In essence, what Nakamoto did was create an open-source program designed to create units of a virtual currency if certain criteria are met, up to a maximum of around 21,000,000 Bitcoin units. This process of creating Bitcoins is known as “mining”. In order to mine Bitcoin, you initially needed 2 things only – an Internet connection so as to link to the Bitcoin network, and a computer. A block is mined by dedicating computing power towards solving a complex mathematical algorithm, which process is known as hashing. Whoever submits the correct answer first, or rather, the correct hash, successfully mines the block and is rewarded by a set amount of Bitcoins plus transaction fees (more on that later).
Initially, anyone could mine Bitcoin with a simple PC, but as more and more people started participating in the mining process, the difficulty increased dramatically and nowadays it is virtually impossible to solo-mine Bitcoin. Instead, people have grouped together and formed pools in order to mine Bitcoin and share the spoils on each block reward.
Bitcoin is a deflationary currency, and it is programmed to be completely and fully mined by 2140. After that, no more new Bitcoins will be issued.
Where are Bitcoins stored?
Contrary to popular belief, Bitcoins are not stored on your PC or on any other device through which you access your Bitcoins. Instead, Bitcoins are created and stored on the blockchain. These are then accessed thanks to your private key which is generated when you download and operate a Bitcoin wallet for the first time. It is different than the password which you can create to lock the wallet; the password is there to secure the wallet, whereas the private key is the lock protecting and allowing you access to your Bitcoins on the blockchain. This allows you to access your Bitcoins from any device, anywhere in the world, and at any time, as long as you have your private key handy.