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How new BTC are created


Johannesburg, 06 May 2021
Read time 3min 20sec

Bitcoin is the best performing cryptocurrency in the last ten years. Its great bull market phase has triggered a lot of attention not only in the crypto world but also with major investors that see it as the new digital gold.

Actually, there is a reason why it's considered the gold of our time, and that's because Bitcoin is a very scarce asset. So, whether you are a new investor or you just want to learn more about Bitcoin, a great place to start is to learn how new BTC are generated.

Bitcoin Mining

Before we explain how new BTC are created, it's important to be familiar with blockchain technology, which is essentially a network where not only the transactions are validated and processed but also where new BTC are generated.

The blockchain network is independent of any influence by a central authority or developer, which means that no one has the control to manipulate the system for their own gain. Actually, the miners, users of the network, process the transactions and validate them in order to make sure the system remains secure. So, without the miners, the system will not function properly. What's more, through the mining process, not only blocks of transactions are added to the blockchain network, but also new BTC are created.

Exchange Sites

Exchange sites are very important because mining is obviously not going to be very profitable in the following years (at least not on your own as the costs are too high). On an online trading platform, you are able to obtain BTC and also sell your BTC for other currencies. A good online trading site that is based on AI technology is Bitcoin Code. This automated trading system is the perfect option for anyone that is new to crypto trading and doesn't have a lot of knowledge about BTC. In fact, you only need about 20 minutes per day to configure the bot. When you visit https://bitcoin-code.io/, you can open an account by depositing at least $250.

Mining

There are a couple of important things that you should be aware of about mining. First, the block reward of the miners is getting a halved every four years. Today the reward is 6.25 BTC. This event is programmed to happen to order to control to supply of BTC, and also the blockchain protocol is designed in a way that new BTC is generated at a fixed rate.

Next, mining involves the solving of complex computational puzzles, which makes mining a lot more competitive. Beyond that, as more miners join the network, it becomes very difficult to gain the block rewards because the level of difficulty of mining also rises.

Hence it is not very profitable to mine on your own, and miners need to decrease their operational costs in order to reap the benefits of mining. And because Satoshi Nakamoto has restricted the number of BTC that will ever exist to 21 million, Bitcoin is a very rare and valuable asset, and this is also why it is perceived as valuable and as rare as gold.

Summary

In conclusion, the rise of the price of Bitcoin is mainly driven by reduced block reward, increased market demand, and a dramatic decrease in the number of new BTC being generated by the network. Hence, today Bitcoin is worth more than $50,000, and it's very likely that the price will continue to rise in the future.

Actually, some experts predicted by 2023, Bitcoin will surpass $100,000. So, all in all, Satoshi Nakamoto made a clever move when he/she designed a predictable rate at which new BTC are generated.

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