Block rewards are the core economic incentive that motivates miners or validators to spend computing power or stake capital securing a network. On proof-of-work blockchains, the reward goes to the miner who solves the block first; on proof-of-stake blockchains, it goes to the validator selected to propose or confirm the block. The reward is usually made up of two parts: newly created coins, which increase the total circulating supply, and the transaction fees paid by users whose transactions were included in that block. This structure ties network security directly to the issuance of new currency.
Not every network keeps its block reward constant. Bitcoin, for example, cuts the newly issued portion of its block reward in half roughly every four years, an event known as the halving, which occurs every 210,000 blocks as part of its fixed 21 million coin supply cap. As issuance gradually shrinks over time on networks with a capped supply, transaction fees are expected to make up a larger share of the total reward, and eventually become the primary incentive once new issuance approaches zero. Other networks structure their issuance schedules differently, so it's worth checking a specific blockchain's own rules rather than assuming they all work the same way.
Key takeaways
- A block reward pays the miner or validator who successfully adds a new block, combining newly issued coins with collected fees.
- It is the core incentive that motivates participants to spend resources securing a blockchain network.
- On Bitcoin, the newly issued portion of the block reward halves roughly every four years, as part of its fixed 21 million coin supply schedule.
Block Reward — frequently asked questions
Who receives the block reward?
The miner, on proof-of-work networks, or the validator, on proof-of-stake networks, that successfully produces the next valid block receives the reward, as defined by that network's own specific consensus rules and requirements.
Will block rewards eventually run out?
On networks with a fixed maximum supply, like Bitcoin, the newly issued portion of the reward shrinks over time and approaches zero, after which transaction fees are expected to become the main incentive for securing the network.
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