## Mining: how cryptocurrency is created without a central bank Where do new bitcoins come from? The answer lies in mining — a process that simultaneously confirms transactions and generates new coins. Unlike the traditional system, where fiat currency is printed by government authorities, cryptocurrency is created through a distributed network of participants who follow pre-established protocol rules. ### The role of miners in the network Miners are participants in the blockchain who perform a critical function in ensuring the security and integrity of the network. They collect unconfirmed cryptocurrency transactions from the memory pool, combine them into a single block candidate, and then validate that block. An interesting point: when a miner creates a block, the first transaction in it is the coinbase — a special transaction that sends the block reward to themselves. This incentivizes participants to keep the Bitcoin network operational. ### How the Proof of Work consensus algorithm works The block confirmation process is based on mathematical calculations. After the miner gathers a list of transactions, each of them is hashed, and the results are combined into pairs. These pairs are hashed again, and the operation is repeated until one final hash is obtained — the Merkle root. Then the root hash is combined with the hash of the previous block, a random number (nonce), and other parameters. All of this is hashed again, creating the final block hash. But there is a condition: this hash must be less than a certain target value. Miners cannot predict the correct outcome — they use a trial and error method, changing the nonce value thousands of times until they find a suitable hash. The first one to do this gets the right to add a block to the blockchain and receive a reward. The entire process takes an average of ten minutes. ### Block reward and its reduction The block reward size is not fixed — this value is set by the Bitcoin protocol and decreases every 210,000 blocks ( approximately every four years ). Initially, the first miners received 50 BTC for each block found. Today, this reward is 6.25 BTC. Such a system encourages miners to participate in the network at early stages, while also guaranteeing a limited supply of cryptocurrency. The Proof of Work consensus algorithm is called so precisely because a successful hash serves as proof of the computational work done. ### The significance of Mining for blockchain Without miners and Mining, the Bitcoin system could not exist. These network participants not only generate new coins according to the established rules of the protocol but also ensure the cryptographic security of the entire system. Each confirmed block receives a unique identifier — its own hash, which becomes part of the blockchain's history and cannot be changed without recalculating the entire subsequent chain.

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