Mining is the process that cryptocurrencies, such as Bitcoin, use to generate new coins and verify blockchain transactions. In return for their computational effort, miners are rewarded with new coins. These coins serve as an incentive for miners to act honestly and only record true transactions, further maintaining the security of the blockchain.
In a central banking system, fiat currency is created and distributed by central banks and financial institutions. But for a decentralised asset like cryptocurrencies, the issuance of new coins is done through ‘mining’, which involves following a predefined set of rules established by the underlying consensus mechanism protocol.
Learn more about Bitcoin mining.