Quote from: DorothyV1 on August 17, 2013, 09:21:56 AM

Hi, I'm new to the community. Can someone explain what are orphaned blocks? Do we get payment for those?

Others have more expertise than me, but I'll give it a quick stab ...

Orphaned blocks occur when a block is solved (the found hash is less than the current target, or to put it another way the found hash difficulty is higher than the bitcoin network difficulty), but by two different miners within a small space of time. So now there are two blocks that could be added to the blockchain and the network must decide which to use (it can't just take the first as its a distributed system, no-one is in"charge").

So different parts of the network will add one or other of the blocks at random to their local copy of the blockchain and continue solving the next block. Once the next block is found, this chain is longer and is broadcast, at which point all the miners hashing off the other block give up, the block is deleted from the chain and becomes an orphan. Chains can be rearranged even later, hence the 6 confirmations needed for a transaction (once the chain is 5 blocks longer than the block with the transaction it is considered very unlikely to become an orphan).

As for payment, it depends on the pool. The pool (or a solo miner) is not paid for the orphan as the 25btc block free coin generation transaction simply ceases to exist on the blockchain. However a PPS pool will usually pay shares on the orphaned block (this is why their fee is higher, the pool carries the risk of the loss). Other payment systems may not pay out on orphans.