Bitcoins are created from bitcoin mining (adding transactions to a public ledger). An algorithm controls mining difficulty and total coin creation (21 million). Because coins are created and distributed via a controlled algorithm (as opposed to a central bank), the bitcoin system avoids inflation of the currency and ensures as steady flow of new coins.

Where do Bitcoins come from?: When a miner cracks an algorithm to record a block of transactions to a public ledger called a blockchain. When the “block” is added to a “blockchain” new Bitcoins are created.

Bitcoins are Digital Representations of Currency

Bitcoins themselves aren’t real, tangible things that you can hold or use in real life; they are digital representations of currency. Once a new coin is created, a record of the existence of that coin is held publicly and the current owner of that coin has a private code that connects back to those coins. So, if we thought of the entire concept of bitcoin having value, we could think of owning bitcoin as more akin to owning shares in the overall bitcoin network.

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"Where Do Bitcoins Come From?" contains information about the following Cryptocurrencies:

Bitcoin (BTC)

What do you think?

Sam on

This is nothing more than a ponzi scheme

Thomas DeMichele
Thomas DeMichele on

I disagree. The market price can be a little volatile to say the least. However, there is a real asset under here with a limited supply that works to store and transfer value securely with transactions recorded on a public ledger.

There is a lot of value in the total package here. Does that value line up perfectly with the price of a Bitcoin on a given day? That is a hard question to answer. However, there are a lot of arguments to be made in favor of cryptocurrency.

If you look at the supply vs. the market cap, and realize that Bitcoin is the backbone of the crypto economy, you can start to see why the current value is what it is.

Some of it might be speculation, bubbles, and ponzi like… but at its core it is miles beyond tulip futures, weather futures, or mortgage backed securities backed by subprime mortgages that are near worthless. Bitcoin has real value, those things did not. Them not having value is ultimately what caused their bubbles to burst. Not saying throw all your money into bitcoin, I am saying you should research it and try it before you knock it.

ALMA Hinton on

Don’t understand where the money comes from when people say they have made so much money and it is in their bank. Whose bank has it come out of

Thomas DeMichele
Thomas DeMichele on

If you sell a bitcoin for $10k usd then the buyer has a bitcoin and you have $10k USD. If you transferred it to your bank, then it is in your bank.