Block Reward: The first miner Financial News to find a valid solution gets to add their proposed block to the blockchain and is rewarded with newly minted Bitcoins (the “block reward”) and the transaction fees from the transactions included in that block. This incentivizes miners to secure the network.
5. Transactions
A Bitcoin transaction is simply a transfer of value from one Bitcoin address to another.
Digital Signatures: When you send Bitcoin
your wallet uses your unique private key to create a digital signature for the transaction. This mathematical proof verifies that you are the legitimate owner of the bitcoins and prevents anyone from altering the transaction once it’s broadcast.
Mempool: When you broadcast a transaction, it first goes into a “mempool” (memory pool) – a waiting area for unconfirmed transactions. Miners pick transactions from the mempool (often prioritizing those with higher fees) to include in the next block.
A user creates a Bitcoin transaction gmx mailing address (e.g., sends BTC from Address A to Address B).
The transaction is signed with the user’s private key and broadcast to the Bitcoin network.
Full nodes on the network receive the transaction and verify its validity (e.g., checking for sufficient funds, correct signatures).
Purpose and Significance:
Valid transactions are added to a position to help the masses for the greater good waiting area called the “mempool.”
Bitcoin miners pick transactions from the mempool to assemble a new “block.”
Miners then compete to solve the cryptographic puzzle (Proof of Work).
The first miner to solve the puzzle be numbers broadcasts their newly found block to the network.
Other full nodes receive the new block, verify its validity (including the proof of work and all transactions within it).
If valid, they add the block to their copy of the blockchain.
The process repeats, with a new block being added roughly every 10 minutes, extending the immutable chain of transactions.
