As we have seen, miners play a crucial role in the blockchain network by creating new blocks and verifying transactions. To encourage participation and secure the network, the Bitcoin system awards the first successful miner with a certain amount of bitcoins.
However, there is a risk that a miner with a large processing power could attack the entire system by monopolizing block creation. To mitigate this risk, the Bitcoin system uses a mechanism called “Proof-of-Work”. This requires the miner to perform a certain amount of computational work, making it more difficult for a single miner to dominate the network.
In summary, the incentives for miners to participate in the network and secure the blockchain include the reward of bitcoins and the requirement to perform proof-of-work. These incentives help ensure the decentralization and security of the blockchain.
H3: Incentives for Miners in the Blockchain Network
Determining the Number of Transactions in a Block
As we saw in the chapter “Bitcoin – Mining”, a miner may be flooded with many transactions at any given period of time. The maximum size for a block is pre-defined in the system, which necessitates that only a certain number of transactions can be included in the block.
The number of transactions that can be included in a block is determined by the pre-defined block size and the average length of each transaction. It is important for the sender to make their transaction message short, as this incentivizes the miner to include it in the block before other, longer messages.
Incentivizing Miners through Transaction Fees
A sender generally includes a transaction fee in the form of a certain number of bitcoins to incentivize the miner to prioritize the inclusion of their transaction in their block.
Storing the Entire Blockchain
The size of the blockchain may become too large for a node to store it on their disk over time. This issue can be resolved by using the Merkle Tree, which will be described in the next section.