How new bitcoins are created? |BTC|

[sushil]

BTCNew coins are generated by a network node each time it finds the solution to a certain mathematical problem (i.e. creates a new block), which is difficult to perform and can demonstrate a proof of work. The reward for solving a block is automatically adjusted so that in the first 4 years of the Bitcoin network, 10,500,000 XBT will be created. The amount is halved each 4 years, so it will be 5,250,000 over years 4-8, 2,625,000 over years 8-12 and so on. Thus the total number of coins will approach 21,000,000 XBT over time.

In addition, built into the network is a system that attempts to allocate new coins in blocks about every 10 minutes, on average, somewhere on the network. As the number of people who attempt to generate these new coins changes, the difficulty of creating new coins changes. This happens in a manner that is agreed upon by the network as a whole, based upon the time taken to generate the previous 2016 blocks. The difficultyis therefore related to the average computing resources devoted to generate these new coins over the time it took to create these previous blocks. The likelihood of somebody "discovering" one of these blocks is based on the computer they are using compared to all of the computers also generating blocks on the network

[legendster]

[IAmARoyalElite]

Captain Obvious?

[cashtraderuk]

BTCNew coins are generated by a network node each time it finds the solution to a certain mathematical problem (i.e. creates a new block), which is difficult to perform and can demonstrate a proof of work. The reward for solving a block is automatically adjusted so that in the first 4 years of the Bitcoin network, 10,500,000 XBT will be created. The amount is halved each 4 years, so it will be 5,250,000 over years 4-8, 2,625,000 over years 8-12 and so on. Thus the total number of coins will approach 21,000,000 XBT over time.

In addition, built into the network is a system that attempts to allocate new coins in blocks about every 10 minutes, on average, somewhere on the network. As the number of people who attempt to generate these new coins changes, the difficulty of creating new coins changes. This happens in a manner that is agreed upon by the network as a whole, based upon the time taken to generate the previous 2016 blocks. The difficultyis therefore related to the average computing resources devoted to generate these new coins over the time it took to create these previous blocks. The likelihood of somebody "discovering" one of these blocks is based on the computer they are using compared to all of the computers also generating blocks on the network

plagiarism...or not?

 http://bitcoinfaq.com/

[Bitshill]

About 21,000,000 created everyday.

[sho_road_warrior]

Since this is the beginners and help section, lets nitpick a bit, shall we?

BTCNew coins are generated by a network node each time it finds the solution to a certain mathematical problem (i.e. creates a new block), which is difficult to perform and can demonstrate a proof of work.

No! Its not a mathematical problem and no solution to a problem is found. Its not even difficult to perform. This bad metaphor made it hard for me to understand PoW in the beginning.

The basic Idea is that the mining node (usually called "miner") is hashing certain information of the block. To calculate a hash is easy, there are USB sticks that calculate 333 Million of them per second (333 Megahash/s). The hash however has to meet certain criteria. In its binary form it has to have a certain amount of leading zeros. Since it is impossible to predict what a hash of something looks before you calculate it, miners have to try many different versions to find a hash that meets the criteria. This - again - is not hard or difficult, but it takes time. Currently the total network calculates 293,848,584 Billion (~293 PetaHash/s) of these hashes every second. All this in order to find a hash meeting the criteria every 10 minutes on average. Thus you could say every hash is lottery ticket and you instantly know if you got the jackpot or have to try again.

tl;dr its not a mathematical problem its a lottery.

The reward for solving a block is automatically adjusted so that in the first 4 years of the Bitcoin network, 10,500,000 XBT will be created. The amount is halved each 4 years, so it will be 5,250,000 over years 4-8, 2,625,000 over years 8-12 and so on. Thus the total number of coins will approach 21,000,000 XBT over time.

Does anyone actually use XBT? Anyway. Yes, the total number of coins will approach(!) 21 Million BTC, but never reach 21 Million unless the protocol is changed. Due to how the halving works the total number of Bitcoins will be 20999999.9769 BTC

In addition, built into the network is a system that attempts to allocate new coins in blocks about every 10 minutes, on average, somewhere on the network. As the number of people who attempt to generate these new coins changes, the difficulty of creating new coins changes.

Basically: the number of leading zeros the hash must have to be accepted changes. Thus you need to calculate more (or less) lottery tickets on average to win the reward (find a new block)

This happens in a manner that is agreed upon by the network as a whole, based upon the time taken to generate the previous 2016 blocks. The difficultyis therefore related to the average computing resources devoted to generate these new coins over the time it took to create these previous blocks. The likelihood of somebody "discovering" one of these blocks is based on the computer they are using compared to all of the computers also generating blocks on the network

About 21,000,000 created everyday.

Nope, 21 Million never (unless the protocol changes)

[DannyHamilton]

Since this is the beginners and help section, lets nitpick a bit, shall we?

Sure.  You don't mind if I "nitpick" your nitpicking, do you?

No! Its not a mathematical problem and no solution to a problem is found. Its not even difficult to perform. This bad metaphor made it hard for me to understand PoW in the beginning.

The basic Idea is that the mining node (usually called "miner") is hashing certain information of the block.

And "hashing" is performing a specific set of mathematical steps, which could be described as "a mathematical problem", right?

To calculate a hash is easy,

Have you tried calculating one by hand?  I don't think I'd describe it as easy.

there are USB sticks that calculate 333 Million of them per second (333 Megahash/s).

