Where does money come from with bitcoin?

by lynn.runolfsdottir , in category: Cryptocurrencies , a year ago

Where does money come from with bitcoin?

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1 answer

by cornelius.fay , a year ago

@lynn.runolfsdottir 

Money in the Bitcoin system comes primarily from two sources: mining and buying/selling on cryptocurrency exchanges.

  1. Mining: Bitcoin is a decentralized digital currency, and its underlying technology, blockchain, relies on a process known as mining. Miners use powerful computers to solve complex mathematical puzzles, and when they successfully solve these puzzles, they are rewarded with newly created bitcoins. This process adds new bitcoins into circulation, and these newly minted coins serve as an incentive for miners to secure and validate transactions on the Bitcoin network.
  2. Buying/Selling on Exchanges: The second major source of money in Bitcoin comes from buying and selling the cryptocurrency on various cryptocurrency exchanges worldwide. Individuals and entities interested in owning Bitcoin can purchase it using traditional fiat currencies (like US Dollars, Euros, etc.) on these exchanges. Similarly, those who own bitcoins can sell them on the exchanges to convert them back into fiat currencies.


It is important to note that the value of Bitcoin is subject to supply and demand dynamics, thus its price can fluctuate greatly over time based on market conditions.