Disclaimer: This book is exclusively for educational purposes. Any financial decisions made by you, are at your own risk.
In the world of Bitcoin, new coins are not issued by a central authority or government. Instead, they are created through a process known as mining. Mining serves a dual purpose: it enables the creation of new bitcoins and ensures the security and integrity of the Bitcoin network.
The process of mining involves solving complex mathematical puzzles using specialized hardware and software. Miners compete with each other to find a solution to these puzzles, and the first miner to solve it is rewarded with newly minted bitcoins. This process is designed to be resource-intensive to discourage fraudulent activities and ensure the scarcity and value of bitcoins.
The rate at which new bitcoins are created is predetermined and follows a halving mechanism. Initially, the block reward for mining a new block was 50 bitcoins. However, approximately every four years, this reward is halved. This event, known as the “halving,” reduces the number of new bitcoins entering circulation. The most recent halving occurred in May 2020, reducing the block reward to 6.25 bitcoins.
