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[–] TheBuddha [S] 1 point 4 points (+5|-1) ago 

Mining is what they are doing for proof of work. Mining is how new coins are generated.

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[–] Halstan 1 point -1 points (+0|-1) ago 

Proof of work? I thought there were a set number of coins? Man, this is a whole other world.

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[–] TheBuddha [S] 0 points 4 points (+4|-0) ago 

There is a finite number of coins. Not all of them are available, as they haven't been mined yet.

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[–] lkjdfglkjdfgjk 0 points 2 points (+2|-0) ago  (edited ago)

All cryptocoins are decentralized systems and need a way to solve "the double spend problem". That is when you try to send money to Bobs wallet. It either succeeds or fails, and the whole world need to agree to if the transaction goes through or not. Otherwise everything breaks down as in the same money can be in many wallets at once, and nobody can agree where anything is.

Bitcoin and most other cryptocoins solve this by something called mining or "proof of work". It basically means the person who is prepared to burn the most electricity gets to decide if that transaction goes through.

Its super wasteful. Billions of dollars of electricity wasted on something that can be solved for free. The most elegant solution is the consensus protocol. That means that the people/institutions you trust get to decide what goes through. That costs nothing.

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[–] ADaniels 0 points 1 point (+1|-0) ago 

Verifying transactions, which they are rewarded coin for, it’s how you have an incentive for getting a strong backbone of processing power to protect your decentralized network since you can’t have any central servers or it would comprimise the security.