Quote from: late443 on March 04, 2012, 04:59:52 AM

Quote from: the joint on March 04, 2012, 04:38:38 AM

Quote from: boconniff40 on March 04, 2012, 04:31:24 AM

So you're saying transaction fees produce new blocks that we can mine? Also what are block rewards?

Whenever a Bitcoin transaction is made, it is broadcast to all nodes in the network. All transactions since the previous block was solved are contained in the next block to be solved, and so all miners compete to be the first provide mathematical proof of work for the current block.

Let's say someone mines a block solo. As we know, 50 BTC is generated with each solved block. But let's say there was 1 transaction during that time containing a transaction fee of .005 BTC. Then, that miner will receive 50.005 BTC. Right now, the network is small and there are relatively few transactions, so the amount of transaction fees included in the block are small.

After all 21 million BTC have been generated, the 50 BTC will no longer be generated, but miners will still be rewarded with the transaction fees. By this time, assuming that BTC is widely adopted, there will be many many times the number of transactions and thus the amount accumulate in transaction fees per block will be greatly increased. It's possible that by this time, miners who solve a block solo will receive even more than 50 BTC, but they won't be new coins. They will simply be existing coins that were included in the block in the form of transaction fees.

Thanks, finally an answer that makes sense.

No problem. The same principle applies to Litecoins. I've solved a few blocks mining Litecoins solo, and I've received varying amounts ranging from 50.0 LTC to 50.3 LTC. There were no transaction fees contained in the 50 LTC block that I solved, but there were .3 LTC in transaction fees in the 50.3 LTC block that I solved.