Mining is the process by which new bitcoin is added to the money supply. Mining also serves to secure the bitcoin system against fraudulent transactions or transactions spending the same amount of bitcoin more than once, known as a double-spend. Miners provide processing power to the bitcoin network in exchange for the opportunity to be rewarded bitcoin. Miners validate new transactions and recording them on the global ledger. A new block, containing transactions that occurred since the last block, is "mined" every 10 minutes, thereby adding those transactions to the blockchain. Transactions that become part of a block and added to the blockchain are considered "confirmed", which allows the new owners of bitcoin to spend the bitcoin they received in those transactions. Miners receive two types of reward for mining: new coins created with each new block and transaction fees from all the transactions included in the block. To earn this reward, the miners compete to solve a difficult mathematical problem based on a cryptographic hash algorithm. The solution to the problem, called the Proof-of-Work, is included in the new block and acts as proof that the miner expended significant computing effort. The competition to solve the Proof-of-Work algorithm to earn reward and the right to record transactions on the blockchain is the basis for bitcoin's security model.
Mining is the process by which new bitcoin is added to the money supply. Mining also serves to secure the bitcoin system against fraudulent transactions or transactions spending the same amount of bitcoin more than once, known as a double-spend. Miners provide processing power to the bitcoin network in exchange for the opportunity to be rewarded bitcoin. Miners validate new transactions and record them on the global ledger. A new block, containing transactions that occurred since the last block, is "mined" every 10 minutes, thereby adding those transactions to the blockchain. Transactions that become part of a block and added to the blockchain are considered "confirmed", which allows the new owners of bitcoin to spend the bitcoin they received in those transactions. Miners receive two types of reward for mining: new coins created with each new block and transaction fees from all the transactions included in the block. To earn this reward, the miners compete to solve a difficult mathematical problem based on a cryptographic hash algorithm. The solution to the problem, called the Proof-of-Work, is included in the new block and acts as proof that the miner expended significant computing effort. The competition to solve the Proof-of-Work algorithm to earn reward and the right to record transactions on the blockchain is the basis for bitcoin's security model.
The process of new coin generation is called mining, because the reward is designed to simulate diminishing returns, just like mining for precious metals. Bitcoin's money supply is created through mining, similar to how a central bank issues new money by printing bank notes. The amount of newly created bitcoin a miner can add to a block decreases approximately every four years (or precisely every 210,000 blocks). It started at 50 bitcoin per block in January of 2009 and halved to 25 bitcoin per block in November of 2012. It will halve again to 12.5 bitcoin per block sometime in 2016. Based on this formula, bitcoin mining rewards decrease exponentially until approximately the year 2140 when all bitcoin (20.99999998 million) will have been issued. After 2140, no new bitcoins are issued.
The process of new coin generation is called mining, because the reward is designed to simulate diminishing returns, just like mining for precious metals. Bitcoin's money supply is created through mining, similar to how a central bank issues new money by printing bank notes. The amount of newly created bitcoin a miner can add to a block decreases approximately every four years (or precisely every 210,000 blocks). It started at 50 bitcoin per block in January of 2009 and halved to 25 bitcoin per block in November of 2012. It will halve again to 12.5 bitcoin per block sometime in 2016. Based on this formula, bitcoin mining rewards decrease exponentially until approximately the year 2140 when all bitcoin (20.99999998 million) will have been issued. After 2140, no new bitcoins will be issued.
Bitcoin miners also earn fees from transactions. Every transaction may include a transaction fee, in the form of a surplus of bitcoin between the transaction's inputs and outputs. The winning bitcoin miner gets to "keep the change" on the transactions included in the winning block. Today the fees represent 0.5% or less of a bitcoin miner's income, the vast majority coming from the newly minted bitcoins. However, as the reward decreases over time and the number of transactions per block increases, a greater proportion of bitcoin mining earnings will come from fees. After 2140 all bitcoin miner earnings will be in the form of transaction fees.
@ -68,10 +68,10 @@ Each node verifies every transaction against a long checklist of criteria:
* nLockTime is less than or equal to INT_MAX
* The transaction size in bytes is greater than or equal to 100
* The number of signature operations contained in the transaction is less than the signature operation limit
* Unlocking script (scriptSig) only push numbers on the stack, and the locking script (scriptPubkey) must match isStandard forms (this rejects "nonstandard" transactions)
* The unlocking script (scriptSig) can only push numbers on the stack, and the locking script (scriptPubkey) must match isStandard forms (this rejects "nonstandard" transactions)
* A matching transaction in the pool, or in a block in the main branch, must exist
* For each input, if the referenced output exists in any other transaction in the pool, reject this transaction
* For each input, look in the main branch and the transaction pool to find the referenced output transaction. If the output transaction is missing for any input, this will be an orphan transaction. Add to the orphan transactions, if a matching transaction is not already in the pool
* For each input, look in the main branch and the transaction pool to find the referenced output transaction. If the output transaction is missing for any input, this will be an orphan transaction. Add to the orphan transactions pool, if a matching transaction is not already in the pool
* For each input, if the referenced output transaction is a coinbase output, it must have at least COINBASE_MATURITY (100) confirmations
* For each input, the referenced output must exist and cannot already be spent
* Using the referenced output transactions to get input values, check that each input value, as well as the sum, are in the allowed range of values (less than 21m coins, more than 0)
Minh T. Nguyen
10 years ago