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I'm excited because I bought my first bitcoins today! (0.41 bitcoins at that!) I'm wondering how they are put in to circulation? From my understanding it seems that the algorithm generates x bitcoins every hour, where x is a diminishing value, until eventually zero coins are being created... so let's say an hour from now 5 bitcoins are created... Where are they created and how are they put into circulation? Or are they created evenly throughout everyone's wallets and just distributed evenly (in which case I might receive 0.000001 bitcoins in the next hour?) And what is a bitcoin miner?

Also, what happens if my computer is destroyed and my wallet file with my bitcoins is lost? Are those bitcoins gone forever? Wouldn't this cause the supply of bitcoins to go down overtime until eventually there are very few bitcoins left?

Thanks! God bless!

(I bolded my 3 questions so that they are easy to find and answer).

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Let me answer your questions out of order:

What's the point of bitcoin mining / how they are put in to circulation?

https://bitcoin.stackexchange.com/a/3201/2306

what happens if my computer is destroyed. Are those bit coins gone forever?

Yes.

Wouldn't this cause the supply of bit coins to go down overtime until eventually there are very few bit coins left?

Yes.

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  • So as far as mining goes, how many bit coins could I mine every hour? Is it worth it or is it just pennies... 0.0001 bit coins or something. – Albert Renshaw Apr 13 '13 at 13:53
  • @AlbertRenshaw CPU/GPU mining will cost you more in electricity than you will get from mining. FPGAs/ASICs are the only things that are profitable right now. – Nick ODell Apr 13 '13 at 15:56

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