Bitcoin, when used as a medium of exchange, rather than as an
investment vehicle, shows users many potential benefits. Part of
the appeal is that bitcoins cannot be created at will and the
supply of bitcoin, while large enough to function as a medium of
exchange, is still finite.
Bitcoins are effectively "created" by solving specific
mathematical puzzles using computer processing power. Over time,
remaining bitcoin puzzles take increasing amounts of computer power
to solve. Parties can independently "mine" for bitcoins
using their own computers, or as part of easy-to-join online
collectives in which each person's individual computer does
some of the work and receives part of the payoff or via rented
networks. As such, "mining" bitcoins comes with
associated real-world hardware and electrical costs, which also
helps to provide for at least a level of price stability.
