What is Mining?

Bitcoin “mining” is the process by which new Bitcoins enter circulation, and is actually the process that verifies transactions and secures the Bitcoin network.

Bitcoin is setup in a genius way. Being decentralized, how does the system incentivize individuals to contribute their computing power to bolster the network? The answer is by rewarding Bitcoin miners by giving them a batch of newly circulated Bitcoins. Every 10 minutes, a “block” of transactions is verified (“confirmed”) and the miner that confirmed that particular block is rewarded with 25 new Bitcoins.

The Bitcoin source code determines the rate at which new Bitcoins enter circulation, until a limit of 21,000,000 Bitcoins are released. There are currently about 13,500,000 Bitcoins in circulation.