Bitcoins are created using a process called “mining” which involves a computer on the bitcoin network solving a complex mathematical problem which creates a new “block.” The mathematical problem is something that is difficult to solve and demonstrates that work was done, which is called “proof of work.”
The reward for solving a block is automatically adjusted so that in the approximately first 4 years of the bitcoin network, 10,500,000 BTC was created, 50 BTC per block. The reward amount is halved roughly every 4 years, so during roughly years four through eight, 5,250,000 bitcoins will be created, 25 BTC per block. Approximately every 4 years the “block reward” is halved. Next down to 12.5 BTC/block, roughly in the fall of 2016, then 6.25 BTC/block about four years later, and so on until around 2140 when no more are created and the supply will be just under 21,000,000.
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