Block Reward

Block reward is the incentive that cryptocurrency miners receive for successfully validating and adding a new block to a blockchain. It typically consists of two parts: newly minted (or mined) coins and the transaction fees from all transactions included in the block.

How Block Rewards Work

When miners verify transactions and solve complex cryptographic puzzles, they help maintain the blockchain network’s integrity and security. In return, the blockchain protocol automatically grants them a reward. For Bitcoin, the reward amount decreases over time due to a programmed event called “halving,” which happens roughly every four years, reducing the number of new bitcoins entering circulation.

Why Block Rewards Drive Crypto Networks

Block rewards are crucial because they motivate individuals and organizations to commit their resources—like electricity, computing power, and time—to keep decentralized networks operational. Without block rewards, fewer miners would participate, which could compromise a network’s security and functionality.

A Fundamental Part of Blockchain Sustainability

The concept of block rewards ensures that blockchain networks can operate without a central authority by incentivizing users to verify transactions honestly. As block rewards decrease over time, many networks expect transaction fees to eventually sustain miner participation.