Bitcoins come into existence through a process called mining. Mining is the competitive use of computational power to calculate a number that falls within a certain range. The valid number range is periodically adjusted by the Bitcoin network to make it more or less difficult to find the solution; the target rate is 1 solution every 10 minutes. The solution number itself must be cryptographically computed and verifiable based on the latest set of transactions and the last block of the blockchain. This makes the potential solutions to each competition different and unpredictable. The first miner to discover a number that meets the criteria is rewarded with a set amount of brand new bitcoins (currently 25 bitcoins), plus any recent transaction fees that have been paid by other people sending bitcoin on the network. The competition then repeats for the discovery of a new number. The rules of the Bitcoin software periodically adjust the difficulty of the competitions so that on average, 6 competitions are solved every hour. This has the effect of limiting how often and how easily bitcoins can be created: the more computers that mine bitcoins, the harder it becomes to win the competition and be rewarded with new bitcoins. Additionally, the amounts of bitcoins created per competition is cut in half every 210,000 competitions. It’s estimated that this amount will be halved to 12.5 bitcoins by the year 2016, and by 2140, the amount will go to zero, and no new bitcoins will ever be created again. This is how the creation of bitcoins is limited over time, with the maximum amount of bitcoins that can ever exist limited to 21 million. While mining is how new bitcoins are created, its primary purpose is the processing of new transactions by adding them to the blockchain. Mining is fundamental to securing and synchronizing the blockchain throughout the network, and the newly created bitcoins are essentially rewards for those people performing the mining process. tl;dr; Bitcoin mining is a competition to find a random number that meets a strict set of conditions. You get rewarded new bitcoins if you win the competition. This is how all bitcoins are created. The reward amount gets cut in half every few years and there can only ever be 21 million total bitcoins minted.