How does PayPal / Visa / Mastercard / banks and other centralized transaction system?
When you send money to someone in one of these systems, in fact, no money do not travel anywhere, just PayPal / Visa / Mastercard / etc reduces the balance in your account, and increases the balance in that account to receive the money.
Thus, the money in these systems are nothing else than all the accounts and balances of those accounts belong to the list. Cash transaction is simply a modification of the list.
PayPal / Visa / Mastercard / etc systems, the list has only modifies the central control point. No one, except the central control point, do not know what is going on within the system.
How does Bitcoin and other decentralized transaction systems?
Bitcoin system, all accounts and balance sheets of copy of the list, updated in real-time to every Bitcoin user (this copy is called blockchain).
Each user in real-time monitors all ongoing transactions, equating them with your existing copy of the list. Transactions that are trying to issue non-existent (participants in the network, each copy of the list) money to be rejected (the majority of the network). Held considered the transaction, agreed by the vast network.
In that one man could create a million users and get a million votes used in proof-of-work system - votes in the number of granted not for the number of users, but also for user applications (Bitcoin network) computer resource amount the transaction approval process is called "mining" which performs user called "miner".
How does Bitcoin "mining" process?
Users administering their computer resources Bitcoin transactions confirm remunerated Bitcoin currency units (BTC), relative to the percentage of total power Bitcoin network consists of those users designated computer resource capacity.
This is the only way in which BTC can occur if they did not exist before. In this way, the circulation of new BTC.
The newly issued BTC being fixed depending on time and not on the total amount of Bitcoin network resources. Thus, no matter how much to increase or decrease the power of Bitcoin network resources - the new issue of BTC since no change.
The newly issued BTC amount managed at any central point, and the same open-source program, it is for all users.
The newly issued BTC decreases by half every 4 years. Bitcoin infancy 2009-01-03 BTC it was 50 in 10 minutes, at the moment is 25 BTC in 10 minutes. In this way, the maximum possible BTC being fixed, and approaching, but never exceeded 21 million BTC.
Each Bitcoin user can choose to be sent to your transaction to add transaction fee, which goes to Bitcoin Miner. Release most likely to exist in the BTC, the main Miner source of earnings is not a newly released BTC, but the transaction fees.