BITCOIN CREATION-MINING
As mentioned above, Bitcoin can be bought on the foreign exchange market or transferred via electronic remittance from mobile phones or computers. But there is a third option, as there are people all over the world competing for Bitcoin mining using computers to solve complex mathematical equations – the Bitcoin algorithm.
Industrial Bitcoin mines use enormous computing power to process the algorithm, and in return are rewarded with Bitcoin. The winner is currently rewarded with 25 Bitcoin every 10 minutes, (FortuneGreece, 2014).
In essence, Bitcoin mining is the production of new cryptocurrencies resulting from the verification and accumulation of Bitcoin transactions.
BITCOIN CREATION-MINING
BITCOIN CREATION-MINING
The use of specific software as well as special electronic devices is required.
BITCOIN CREATION-MINING
For example, one user buys a television from another user with 1 Bitcoin. To determine if this Bitcoin is authentic, users of crypto mining – the miners – are starting to validate the transaction. All transactions made are concentrated in a digital box that is locked by a virtual padlock. These transactions are blockchains.
Users use the software to locate the key that unlocks the virtual padlock. Once this is done, the digital box opens and the transactions are verified. And the user who managed to unlock the box is the one who is rewarded with the production of 25 new Bitcoin (Volastro, 2014).
Thus, the new user installs the software on an electronic device and generates a unique email address for him to use and receive payments. Then, the transactions it performs are authenticated by other users resulting in the production of new Bitcoin.
It is useful to note here that despite the current popularity of Bitcoin, its use in some countries around the world is considered to be illegal and illegal.
The State Bank of Vietnam, for example, issued a warning in February 2014 against the use of Bitcoin and a ban on credit institutions dealing with cryptocurrencies.
In Iceland, the legal treatment of Bitcoin is not clear. In March 2014, the Central Bank of Iceland had issued a statement saying that the use of Bitcoin could lead to a breach of the foreign exchange law, which stipulated that the Icelandic currency could not exit the country and that foreign currency cannot be used in the country (BitcoinNews, 2017a).