Block Reward is a financial incentive given to miners for successfully verifying and adding a new block of transaction-hash to the blockchain.

How It Works

In blockchains that use a mining process (like Bitcoin), a miner is a person or entity that uses a powerful computer to solve a complex mathematical puzzle. The first miner to solve the puzzle gets the right to add the next block of transactions to the blockchain.

As a reward for their work, the miner receives a block subsidy, which is a fixed amount of newly created cryptocurrency, plus any transaction fees included in the block. This incentive is crucial because it motivates miners to secure the network and ensures that new cryptocurrency enters the supply in a predictable way. The block reward for Bitcoin, for example, is cut in half approximately every four years in an event known as halving, which makes the cryptocurrency scarcer over time.

Why It Matters

The block reward is the lifeblood of a Proof-of-Work blockchain. It provides the economic incentive for miners to invest in the hardware and energy needed to maintain the network. Without the reward, no one would be motivated to perform the work of verifying transactions, and the blockchain would not be able to function. It is a fundamental mechanism for security and supply issuance.