Coinbase Transaction

BlockworksJul 16, 2019 ⋅ 1 min read

Written by Max Hinchman

Introduction

The coinbase reward is the block reward a miner receives for submitting a block that was validated by the network. This bitcoin is created through protocol level inflation to provide economic incentive for miners to expend energy to validate transactions. These rewards are given out approximately every 10 minutes, as the difficulty level adjusts when changes to hash power cause the time to solve a block to deviate.

The coinbase reward started at 50 BTC when the bitcoin network first started but the reward is halved every 210,000 blocks (~4 years). The halving mechanism was designed by Satoshi Nakamoto as a way of protecting the currency from inflation as it is distributed to the market. Current miners receive 12.5 bitcoin each time they successfully mine a block. When the next halving occurs sometime in May of 2020, miners will receive a 6.25 bitcoin coinbase reward. There will be 21,000,000 total bitcoin issued on the network so it is estimated that the last block will be mined in 2140.

Suggested Reading

What is a Coinbase Transaction? by Jerome Morrow

Coinbase Transaction Explained by Bisade Asolo

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Outline
  • Introduction
  • Suggested Reading