• When you hear about Bitcoin "mining," you envisage coins being dug out of the ground. But Bitcoin isn't physical, so why do we call it mining?
    Because it's similar to gold mining in that the Bitcoin exist in the protocol's design (just as the gold exists underground), but they haven't been brought out into the light yet (just as the gold hasn't yet been dug up). The Bitcoin protocol stipulates that 21 million Bitcoin will exist at some point. What "miners" do is bring them out into the light, a few at a time.

    The process is simple, but without limitations anyone could abuse it. Therefore, only unconfirmed transactions can be mined. After the miners identify the transactions as legitimate, the nodes are spread out into a network similar to a Peer-2-Peer file sharing network. For each of these confirmed transactions a miner creates, a node has to add it (the legitimate transaction) to its database, where it is then made part of the block chain.

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