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Old 05-16-2011, 06:46 PM   #14
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Join Date: Apr 2002
Chapter/Region: MWSOC
Location: Chicago

grain of wiki salt...

Generating bitcoins

The Bitcoin network creates and distributes a batch of new bitcoins approximately six times per hour at random to somebody running the software with the "generate coins" option selected. Any user can potentially receive a batch by running it, or an equivalent program specialized for the equipment the user owns. Generating bitcoins is often referred to as "mining", a term analogous to gold mining.[4] The probability that a given user will receive a batch depends on the computing power he contributes to the network relative to the computing power of all nodes combined.[22] The amount of bitcoins created per batch is never more than 50 BTC (plus transaction fees), and the awards are programmed to decrease over time down to zero, such that no more than 21 million will ever exist.[15] As this payout decreases, the motive for users to run block-generating nodes is expected to change to earning transaction fees.

All generating nodes of the network are competing to be the first to find a solution to a cryptographic problem about their candidate-block, a problem that requires repetitious trial and error. When a node finds such a valid solution, it announces it to the rest of the network and claims a new batch of bitcoins. Peers receiving the new solved-block validate it before accepting it, adding it to the chain. Nodes can employ their CPUs using the standard client or use other software to take advantage of their GPUs.[15][23][24] Users can also generate bitcoins collectively.[25]

So that one block gets generated every ten minutes, each node separately readjusts the difficulty of the problem it tries to solve every two weeks according to any changes of the collective CPU-power of the peer-to-peer network.[citation needed]
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