Certified Bitcoin Professional Practice Exam

When are new bitcoins added to circulation?

1. Every hour after transactions are confirmed

2. Every time a user withdraws from an exchange

3. Every time a block is mined

4. Only on weekends

The correct answer is: Every time a block is mined

New bitcoins are added to circulation every time a block is mined. This process occurs within the Bitcoin network, where miners compete to solve complex mathematical problems to validate transactions and create new blocks. Each time a miner successfully mines a new block, they are rewarded with newly created bitcoins, which are then added to the total supply in circulation. The reward for mining blocks is a crucial part of Bitcoin's monetary policy and is designed to control inflation and incentivize miners to secure the network by processing transactions. This reward decreases over time through a process known as halving, which occurs approximately every four years, further influencing the rate at which new bitcoins enter circulation. Other options do not align with how bitcoin circulation works. For example, transactions confirmed every hour or user withdrawals from an exchange do not result in the creation of new bitcoins. Additionally, there are no specific days, such as weekends, that dictate when new bitcoins can enter the market; the mining process operates continuously, depending on the computational efforts of miners.