How Minting Coins Enriched Early Bitcoin Adopters and Keeps the System Fair

By | June 28, 2017

For the many people today who enjoy learning about and making use of digital technology, there are countless rewarding subjects into which to delve. Many, for example, find it satisfying to keep up with the latest developments on the smartphone front, always striving to stay abreast of what top designers like Apple and Samsung are doing. Others find software more interesting, looking into how technologies like machine learning and other ways of leveraging distributed computation are starting to change the world. Of subjects of the latter kind, many technology enthusiasts today consider cryptographic currencies like Bitcoin some of the most fascinating of all.

Bitcoin was launched over eight years ago now, and adoption has grown tremendously since. When it was first unleashed upon the wider world, the novel technology was something of a curiosity, with only a few subscribers to specialized mailing lists even understanding what purpose it was meant to serve. Those early pioneers kept plugging away at the computing activity that sustains the currency and makes it possible, though, and many of them earned fortunes in the process.

How exactly that happened often turns out to be difficult for some to understand. The most important thing to realize is that transactions made with Bitcoin are all registered in an official, distributed ledger. In order to prevent fraud and other underhanded forms of tampering, each group of transactions must be signed with a special piece of data that can only be discovered through some truly intensive computation.

As a result, creating illegitimate Bitcoin transactions would require so much effort that the would-be fraudster would probably need to possess a majority of the available computing power. In order to prevent that from happening, those who wish to use Bitcoin in upstanding, legitimate ways must be provided with incentives to participate, as well. These incentives are established in the form of newly minted Bitcoin awards given out to the first node that discovers the signature needed for each block on the ledger.

Minting Coins is, therefore, a built-in feature of the Bitcoin technology that helps to keep the system fair and free of fraud. The early adopters of Bitcoin who made so much money for themselves did so by receiving such rewards of their own at a time when there was little competition.