Why are coinbase transaction outputs greater than reward?

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This is then added to the block reward – which halves every 210,000 blocks or roughly every four years – in 2015 the reward will be 25 Bitcoins and will reduce by 50% to 12.5 Bitcoins per block in 2017. The maximum number of halving allowed in the bitcon protocol is 64 – this limit where only transaction will make up the block reward is expected to be reached in the year 2139.

The miner then creates the coinbase transaction to award himself the reward. This takes on a special format as shown below:

The transaction hash is special alongside the output index where all the bits are set to o and 1 respectively. The coinbase data size is the size of the next field or the coinbase data field.

The coinbase data field can contain information such as the extra nonce, merged mining information and a list of the addresses of the mining pool where the funds are to be sent. The sequence number – all bits are set to 1.


Once a block has been mined...

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Actually, yes.
Transactions sent on the networks are broadcast across the network instantly. This is why when someone sends you a Bitcoin payment to your Coinbase account, you can see it show up as "pending" right away. Other wallets and some Bitcoin clients can accept these 0 confirmation transactions.

The Coinbase wallet will wait until a transaction has 3 confirmations before marking it as "complete." Other wallets and services will wait for more or less confirmations. There is no arbitrary amount that Bitcoin says you have to follow. But the general rule is: the more confirmations a transaction has, the "safer" it is to accept it. I'm going to go way off on a tangent and get a bit technical, but here's one reason why:

Orphans

Miners (and probably more specifically, mining pools) are the entities in Bitcoin that submit blocks and confirm the transactions. But what happens if two miners submit a block at the same time? This happens more than you...

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The Bitcoin network is made up of people who send transactions and miners--people who process and confirm the transactions. Miners spend their time and resources to build extremely advanced computing power to process transactions. They get to keep the transaction fees from the transactions they confirm on the network. If a transaction is sent with a very small or no fee, it is not worth their time to process it, so it can get skipped. The transaction can be skipped over and over again until some miner finally confirms it. This can take hours.

Transactions sent to your Coinbase account Bitcoin addresses will need 3 confirmations before being marked as "complete" and available in your account balance. On average, each confirmation takes about 10 minutes. To check and see how many confirmations a transaction has, you can look up the transaction in your Coinbase account by clicking on it. You will then see its status.

You can also view the status on any bitcoin...

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All transactions on the bitcoin network are not created equally. A coinbase transaction is a unique type of bitcoin transaction that can only be created by a miner. This type of transaction has no inputs, and there is one created with each new block that is mined on the network. In other words, this is the transaction that rewards a miner with the block reward for their work. Any transaction fees collected by the miner are also sent in this transaction.

The First Transaction in a New Block

The coinbase transaction is, in most cases, the first transaction in a new block. The recipient of the coinbase transaction can choose to have the block reward, and transaction fees sent to one bitcoin address, or the bitcoins can be sent to a multitude of different addresses. In this sense, it’s just like any other transaction on the network.

The First Coinbase Transaction Cannot Be Spent

An interesting sidenote on this topic is that the first coinbase transaction...

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Why does Bitcoin have “Miners?”

Gold has miners because people want gold and it just so happens, unfortunately, that most gold is deep in the earth. Bitcoin has miners because people want bitcoins, but something here seems silly: how did a bunch of bitcoins, the tokens of a man made invention, end up locked up in circumstances demanding mining? What’s the point of that?

Not the Best Name

The truth is, bitcoin “mining” is a misnomer. When gold is mined, nothing is achieved beyond the discovery of new gold. When bitcoins are mined, however, a valuable service is provided to the Bitcoin network: decentralized transaction recordation and validation.

Double Spending

Bitcoin relies on miners to record and validate transactions because of a particular problem inherent in any system of digital currency: double spending. Double spending is the high-tech incarnation of counterfeiting. Say, for example, that a currency user, Alice, has a $5 note and she...

