Cryptocurrencies could be a huge mystery like unicorns and fairies for most of us because it is something that we cannot see, touch and feel. It is at the digital space. A world that is different but created by humans. It is always a wonder where and how they are made.

Bitcoin was created and released as open-source software in 2009 by an unknown programming group or individual known as Satoshi Nakamoto. At the time of its creation, bitcoin was the first-ever cryptocurrency — a type of digital currency that uses encryption to make transactions, as well as new bitcoin.

This means that while all bitcoin is cryptocurrency, not all cryptocurrency is bitcoin. We will return to this thought in a later post, when we will detail the differing types of cryptocurrency.

Bitcoin transactions are recorded in a digital ledger known as the blockchain, which is made up of individual blocks. To be added to the blockchain, these blocks must contain the answer to a complex mathematical equation.

Machines known as bitcoin miners solve these equations, in exchange for a bitcoin reward, effectively birthing new bitcoin. The reward currently sits at 12.5 BTC per mined block, and decreases by half after a certain number of blocks are mined (this occurs approximately every four years), until 21 million bitcoin have been issued. At that point, bitcoin will stop being created. (No need to worry, however—the last bitcoin is not estimated to be mined until 2140!)

Bitcoin website The Halvening offers an interactive, real-time countdown chart to when the reward will halve. It shows how many blocks remain to be mined, and an ETA as to when that will occur.

This is why bitcoin makes such a good currency — it is difficult to reproduce, and has a limited supply, thus creating demand.

The more miners are mining — working together in what is known as a mining pool — the more difficult the math equation used to solve a block becomes.

Bitcoin is a decentralized currency (meaning it is not controlled by central authority), and is generated on a peer-to-peer network. The “bitcoin mining algorithm” determines how much and when new bitcoin is introduced. This is why bitcoin is known as a “controlled supply.”

Purchasing bitcoin is quite the easy task. There are a number of exchanges that allow you to use a credit card or bank transfers to convert your paper currency into bitcoin. In certain locations, there are even bitcoin ATMs, at which you can buy and sell bitcoin for cash.

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