Bitcoin is newly issued through mining (the 4th time)

Serialized Column：Starting from Zero: Cryptocurrency Trading：Episode 4

Bitcoin isissued through miningas a method to issue new coins.

When you hear mining, it may evoke “digging a vein with a pickaxe,” but of course Bitcoin is not like gold or silver.

The mining work itself is done by computers performing enormous calculations, and the people who mine are called miners.

The term mining is just a figure of speech; what is actually done is using computers to check for fraud in Bitcoin transactions,and the process of adding them to the blockchain, the transaction ledger.

What is checked in mining?

● Is the sender of the funds the rightful owner of that Bitcoin?
● Has the same Bitcoin been spent more than once?
● Is there a possibility that the sender does not actually own the Bitcoin?

These are checked by volunteers around the world, and the checks are performed roughly every10 minutes.

What is the reward obtained from mining?

Those who succeed in the retry processing receivea reward in Bitcoin.

That moment is precisely when new Bitcoin is issued. From this flow, the term “mining” seems most apt.

Moreover, mining success = rewards occur only once every 10 minutes for one person worldwide.

The reward started at 50 BTC per 10 minutes per person, and is designed to halve roughly every four years to balance supply.

In November 2012 it halved to 25 BTC, and around June–July 2016 it would halve again to 12.5 BTC, with the expectation that value will rise as supply decreases.

Solo mining is not feasible! But joint mining might still work

To mine, you do not need any special permissions; any computer connected to the Internet can participate at any time.

Originally, a single computer at home could devote spare time to Bitcoin mining, but nowadays hundreds of machines are used by “mining pros,” making competition fierce.

Therefore, solo mining is often impractical,as electricity costs are likely higher, so joint mining is also available.

Joint mining refers to mining pools, which gather hundreds to thousands of miners as a team and mine together, sharing the Bitcoin earned among them.

Each person’s reward is small, but the idea is that working with many PCs increases the chance of success. Still, if any small reward could someday grow significantly in value, it’s a dream-worthy endeavor, isn’t it?

But,if mining isn’t appealing, you can simply “buy” on an exchange.This is generally the fastest way to obtain Bitcoin!

Summary

Bitcoin is newly issued through mining (extraction) using a PC and then added to the blockchain (transaction ledger) by the processing.