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so one question you might have when thinking about cryptocurrency in the blockchain is, well, where does the money come from?

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if the blockchain is just a record of transactions, can someone just go in there and say, hey, i have 100 bitcoin.

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well, it doesn't really work like that.

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you can't just claim you have it.

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there has to be proof that you got it from somewhere.

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and this is where mining comes in.

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so this is how you actually generate new cryptocurrency through mining.

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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.

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so we know we can't just make up transactions on the blockchain, we have to actually mine them.

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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.

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now when they actually mine something and they successfully complete a block, they now receive bitcoin.

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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.

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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.

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now, this is where a lot of the more technical and complex math comes into play.

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and we're not going to dive too much into that.

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we're going to still keep it surface level.

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but mining, even though we had a cool picture of like a miner right there and a mine and a minecart, right?

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it doesn't look anything like that.

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mining is really a computer just processing a lot of data to try to complete transactions to try to complete a block.

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and if you complete a block, you have mined the block.

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you get a portion of that completed block, you get a portion of what it was worth.

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and again, we're not going to dive too deep into that.

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but in the next video, we'll dive more into transactions and how transactions affect this flow.

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but we know now how actual bitcoin, for example, comes into existence.

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you cannot just claim you have it.

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the algorithm is set up in such a way with bitcoin that you have to actually contribute to bitcoin itself.

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you have to mine for bitcoin network.

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and if you do it successfully, you get some bitcoin as a return.

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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.

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so let's head into that in the next video.