How Bitcoins Are Generated

HOW BITCOINS ARE GENERATED.

The Bitcoin network is secured by miners. They also process transactions. Miners ensure that the Bitcoins are protected and not vulnerable to attack . For their security and processing services, miners are rewarded with new bitcoins (and transaction fees).

BLOCKS

Any time a miner successfully solves Bitcoin’s proof of work algorithm that miner just mined a “block”. The miner or mining pool that mines a block receives a reward through the block. This block is a set amount of bitcoins agreed upon by the network. The block reward are all new bitcoins. This is how bitcoins are created.

HOW MANY BITCOINS ARE CREATED?

The block reward starts at 50 bitcoins per block, and halves every 210,000 blocks. This means that each block up until block 210,000 will reward 50 bitcoins, but block 210,001 will reward just 25.

This implies that blocks are found on average every 10 minutes. With an average of 10 minutes per block, a block halving occurs ever four years.

This means new bitcoins are generated every 10 minutes. The creation of new bitcoins can be publicly verified by anyone, using a block explorer.

Subsequently, the block reward halves many times and becomes so small that no new bitcoins can be created.

CAN COUNTERFEIT BITCOINS BE CREATED?

The only bitcoins that can be spent are those ones rewarded to miners. So a single user cannot bring bitcoins into supply because of the fact that Bitcoin uses cryptography to verify all transactions. Therefore only the correct digital signature will allow bitcoins to be spent. Miners verify and process this data while they try to solve the proof of work. This ensures security and doesn’t allow people to spend bitcoins they do not own or create bitcoins that were not issued by the network.

However, someone could create their own fork of Bitcoin which gives them new bitcoins. But the new bitcoins would only be valid on the new fork of the network. The main Bitcoin chain would see the new coins as invalid and they can not be spent.

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