time to do some digging!
You won't earn like this. Start by reading people's blogd and posting meaningful comments.
They are actually mined by small Chinese children in a deep hole :)
Haha that is pretty funny.
xoxoxoxo
:)
hello man
ah ah ah ah :D
You will do better with relevant comments than asking for follows. Irrelevant comments may be flagged
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. :)
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.
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.
This is the right time to mining, of course we also have to invest :)
Thanks @jrcornel For your explanation.
I always thought they were delivered by Storks.
Bitcoin mining is not profitable now a days i think because more people involved in mining.
Good post! Today I did a small Bitcoin transaction and I saw the transaction fee was quite high (above 10%!). I transferred 0.00404743 BTC (about $11.5) and the fee was 0.00043981 BTC (about $1.28). Hopefully after all the soft forks and what not the fees will come down.
Yes, that is the hope!
pls i need 1btc how can you help me with tht
1LLbmCnYjbtccmTYcUR6uqz4r4YFpcSgAJ
I dont think I can help you, why do you need the 1 BTC?
I know someone that mines. It's to expensive for me and I really need air conditioning. I can't take that much of a hike in my utility bill.
wow thank you that was a lot of great information. keep up the great work.
fee free to follow me @ https://steemit.com/@belalh
I actually don't have a full grasp on this but every time I read new information, I finally analyze to a better understanding and @jrcornel did a great job at it I must say . Well done 👍
Yes I know what you mean, it can be confusing and hard to grasp at first. The more you hear and read it the better understanding you will likely have, as you mentioned. :)
A whole lab process (: Steem on ! Looking forward to your future posts now
Very nice post !
it is some pretty wicked technology, who ever came up with this is truly a genius
It's awesome
@abutaleb365
For most people now its probably cheaper to buy bitcoin than actually mine it
I remember seeing people selling bitcoin on ebay for a few quid a pop.. if only we'd known :)
Modern technology and the use of unorthodox systems are changing the financial landscape and the wealth of nations. Modern banking is next on the horizon.
17 million mined, 4million to go and bitcoin will rocket to the moon.
wonderful ! so much informative post. thanks for your effort.
It really is quite rare to hear of anyone currently making great profits with mining, running costs are just so high
You broke this down really well. Great post! Followed and upvoted.
Very interesting, I didn't know all of that.
I'm trying to understand why there are fans blowing on what look like thumb drives with Bitcoin symbols on them. They also appear to be on power strips with USB connections. I've never seen anything like that before. I understand that thumb drives can get warm from use, but I've never seen a farm of them like that. Do you know anything more about that pic? Thanks.
Is really good, more and more happy to be here, thanks for posting, good information
I still don't really get it...
Good read! Thanks for sharing :)
Good job @jrcornel! (:
bitcoins is the future anyone not on board already is missing a great chance
Very informative article, thank you!
Great post, very informative 👍🏼
sounds like a good recipe for boom and bust cycles, but instead of repeating what I just wrote, please read my latest blog entries @earthcustodians, check out
From Gold To Fiat And Cryptocurrencies, And The Fate Of Irrational Exuberance
Bitcoin & The Manic Bullishness Of The Crowds Struck Again (WAM/Jeff Berwick Talk Cryptocurrencies)
The Problem With Power VS The Zero-Sum Game Economy
and more
Thank you for sharing these in dept articles
that helps me. I am not a technical girl :p
very useful! thanks it all
never wondered this, found out from the get go, but there's tons of people who have no clue so ya GREAT POST!! .........again......will you ever stop?
yo i dont know,
to the extreme you rock the mic like a vandal light up the stage and wax a chump like a candle....dance!!!!
alright first person to name that tune gets one SBD!
Ice Ice Baby ;)
You are correct! You WIN!!! Check your wallet. Now don't go spending it all in one place you hear, and if I find out you spent any of it on Ripple your mother will hear about it!
My mother was asking me and trying to learn a little bit more about crypto currencies ever since she joined Steemit and I was struggling to find a good short and easily understandable video or post and here it is! Thank you and I will resend it to her asap! :)
Well articulated, @jrcornel. It can be difficult to explain how bitcoin works to new parties of interest, let alone the mining process. Thank you for your contribution.
Thank you for explaining how bitcoin is born, but I was thinking as more large organisations get involv in blockchain will mining grow, an individual will need a more sophicated computer.
Thanks for this interesting info. I did not know that
Really good stuff thanks
Finally a simple explanation! Thank you for that @jrcornel ! I am a newbie, everything is still a bit incomprehensible to me but my worst was this mining thing - I did have an idea already but you put it very simply, better than any video I tried to watch! Thanks again! :)
Informative article, thanks! Do you know what the calculation is that has to be done to complete a block? Is it something like factoring a large number?
This is more than I expected; kudos. You mentioned the infinite nature of Bitcoin, what I do not understand is what will happen to the miners when there are not more coins to be mined and the fact that Bitcoin transactions are free? will the system shut down or that will be sorted by the much anticipated Hard Fork? I'd appreciate clarification and thanks for the good work.