To understand Bitcoin and cryptocurrency, it is important to understand Bitcoin mining, which is the process by which bitcoins are created.

 

Mining is the process of securing transactions and committing them into the public chain called blockchain. Bitcoin nodes use the blockchain to distinguish legitimate Bitcoin transactions from attempts to double spend coins that have already been spent elsewhere. It requires winning a kind of computational lottery where each hash you perform is like buying one ticket. The Bitcoin protocol currently permits the miner who generates a block to claim 12.5 bitcoins as well as any transaction fees for the transactions that miner chooses to include.

The Bitcoin network uses proof-of-work (POW) system to generate coins, secure and publish transactions. There are also other cryptocurrency system protocols like proof-of-stake (POS) and proof-of-capacity (POC).