coincentral-main-menu-search-eyeglass
Hamburger X.

Where do Bitcoins come from?

Where do Bitcoins come from

Where do Bitcoins come from?

Because they’re a digital currency, there’s not a simple answer to the question, “Where do Bitcoins come from?” Bitcoin was created in 2009 by an unknown developer (or developers) under the pseudonym Satoshi Nakamoto. Nakamoto seemingly created the digital currency in response to the 2008 financial crisis.

New Bitcoins enter the ecosystem using the computer programming Nakamoto wrote when creating the Bitcoin network. This program will only ever produce 21 million Bitcoin. Today, a little over 16.7 million exist.

Bitcoins in circulation

Where do new Bitcoins come from?

In the Bitcoin whitepaper, Nakamoto explains that each Bitcoin transaction has to be verified by a decentralized group of computers – also known as miners. In exchange for verifying transactions and auditing the network ledger, these miners get Bitcoins as a reward.

These Bitcoin rewards had previously not been in circulation and therefore come from the network programming.

Transactions are grouped together in sets called blocks. With each block, miners work to solve a complex algorithm for the privilege to add the block to the chain of existing blocks, hence the name blockchain.

The algorithm increases and decreases in difficulty to ensure that each block takes an average of 10 minutes to mine.

The first miner to solve the algorithm broadcasts the answer to the rest of the miners on the network. If the other miners agree that the block is valid, they add it to the blockchain.

The miner that solved the algorithm then receives the Bitcoin reward. The mining rewards are the only source of new Bitcoins.

Bitcoin mining rewards

The bitcoin mining reward started at 50 Bitcoin per block and has decreased 50% every 210,000 blocks (~4 years). The current mining reward is 12.5 Bitcoin per block.

The reward will continue to decrease about every 4 years until all of the Bitcoins are in circulation. The next “halving” won’t occur until the middle of 2020.  

NEWSLETTER

Newsletter (Sidebar)

  • This field is for validation purposes and should be left unchanged.

RELATED ARTICLES

types of stablecoins

Understanding the Three Types of Stablecoins

Learn about the three different types of stablecoins: centralized IOU stablecoins, crypto-collateralized stablecoins, and non-collateralized stablecoins.

Read More
bitcoin crypto accountant

How to Find the Best Crypto Accountant: A Guide to Find Your Guide Through Tax Season

Tax time approacheth! Got all your crypto transaction records? Unsure who to contact for help? Learn the...

Read More

How to Pay Taxes on Cryptocurrencies

Not sure how to pay taxes on your cryptocurrency gains? This guide will help you prepare for...

Read More

NEXT ARTICLE

Getting Started Gold Bars.

NEXT ARTICLE

CoolWallet S Review | What You Should Know About the Mobile Hardware Wallet

Is the CoolWallet S right for you? Find out the pros, cons, and everything else you should know about the “world’s only mobile hardware wallet.”

ABOUT THE AUTHOR

Getting Started Gold Bars.

ABOUT THE AUTHOR

Based in Austin, TX, Steven is the Executive Editor at CoinCentral. He’s interviewed industry heavyweights such as Wanchain President Dustin Byington, TechCrunch Editor-in-Chief Josh Constine, IOST CEO Jimmy Zhong, Celsius Network CEO Alex Mashinsky, and ICON co-founder Min Kim among others. Outside of his role at CoinCentral, Steven is a co-founder and CEO of Coin Clear, a mobile app that automates cryptocurrency investments. You can follow him on Twitter @TheRealBucci to read his “clever insights on the crypto industry.” His words, not ours.