How does the network apply credit for created blocks?

Question

First post. I must say in advance thanks to everyone for all the great conversation and help and software so far. It's really helped me get familiar with bitcoins and bitcoin mining.

I have a question about functionality of the Bitcoin network and how mining credits are applied to the correct person.

Assume a person is solo mining. That is, one computer is doing the mining. IT may be running a pool, but that's not relevant for this question. So, lets assume a solo miner generates a few blocks and they get accepted.

When the network approves a block that has been created, how is the credit for the block creation (50 bit coins, soon to be 25) applied to the miner's wallet?

Let's say that a GPU miner, like DiabloMiner is running, and getting its work from Bitcoin-QT. How does Bitcoin-QT, detect the mining credit of 50/25 bitcoins and send it to the correct miner's address?

Thanks.

Answer 1

Miner has to supply the Bitcoin address for block reward. Then, when the block is mined, the special "credit" transaction is permanently stored in found block, creating given amount (25 BTC, was 50 BTC) to given address.

Some pools (Eligius or P2Pool) use this feature and create a lot of credit transactions, so that when block is found, all participants will receive their respective share.

Answer 2

When creating a block, the first transaction in a block is always a coinbase transaction (a transaction with input of 0). In this transaction, the miner specifies output just like in a normal transaction - destination address, amount and so forth. This transaction is treated more or less just like every other transaction by the clients - it can be spent and so forth.