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Transaction

(Mastering Bitcoin) Transactions are the most important part of the bitcoin system. Everything else in bitcoin is designed to ensure that transactions can be created, propagated on the network, validated, and finally added to the global ledger of transactions (the blockchain). Transactions are data structures that encode the transfer of value between participants in the bitcoin system. Each transaction is a public entry in bitcoin’s blockchain, the global double-entry bookkeeping ledger.

A transaction may have no recipient, or it may have several. The same can be said for senders! On the Blockchain, the sender and recipient are always abstracted with a ScriptPubKey, as we demonstrated in previous chapters.

If you use Bitcoin Core your Transactions tab will show the transaction, like this:

For now we are interested in the Transaction ID. In this case, it is f13dc48fb035bbf0a6e989a26b3ecb57b84f85e0836e777d6edf60d87a4a2d94

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Bitcoin is the currency of the Internet: a distributed, worldwide, decentralized digital money. Unlike traditional currencies such as dollars, bitcoins are issued and managed without any central authority whatsoever: there is no government, company, or bank in charge of Bitcoin. As such, it is more resistant to wild inflation and corrupt banks. With Bitcoin, you can be your own bank.

If you are new to Bitcoin, check out We Use Coins and Bitcoin.org. You can also explore the Bitcoin Wiki:

How to buy bitcoins worldwide
Buying Reddit Gold with bitcoin

Will I earn money by mining bitcoin?

Security guide for beginners - (WIP)

Community guidelines

Do not use URL shortening services: always submit the real link. Begging/asking for bitcoins is absolutely not allowed, no matter how badly you need the bitcoins. Only requests for donations to large, recognized charities are allowed, and only if there is good reason to believe that the person...
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First let us understand Bitcoin mining process. I will keep it simple and exact technological in depth knowledge is not covered in detail because that might confuse you.

Mining, as the world understands is a process involving sophisticated equipments and digging across the ground which is supposed to contain ore of gold (OR iron for that matter).

Bitcoin mining is similar to this. No, you do not have to dig the ground literally. It involves equipment like ASIC (Application Specific Integrated Circuits). You are taking the transactions and verifying it. Each transactions is collectively called a block and several blocks taken together is 1 blockchain. With every 10 minutes, each blockchain is governed by a hash code which is verified by the network. There are miner pools which are responsible for giving the reward. Examples include: http://BW.com; Crypto & Bitcoin Mining Pool #1; AntPool

This is where the reward comes into play. The reward is governed by 2...

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A transaction is a transfer of Bitcoin value that is broadcast to the network and collected into blocks. A transaction typically references previous transaction outputs as new transaction inputs and dedicates all input Bitcoin values to new outputs. Transactions are not encrypted, so it is possible to browse and view every transaction ever collected into a block.

Standard transaction outputs nominate addresses, and the redemption of any future inputs requires a relevant signature.

All transactions are visible in the block chain, and can be viewed with a hex editor. A block chain browser is a site where every transaction included within the block chain can be viewed in human-readable terms. This is useful for seeing the technical details of transactions in action and for verifying payments.

general format of a Bitcoin transaction (inside a block)

Principle example of a Bitcoin transaction with 1 input and 1 output only

Data

Input: Previous...
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This article explains Bitcoin mining in details, right down to the hex data and network traffic. If you've ever wondered what really happens in Bitcoin mining, you've come to the right place. My previous article,

Bitcoins the hard way

described how I manually created a Bitcoin transaction and sent it into the system. In this article, I show what happens next: how a transaction gets mined into a block.

The purpose of mining

Bitcoin mining is often thought of as the way to create new bitcoins. But that's really just a secondary purpose. The primary importance of mining is to ensure that all participants have a consistent view of the Bitcoin data. Because Bitcoin is a distributed peer-to-peer system, there is no central database that keeps track of who owns bitcoins. Instead, the log of all transactions is distributed across the network.

The main problem with a distributed transaction log is how to avoid inconsistencies that could allow someone to spend...

