Quote from: sk8bo on February 16, 2014, 07:22:17 AM

Ok. So far so good.

What I understood from reading your posts is that the ''mining" process of the different PC machines all over the word is responsible for the code of every Bitcoin transaction, and for providing servers, which support the Bitcoin without having it centralized on one place. I hope I got it right.

But I still do not understand, whos pocket does the money for mining come from. Who pays you to mine?

In one of the previous posts I read somewhere that miners transfer electricity into money, which kinda sounds like written by someone who know as much as I do.

Regards,

D.

It doesn't come from anyone's pocket. Coins are generated by the protocol as a reward for confirming transactions and keeping the ledger in order. You say you understand the concept of bitcoin but you don't. The reward for proof of work is at the very core of what bitcoin is. The self management of the network by its users proving that all transactions are present and correct is at the core of what bitcoin is. And it is this process that generates or you could say releases new coins. Imagine it like this. When satoshi created bitcoin he created a fixed amount of coins too. They were held back in cold storage to be used as rewards for people using their computers to keep checking over and over that the blockchain (ledger) was still all correct and i'm working order. Once a block of transactions had been proved to be all in order some of the coins in cold storage would be released from cold storage and given to the computer that confirmed the block of transactions was correct as a reward.

This next bit is technically incorrect but is an easy way to understand.

The longer we go on the harder it is to confirm the ledger is still correct because it contains every transaction ever made so it takes more computing power to check over and confirm there are no errors. This means it gets harder and harder to confirm and more powerful computer and computing power is needed to release the coins in cold storage.