How is cryptocurrency created and distributed?

1. A new cryptocurrency is created through a process called mining, which involves numerous computers solving mathematical algorithms in order to create new blocks of digital data.

2. The blocks of data form a blockchain, which is a distributed ledger of all transactions that have occurred since the currency’s inception.

3. Once a block is mined, all computer users on the network (called miners) are notified and rewarded with a pre-determined amount of newly created cryptocurrency.

4. Miners then confirm the transactions within the block before it is added to the blockchain and can receive additional rewards based on their participation.

5. As more and more blocks are mined, new tokens of the cryptocurrency are released and distributed to the miners who helped to create them.

6. The total amount of these tokens is predetermined by the developers and cannot be changed without hard forks, or changes in the consensus protocol.

7. Over time, the supply of the cryptocurrency decreases as some coins are lost and others are destroyed, resulting in a deflationary nature of the currency.

8. Finally, new tokens are made available for purchase on the open market. Cryptocurrencies can also be traded for other forms of money or goods and services.