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Sorry if this question is too basic or if it has somehow been answered before...

My understanding is that any type of Bitcoin block must be first mined, which applies to transaction confirmations, for instance.

However, if each and every block must be obtained from a mining effort, then for each and every block there is a reward (currently) of 6.25 bitcoins.

So for a given transaction, it requires a number of confirmations. If that transaction related to the transfer of 1 bitcoin from one person to another, it would require additional 6 confirmation blocks. Each of those confirmation blocks would have to be first mined. The miners would be granted 6.25 bitcoins for each of the transaction confirmation blocks.

In other words, there would be an exponential growth of bitcoins just for the sake of creating transaction blocks. And those bitcoins would in turn require more blocks so they could be traded/confirmed, which would result in yet more bitcoins granted to the miners.

Can someone please help clarify? Am I missing something rather obvious?

Thanks,

Julius

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1 Answer 1

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One new block is created every 10 minutes on average. The mining difficulty is adjusted to keep this rate constant

The mining reward is halved every 210,000 blocks, about every four years.

These two facts alone determine the amount of spendable Bitcoin available at any moment in time.

The result is that the total amount of spendable Bitcoin converges in a completely predictable way towards 21 million. It cannot exceed that.

Total Bitcoins over time
(Source: Insti, Creative Commons Attribution 3.0)

As the mining reward approaches zero, miners will be rewarded through transaction fees alone.

Each block will typically act as the initial confirmation of several thousands of unrelated transactions directly and as a subsequent confirmation of each of the billions of transactions in the current Bitcoin chain since the beginning of time.

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  • You stated: "Each block can confirm thousands of transactions." Can a block confirm totally unrelated transactions? Thanks. Nov 24 at 18:41
  • Yes, normally all transactions in a block are unrelated.
    – bordalix
    2 days ago
  • @bordalix I'm not sure what you mean with "normally", but it is very much allowed (and not uncommon) for a transaction to spend another unconfirmed transaction, such as is e.g. the case with CPFP.
    – stickies-v
    2 days ago
  • @stickies-v yes, you're right. With "normally" I meant most of the transactions in a block will be unrelated, which doesn't mean related transactions can't be in the same block.
    – bordalix
    yesterday

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