re: Bitcoin Casinos Release 2012 Earnings

quote:

---

Exactly how do you 'mine' for a digitized currency

---

Miners use expensive hardware (currently GPU's/FPGA's, soon to be ASIC's) and special software to essentially crack codes. This process is very electricity intensive and requires a lot of energy and technical skill. It is not cheap to do.

from the FAQ:

quote:

---

How are new bitcoins created?
New bitcoins are generated by the network through the process of "mining". In a process that is similar to a continuous raffle draw, mining nodes on the network are awarded bitcoins each time they find the solution to a certain mathematical problem (and thereby create a new block). Creating a block is a proof of work with a difficulty that varies with the overall strength of the network. The reward for solving a block is automatically adjusted so that in roughly the first four years of operation of the Bitcoin network, 10,500,000 BTC will be created. This amount is halved each four years, so it will be 5,250,000 over years 4-8, 2,625,000 over years 8-12, and so on. Thus the total number of bitcoins in existence will not exceed 21,000,000. See Controlled Currency Supply. Blocks are mined every 10 minutes, on average and for the first four years (210,000 blocks) each block includes 50 new bitcoins. As the amount of processing power directed at mining changes, the difficulty of creating new bitcoins changes. This difficulty factor is calculated every 2016 blocks and is based upon the time taken to generate the previous 2016 blocks. See Mining.

---

https://en.bitcoin.it/wiki/Mining

quote:

---

how was it determined/decided/discovered that only 21,000,000 will ever be 'mined'

---

That number was chosen by the original creator(s). I don't know why. It is a limitation that is coded into the protocol. It can't be changed.

quote:

---

and that currently a little over 50% of the 21,000,000 have been 'mined'?

---

Blocks are created every 10 minutes. After 210,000 blocks, the inflation rate cuts in half. That happens about approximately every four years. Bitcoin started in 2009. In late 2012, the first "halving" day occurred. For the first four years, every ten minutes, 50 new bitcoins were created. Now, it's 25.

The first 4 years resulted in a creation of 10,500,000 bitcoins.

Inflation rate graph:

quote:

---

Also, who determined or calculated the rates of inflation of the bit coin?

---

That was written into the protocol by the creator(s).