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(Editor’s note: This is a four post series on Bitcoin, which will cover the virtual currency’s protocol and ecosystem as well as where Europe stands in terms of Bitcoin innovation, research and opportunities. This first post sheds light on how Bitcoin works and its underlying technology.)

Many are saying Bitcoin is the new black. But how many people really understand what the digital currency means for the future?

I’m tired of reading post after post on the economic ramifications of Bitcoin; on how this new virtual currency is unsafe for trading due to its volatile nature…

Fig. 1: Mt.Gox trading after the attack that made them bankrupt

How about the volatile nature of the current markets after the Crimea incident, which made the FTSE 100 slip by 1.4%, or when NASDAQ halted trading for three hours disrupting the $16 billion Facebook IPO?

Fig. 2: FTSE 100 trading when Russia invaded the Crimea peninsula

It seems very few people writing and...

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FAQ

The purpose of this FAQ is to give general education and information about Bitcoin. It should not be considered financial advice.

The great thing about Bitcoin is that you do not need to understand how it works in order to use it. If you are interested in diving in a little deeper, this FAQ is for you.

Q: What is Bitcoin?

Put very simply it is a new form of money that works extremely well on the Internet.

Back to top

Q: So it's a "virtual currency"?

No. Virtual currencies are generally tokens issued by a company for near-exclusive use on their site. Examples include loyalty or gift cards, air miles or mobile phone top-ups.

Bitcoin is a general purpose digital currency. It is programmable money.

Nothing like Bitcoin has ever existed before.

In a similar way that email revolutionised the postal service, Bitcoin can revolutionise financial services.

For a broader view at what Bitcoin provides you should watch...

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The total number of unique addresses used on the Bitcoin blockchain.

The number of daily confirmed Bitcoin transactions.

Total number of transactions.

The number of Bitcoin transactions added to the mempool per second.

The number of transactions waiting to be confirmed.

The rate at which the mempool is growing per second.

The aggregate size of transactions waiting to be confirmed.

Breakdown of the mempool by fee level

The number of unspent Bitcoin transactions outputs (UTXO set size).

The total number of Bitcoin transactions, excluding the 100 most popular addresses.

The total number of Bitcoin transactions per day excluding long transaction chains.

The total value of all transaction outputs per day.

The total estimated value of transactions on the Bitcoin blockchain.

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If you’re reading this post I assume that like many others, you sent a bitcoin transaction and was kind of confused as to why it’s still listed as “unconfirmed” or “pending” after a few hours or so.

I mean Bitcoin transactions are supposed to be instant right?

In this post I want to try and explain in a very basic way how a Bitcoin transaction works and why the fee that you attach to each transaction has a crucial role in how long it will take the transaction to go through the network.

Here’s what happens when you send Bitcoins to someone

Whenever you send someone Bitcoins, the transaction goes through different computers running the Bitcoin protocol around the world that make sure the transaction is valid. Once the transaction is verified it then “waits” inside the Mempool (i.e. in some sort of a “limbo” state).

It’s basically waiting to be picked up by a Bitcoin miner and entered into a block of transaction on the Blockchain. Until it is picked...

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George Samman is a blockchain and cryptocurrency consultant and advisor who recently co-authored a seminal report on blockchain architecture with KPMG.

Here, Samman looks at how solutions like zero knowledge proofs can preserve privacy and confidentiality on blockchain platforms – if they can be made to achieve speed and scalability.

One of the bigger trends in the blockchain world, particularly when it comes to financial services and specifically capital markets operations, has been a need for privacy and confidentiality in the course of daily business. This has meant that blockchain solutions are being designed with this primary need in mind. This has led to all the private blockchain solutions being developed today.

When you build for privacy and confidentiality there are tradeoffs that come with that. Mainly you lose transparency, which was the major feature of the the first blockchain: bitcoin. As originally designed, a blockchain is a transparency...

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