In a blockchain, a block reward is an amount of cryptocurrency rewarded to miners when they successfully validate a new block. For different coins, their block reward is not the same. It is the main part of revenue for miners and a common way of issuance for some cryptocurrencies.
1.In a blockchain network, the rewarded cryptocurrency can be circulated as a token.
2.The first miner who validates a new block can be rewarded, which represents the decentralized issuance of cryptocurrency.
3.The block reward is based on consensus mechanisms and its amount is not subject to fluctuation in the price of the cryptocurrency. However, to prevent hyperinflation, halving will occur in the block reward of some coins.
The Amount of Block Reward
The amount of block reward is not fixed although it is not subject to fluctuations in the price of the cryptocurrency. Once all the coins have been issued, the block reward of a cryptocurrency will be zero as the reward is related to its total supply in most cases. For certain coins, their block reward will be halved, to prevent hyperinflation. For instance, Bitcoin halving occurs every four years.
The Unsuitability of Fiat Currency as Block Reward
It is difficult to reach an agreement to use specific fiat currency as a block reward since miners are from different countries. For some miners, their main goal is to get cryptocurrencies through mining, instead of fiat currencies. Moreover, fiat currency is centrally-controlled, which is opposite to cryptocurrency. All these facts make fiat currency unsuitable for being a block reward in terms of its circulation and issuance.
The Block Reward of Bitcoin
When Bitcoin was launched in 2009, its block reward was 50 coins with a block being generated every 10 minutes. However, its total supply, which is 21 million coins, equals the total amount of coins rewarded to miners since block reward is the only way to issue bitcoin. To hold its value, the block reward of Bitcoin will be halved after every 210,000 blocks, which is a mechanism of the Bitcoin network. Thus, in the past 11 years, its block reward has been cut from 50 to 25 coins. The current block reward is 12.5 Bitcoins after the second halving in 2016. That’s why Bitcoin is so unique and different from traditional money.
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