How do does solving mathematical problems create bitcoins?
In: Technology
Bitcoin has a long ledger, describing every transaction for every bitcoin. This ledger is tamper-proof because there is a cryptographic checksum on every block that is always 0 (not exactly true but it’s simpler to explain this way). If the block’s checksum is not 0, it’s been tampered with, and you need to get the good copy from somebody else. Each block depends on the block before, thus a block chain, hence the term.
The way they make the block’s checksum =0 is by adding a little random number to the end of the block, and then seeing if the checksum is 0. This is a computationally expensive process, taking many millions of tries. The first person to find a number that works publishes their block, and everybody moves on to the next block. Since this process is expensive, and the person paid for the electricity to calculate the answer, the person who publishes the block gets paid a small amount of bitcoin. This process, called mining, is the process of being the fastest to find a solution to the checksum(block+number)=0.
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