Block Reward

A block reward is the incentive given to miners or validators for successfully adding a new block to the blockchain. In proof-of-work (PoW) systems like Bitcoin, miners compete to solve complex mathematical puzzles, and the first one to solve it gets the right to add the block and claim the block reward. The reward typically consists of newly minted cryptocurrency (e.g., Bitcoin) and transaction fees paid by users. Block rewards serve two key purposes: they incentivize participants to maintain and secure the network, and they introduce new coins into circulation. Over time, block rewards decrease through a process known as halving, which reduces the number of new coins created per block. For example, Bitcoin’s block reward was initially 50 BTC per block but has since been reduced to 6.25 BTC as of the 2020 halving. In proof-of-stake (PoS) systems, block rewards are given to validators who lock up their coins (stake) and are chosen to validate the next block.