Rewarding bitcoin miners

Rewarding bitcoin miners

With many numbers of purchases and sales as high as 300,000 occurring in a single day, hence verifying each of them can be a tough task and a lot of work for the miners. As compensation for all of their efforts, miners are rewarded with bitcoins whenever they add a new block of transactions to the blockchain through bitcoin mining.

The total amount of the new blocks that were released with each mined block is known as ‘block reward’. The block reward is then halved each and every 210,000 blocks (that is roughly after every 4 years). It was 50 in 2009. It was 25 in 2013, in 2018 it was 12.5, and then in May 2020, it was halved to 6.25.

blockchain through bitcoin mining

This kind of system will continue till 2140. At that time, miners will be awarded certain fees for processing the transactions that network users will play. Thus, these fees will ensure that the miners still have some of the incentive to mine and keep up the network going on. The idea is that the competition for these types of fees will make them remain low as soon as the halvings are finished.

These type of halvings further reduce the rate at which new bitcoins are made or created and thus it also lower downs the available supply. This further can cause some of the implications for the investors as other types of assets with low supply such as gold can have high demands and also push prices will be higher. At this particular rate of halving, the number of bitcoins that are in circulation will reach up to a limit of 21 million, thus making the currency fully finite and also potentially more valuable with passing time.