How are cryptocurrencies created – 2 main methods

Cryptocurrencies are created either through a process called mining or minting. Here are the key differences.


Mining involves using powerful computers to solve complex mathematical problems. These problems are designed to verify transactions and add them to the blockchain, which is a digital record of all past transactions.

The process of mining is an essential part of the cryptocurrency ecosystem, as it helps to secure the network and prevent fraud. Miners compete to be the first to solve the mathematical problems and are rewarded with a certain amount of the cryptocurrency for their efforts.

Cryptocurrencies that can be mined include Bitcoin and Litecoin.

How are cryptocurrencies created

For cryptocurrencies that can be mined, the process typically involves setting up a computer or network of computers with specialized software and hardware. These computers work to solve the mathematical problems and validate transactions, and when a solution is found, it is broadcast to the network for confirmation.

Once a transaction is confirmed and added to the blockchain, it cannot be altered or reversed. This helps to ensure the integrity and security of the network.

The process of mining requires a lot of computational power and electricity, which can be costly. As a result, many people join mining pools, which are groups of miners who work together to solve the problems and share the rewards.


Minting generates new crypto tokens either at the inception of the network or during transaction validation. Pre-minted cryptocurrencies, such as XRP or Stellar, had all their supply created at the start and no new tokens will be ever created.. The developers of pre-minted cryptocurrencies typically retain a large portion of the total supply, and the remaining coins are sold or distributed to the public.

Cryptocurrencies that use the proof of stake concept for validating transactions typically generate new tokens during that process as a reward for validators who stake their tokens to guarantee their honesty.

Cryptocurrencies that are minted include Ethereum.

It is important to note that the creation of cryptocurrencies is not without controversy. Some people have criticized the use of mining as it requires a lot of energy and can contribute to environmental issues. Additionally, the process of mining can be highly competitive and may not be accessible to everyone.

In conclusion, cryptocurrencies are created through mining, which involves using powerful computers to solve complex mathematical problems and validate transactions, or minting. The process of mining helps to secure the network and prevent fraud, but it can also be energy-intensive and may not be accessible to everyone. Pre-minted cryptocurrencies are created by their developers and are not mined in the same way as mined cryptocurrencies.


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