The block reward serves as the main incentive for miners to secure the network and validate transactions.
Every time a miner or a mining pool successfully adds a new block to the blockchain, they receive a set number of bitcoins as a reward.
This process is what introduces new bitcoins into circulation.
In essence, the block reward compensates miners for their efforts in maintaining and operating the Bitcoin network.
Mining requires significant computational power and electricity. The block reward ensures that miners are financially motivated to continue their operations, providing security to the network.
The block reward has several critical roles in the Bitcoin ecosystem:
Approximately every four years, the block reward is cut in half in an event known as “Halving”.
This mechanism ensures that the total supply of bitcoins will never exceed 21 million.
There have been three halvings:
One in 2012, another in 2016, and the latest in 2020.
As the block reward continues to halve, there will come a time when the reward becomes negligible.
When the block reward becomes too small, miners will rely more on transaction fees as an incentive to validate transactions.
There’s an ongoing debate about how the reduction in block reward might impact the security of the Bitcoin network in the long term. However, it remains to be seen.
BuyBitcoinWorldWide writers are subject-matter experts and base their articles on firsthand information, like interviews with experts, white papers or original studies and experience. We also use trusted research and studies from other well-known sources. You can learn more about our editorial guidelines.
Disclaimer: Buy Bitcoin Worldwide is not offering, promoting, or encouraging the purchase, sale, or trade of any security or commodity. Buy Bitcoin Worldwide is for educational purposes only. Every visitor to Buy Bitcoin Worldwide should consult a professional financial advisor before engaging in such practices. Buy Bitcoin Worldwide, nor any of its owners, employees or agents, are licensed broker-dealers, investment advisors, or hold any relevant distinction or title with respect to investing. Buy Bitcoin Worldwide does not promote, facilitate or engage in futures, options contracts or any other form of derivatives trading.
Buy Bitcoin Worldwide does not offer legal advice. Any such advice should be sought independently of visiting Buy Bitcoin Worldwide. Only a legal professional can offer legal advice and Buy Bitcoin Worldwide offers no such advice with respect to the contents of its website.
Buy Bitcoin Worldwide receives compensation with respect to its referrals for out-bound crypto exchanges and crypto wallet websites.
Wallabit Media LLC and/or its owner/writers own Bitcoin.
Registered Address: 530-B Harkle Road Ste 100 Santa Fe, NM 87505