so one question you might have when thinking about cryptocurrency in the blockchain is, well, where does the money come from?
if the blockchain is just a record of transactions, can someone just go in there and say, hey, i have 100 bitcoin.
well, it doesn't really work like that.
you can't just claim you have it.
there has to be proof that you got it from somewhere.
and this is where mining comes in.
so this is how you actually generate new cryptocurrency through mining.
all the bitcoin that is in existence and used today was mined at some point by somebody and then it was sold, traded, or otherwise transferred.
so we know we can't just make up transactions on the blockchain, we have to actually mine them.
so when mining is done, you have somebody that would be a miner that goes into the system of algorithms and comes out with a result.
now when they actually mine something and they successfully complete a block, they now receive bitcoin.
so now when a block is completed, the algorithm, the algorithm behind bitcoin now says, cool to your wallet, here is 50 bitcoin, for example.
now you wouldn't get that much for actually mining a block today, but that is how much it would say if that algorithm was based on that.
now, this is where a lot of the more technical and complex math comes into play.
and we're not going to dive too much into that.
we're going to still keep it surface level.
but mining, even though we had a cool picture of like a miner right there and a mine and a minecart, right?
it doesn't look anything like that.
mining is really a computer just processing a lot of data to try to complete transactions to try to complete a block.
and if you complete a block, you have mined the block.
you get a portion of that completed block, you get a portion of what it was worth.
and again, we're not going to dive too deep into that.
but in the next video, we'll dive more into transactions and how transactions affect this flow.
but we know now how actual bitcoin, for example, comes into existence.
you cannot just claim you have it.
the algorithm is set up in such a way with bitcoin that you have to actually contribute to bitcoin itself.
you have to mine for bitcoin network.
and if you do it successfully, you get some bitcoin as a return.
so now that our example scenario here, now that we have some bitcoin, now that we have mined some, now we're going to talk about some transactions.
so let's head into that in the next video.