Correct.  It might not be "easy", but a computer can do it VERY fast.  Therefore we set a difficulty on the problem by enforcing certain conditions on the result.  This makes it "difficult" to find an acceptable result, since you have to try MANY, MANY times before you find an acceptable answer.

The hash however has to meet certain criteria. In its binary form it has to have a certain amount of leading zeros.

No.  The difficulty is not controlled with a number of zeros at the beginning of the hash. This bad metaphor made it hard for me to understand POW in the beginning.  The basic Idea is that the resulting hash value must be less than an agreed target.  This has a side effect of resulting in lots of zeros at the beginning of the hash value, but if all we did was chop off a zero each time, it would double the time between blocks for each zero.  This would make it impossible to have more than 256 total difficulty adjustments, and would make it impossible to adjust the difficulty when the average block time is only 9 minutes (or 11 minutes).

Yes, the total number of coins will approach(!) 21 Million BTC, but never reach 21 Million unless the protocol is changed. Due to how the halving works the total number of Bitcoins will be 20999999.9769 BTC

Actually, due to some bugs in a mining program early on, there are 135.20897146 BTC that are completely missing.  Therefore the total number of bitcoins that will ever be created if the protocol is not changed is only 20999864.76792854

Additionally, there are at least 2,610.0138685 BTC that are provably unspendable. Without a significant change to the protocol, you can safely assume that these bitcoins have been "destroyed".  Therefore the maximum number of spendable bitcoins that can exist in the future won't exceed 20,997,254.75406004

Basically: the number of leading zeros the hash must have to be accepted changes. Thus you need to calculate more (or less) lottery tickets on average to win the reward (find a new block)

Basically: the value of the has must be lower than an agreed target.

[odolvlobo]

Since this is the beginners and help section, lets nitpick a bit, shall we?

Sure.  You don't mind if I "nitpick" your nitpicking, do you?

No! Its not a mathematical problem and no solution to a problem is found. Its not even difficult to perform. This bad metaphor made it hard for me to understand PoW in the beginning.

The basic Idea is that the mining node (usually called "miner") is hashing certain information of the block.

And "hashing" is performing a specific set of mathematical steps, which could be described as "a mathematical problem", right?

I hope you don't mind if I nitpick your nitpicking of the nitpicking.

There definitely is a mathematical problem that is solved, and the problem is this:


Find a value of B such that SHA256(SHA256(B)) <= T, where B is the block header and T is the target value.


The only known method for finding a solution to the problem is brute-force guessing, so that is what miners do.

[JohnnieW]

interesting
i wonder how this thing work from programming stand point
is the data (math stuff) sent by a server?
hows that thing work
i don't get it

[Madness]

About 21,000,000 created everyday.

21 million Bitcoin everyday ? what are you saying That's impossible dude.
It's 21m BTC for ever ... means in total and it will take a lot of time to reach that amount of Bitcoin , like a lot

[shorena]

Sure.  You don't mind if I "nitpick" your nitpicking, do you?

No, I love it when you do.

And "hashing" is performing a specific set of mathematical steps, which could be described as "a mathematical problem", right?

I see it more as an exercise than a problem, but as I think more of it this is probably due to my native language, your description would be fitting for "Aufgabe" (an exericse) while a "Problem" (problem) would be e.g. the travelling salesman. Not the actual calculation of a possible solution but the discussion of different possible approaches to find a (possible) solution.

Have you tried calculating one by hand?  I don't think I'd describe it as easy.

Not sha256 no, but the mathematics behind it is not difficult, its just tedious to do. Just because it takes a long time for a human to do does not make it hard.

-snip-
No.  The difficulty is not controlled with a number of zeros at the beginning of the hash. This bad metaphor made it hard for me to understand POW in the beginning.  The basic Idea is that the resulting hash value must be less than an agreed target.  This has a side effect of resulting in lots of zeros at the beginning of the hash value, but if all we did was chop off a zero each time, it would double the time between blocks for each zero.  This would make it impossible to have more than 256 total difficulty adjustments, and would make it impossible to adjust the difficulty when the average block time is only 9 minutes (or 11 minutes).

Thanks, misconceptions like this are the reason I love your nitpicks.

Basically: the value of the has must be lower than an agreed target.

[DannyHamilton]

Since this is the beginners and help section, lets nitpick a bit, shall we?

Sure.  You don't mind if I "nitpick" your nitpicking, do you?

I hope you don't mind if I nitpick your nitpicking of the nitpicking.

There definitely is a mathematical problem that is solved, and the problem is this:


Find a value of B such that SHA256(SHA256(B)) <= T, where B is the block header and T is the target value.

Isn't that what I already said?

- snip -
And "hashing" is performing a specific set of mathematical steps, which could be described as "a mathematical problem", right?
- snip -
The basic Idea is that the resulting hash value must be less than an agreed target.
- snip -
Basically: the value of the hash must be lower than an agreed target.

Sure, you gave a few more details by describing the exact hash process, and pointing out that the thing that is being hashed is the block header, but I don't see anything inconsistent with what I said.

[odolvlobo]

Isn't that what I already said?

Well, I was nitpicking. The "problem" is the statement "Find a value of B such that ...", but the "hashing" is what miners do to find the solution.

[DannyHamilton]

Isn't that what I already said?

Well, I was nitpicking. The "problem" is the statement "Find a value of B such that ...", but the "hashing" is what miners do to find the solution.

Ah, I see what you mean now. I'll be more careful about how I phrase that in the future. Thanks.