Where do bitcoins come from to start?

I know you can mine bitcoins by solving a problem. But when you solve the problem who or what group is giving you the bitcoin? It has to come from someone or some group.

I think I wrote something about bitcoins before. In such a transaction, nobody “gives” them to you. They are just generated. This mechanism creates an initial supply of coins that are randomly distributed to nodes participating in the network. At least that is the intention, according to the paper.

ETA after enough coins are generated, you don’t get “new” coins, you get coins from the people who pay to have their transactions processed. NB this is all analogy, the point is it’s all transactions and there are no actual (even digital) discrete coins; after every transaction some balances come in from certain addresses and others go out to different addresses.

Who “generates” the bitcoin?

EDIT: already answered.

The software generates them.

NB this differs from Magic Money/Digicash schemes where there are denominated digital coins.

I’m way oversimplifying things here but there are a bunch of computers all trying to solve the same very hard computational problem at once. Whichever manages to solve it first gains the cryptographic key that proves they solved it. That key IS effectively the bitcoin. Now that the problem has been solved, the system adds a new bitcoin to the ledger and the solver is the only one who has the secret key to tell the ledger where to send the bitcoin.

The only thing generated is a ledger entry saying that so and so owns a bitcoin.

When you think about it, most dollars are just a ledger entry somewhere saying that so and so owns a dollar.

good article

The process of mining is generating entries in the ledger that show where bitcoins were transferred, according to the rules of the bitcoin software. An entry is called a “block” and contains a list of transactions.

One of the rules is that each block contains one transaction with no source account to an account of your choice. This is called the “block reward”, and it’s currently worth 12.5 bitcoins.

when bitcoin started the guy who was the founder/programmer created all the bitcoins ? If not him/her than who did it?

Pretty much. The first million or so bitcoins were mostly (all?) mined by the mysterious founder.

The founder created all of the original coins. Most coins since then (i.e., most coins, period) have been created by others.

the reason they have value is because people want to buy them with dollars?

Why do dollars have value? Because people are willing to accept them in exchange for goods. The same is true for Bitcoin.

I agree with that. But I feel that with Bitcoin there’s also a strong element of ‘If I get them now, I can sell them for a greater value later’. If you gave me a bunch of dollars, that element isn’t there. I might exchange some of the dollars for goods and services. I would put some in my bank account. I would not think ‘I can sell these to some shlub for more than they cost me’

You can make an analogy with a non-mathematical problem. Suppose the definition of “bugcoin” is any insect found in Central Park, squashed and taped to a plastic casino chip. But only one coin is allowed for each species of insect, and it is created and initially owned by the first person to find that species, tape it to a chip and announce that they have done so.

A lot of bugcoin gets created in the first few days, but it gets harder and harder to make new bugcoin because you must search for rarer species that nobody has found yet and identify them accurately.

(I’m starting to regret this analogy because squashing rare bugs is not good.)

This isn’t a good analogy. At least for bitcoin. The mathematical problems really are arbitrary and they can adjust the difficulty of solving them.

The “solved problem” and the bitcoin are one and the same. It’s not that you solve a problem and someone gives you bitcoins for it. It’s that Bitcoin itself is just an agreement amongst all participants to consider solutions to a certain kind of math problem as a unit of currency that can be exchanged.

The clever thing about Bitcoin is that the math problem being solved requires some calculations over the ledger of Bitcoin transactions - and so demonstrating that you’ve solved the problem implicitly requires maintaining the Bitcoin transaction record. The sequence of solutions to these math problems is the “blockchain” - each “block” being a set of bitcoin transactions and the proof of solution associated with them.

The Bitcoin software basically says that anyone who creates a new block can include a transaction in that block crediting them with a certain number of Bitcoins, and subsequent people who come along will consider that a valid transaction to include in their own ledger when they try to solve the math problem.

It’s a good analogy in terms of how they have been running though, isn’t it? Even if they could have run it differently?

Who is “they” in your last sentence?

A dollar is backed up by the United States government. They have a lot of tangible assets.

A bitcoin is essentially an unsigned IOU you found on the sidewalk. It has less inherent worth than a tulip and we all know how well that worked out.