What is a Block Reward?
In the current banking system, it is the responsibility of banks to supervise transactions. Network nodes blockchain. There are always people in the blockchain to confirm the transactions made. This confirmation of the transaction completes the blockchain. These people receive a reward for this activity called a Block Reward.
The Bitcoin network and the like, based on proof of work, are awarded to miners. In proof-of-stock networks, such as Tzos, these rewards go to buyers. Increasing network security in Tezos depends on increasing the purchase of Tezos currency by users.
In cryptocurrencies, transaction verification is done in different ways, and we will get acquainted with some of these methods in the following.
Block rewards in proof-of-work digital currencies
Users active in evidence-based networks must provide part of their extraction power to the network to earn money. This hardware power is used to solve mathematical equations. Ensuring network security is the most important reason for using this mechanism. Due to the diversity of miners and their processing power, if someone intends to attack the network, he has to have more processing power than all the miners, which is not cost-effective.
This blockchain method is used in cryptocurrencies such as Bitcoin, Ethereum, Monroe and BitcoinCash, and many other currencies.
Bitcoin has become the king of cryptocurrencies. Hence, let’s look at block rewards in the Bitcoin blockchain. Of course, this trend in the Chinese blockchain is similar to that of most bitcoin-based digital currencies.
Block rewards in blockchain bitcoin
Currently, the block reward on the Bitcoin network is 6.25 bitcoins. On average, every 10 minutes, a block is completed, and the block reward is awarded to the miner who succeeds in creating the block. Under Having, this bonus is halved every four years. Therefore, the block reward at the beginning of bitcoin was 50 bitcoins.
Thus, bitcoin mining will continue until 2140.
Impact of block rewards on the future of bitcoin
Block rewards in the Bitcoin network are especially important for three reasons.
Encourage miners to extract
As the number of extractors increases, the hardness of the network increases. On the other hand, the cost of bitcoin mining is increasing every day. However, users’ desire to receive block rewards keeps them active on the network.
Provide network security
Users give their extraction power to the network in the hope of receiving a block reward. As we explained, miners’ sharing of mining power will help ensure network security.
Use all extractable coins.
The third thing that can be said about the importance of block rewards is using the maximum capacity of the extracted coins. Nakamoto has designed the bitcoin network to only 21 million coins can be mined. All 21 million extractable bitcoins will enter the cycle by giving Block Reward to miners.
Permanent rewards with extraction pools
As we have said, the complexity of the Bitcoin network is increasing every day. With the increasing difficulty of the network due to the increase in miners, it is certainly not cheap to use a miner; Because despite the many competitors, you will not be able to complete the block for years after 2140.
This is where connecting to an extraction pool can lead you to receive a block reward.
The extraction pool is a virtual place where small miners try to create new blocks by sharing their extraction power. After creating a new block, each user will share the block reward depending on their extraction power.
Block rewards in stock-based digital currencies
In the stock proof mechanism, the block verification method is slightly different. You do not need to buy extraction equipment to participate in this mechanism. To receive the block reward, entrants must purchase the token or digital currency of their choice. In other words, each person becomes a shareholder of that currency by buying the desired currency. The network also allows a user to validate the network at regular intervals. It is clear that the more shares of individuals, the more rewards they will receive.
What is it like to provide security in stock-based currencies?
You may be wondering what network security would be like in a stock-proof mechanism? To answer this question, one must first identify the threats surrounding these currencies.
To attack a network of such currencies, a person must acquire at least 50% of the units of a currency. Assuming the attacker finances the attack, the attacker himself is the first person to suffer a loss. The reason for this is the sharp drop in the price of the currency in question after the attack.
Digital currencies such as Tzos, Cardano, Stellar, and BinanceQueen are among the currencies that use this method to block authentication.
You may be interested to know that Ethereum, which has been working with the certificate-proof mechanism for many years, also intends to use the stock-proof certificate in its new update.
The difference between rewards and fees in extracting digital currencies
In most cases, when sending a card-to-card process, in addition to the deposit amount, the sender must also pay the transaction fee. In the world of cryptocurrencies, a transaction fee is a fee that is charged by the parties to a transaction during cryptocurrency transactions and paid to the blocker.
That’s why when you buy bitcoins from an online exchange, the amount you receive is less than the amount you buy.
These fees vary according to the amount of network congestion and the speed of the transaction. This is while the block reward will be the same for four years.
Concluding remarks
There are two ways to allocate block rewards in blockchain networks. Block rewards in work-based networks are based on extraction power, and stock-based networks are based on the number of shares.
Which is the best way to secure the network and encourage users to work in the blockchain network. But certainly, each of these methods has its advantages and disadvantages that should not be overlooked.
