Many cryptocurrencies have a finite number of coins that will ever exist. This number is referred to as the Maximum Supply. However, this is not necessarily reflect the number of coins that are currently in circulation. Just like gold, cryptocurrencies are “mined”, but instead of digging through the earth, this process is undertaken by solving complex mathematical “puzzles”.
Computers with high processing power are used to “solve” these “puzzles” by miners, who are rewarded for doing so in the determined cryptocurrency. As every transaction is created and cryptographically encrypted for any cryptocurrency, it is added to the current “block”. Miners process these transactions, that are stored in units known as blocks. Once each complete block as been processed, it is added to the public “blockchain”, a ledger where all the transactions are publicly available to view.
For each successful Bitcoin “block” that is mined, the miners are rewarded with 12.5 BTC. This “reward” is halved every 210,000 blocks, with the next halving expected to happen around May 2020.
Miners play an important role in the cryptocurrency ecosystem, as they are responsible for releasing new coins into the market. With Bitcoin, there are only 21,000,000 coins that will ever exist, so although supply is increasing, the rate of demand is increasing at a much higher rate. In addition to coin rewards, miners are also often given “voting” power or some form of say into the future of a project. Aspects such as hard forks are often voted on by miners.
Each of the hundreds of crypto coins in existence rely on the core concept of the blockchain. Cryptocurrency was designed to be decentralised, secure and unalterable. So every single transaction is encrypted. Once that encrypted transaction happens it’s added to something called a “block” until a fixed number of transactions has been recorded. That block then gets added to a chain — the blockchain — which is publicly available.
These transactions leave no trace of who is behind them, however, because privacy is also a pillar of cryptocurrency. The location of the transactions isn’t centralized, either, so that it can’t be manipulated or controlled by one person or entity.
Since these blocks are heavily encrypted, they’re sort of like complicated math puzzles that only powerful compute-capable hardware can solve. Enter your CPU, or your Radeon and GeForce graphics cards. The process of solving the math puzzles on these blocks and adding them to the p