Quote from: willphase on June 16, 2011, 08:44:46 AM

Quote from: Grouver on June 16, 2011, 08:26:33 AM

I am only still struggling with this answer:

"Why will miners mine? Because of the transaction fees, because the miner who adds a block to the block chain gets to keep all of the transaction fees for that transactions that were in that block."

Can you maybe explain this a little more detailed?

Blocks contain transactions. Blocks are distributed across the bitcoin network to every client in order to verify that a transaction hasn't happened twice (double spending). This is the fundamental reason why bitcoin works.

When a block is successfully solved, the person who solved the block gets to add a magic generation transaction of 50BTC to their account, and also take all the transaction fees for any transactions included in their block.

The bounty for solving a block (currently 50BTC) will reduce every 4 years, as per design of the network, so some time next year it'll drop and people will only get 25BTC per block, and so on. As this happens the profit from solving a block will move from the bounty to the transaction fees. This is why miners will continue to mine in 2033 - when you are earning 0BTC from solving, but potentially a lot of BTC from including transactions that you have verified by solving the block.

Right now the bounty totally outweighs the transaction fees (50BTC vs approx 0.1BTC) but this will change as more transactions happen on the bitcoin network.

Will

I am getting close and closer to my answer.
Thanks for replying.
I still do not understand the bounty part. Who pays the 50BTC bounty as the transaction fee currently is very low?
Also, "Blocks contain transactions."
Gold doesn't contain transactions, how can gold (to compare) already be sold (made into a transaction) when you just found it?