Ethereum and Bitcoin: Understanding the Basics of Lock Rewards
When it comes to cryptocurrencies such as Ethereum and Bitcoin, the understanding of how they work is related to a number of key concepts, including mining, reward and transaction blocking, and transactions.
In this article, we will go into the basis of the Ethereum block reward system and explore why it is not as lucrative for miners as ever.
What is a miner?
The mountainer in the cryptocurrency space refers to an individual or organization that uses powerful computers (known as “mining platforms”) to solve complex mathematical problems in a society called blockchain. Blockchain is like a digital notebook that follows all transactions made in the network and is maintained by nodes (computers) worldwide.
What is a block of rewards?
The blocking compensation is a small amount of cryptocurrency granted to miners for successful “mining” a new block in the blockchain. In other words, when someone adds a new transaction to the blockchain, he or she should include a “fee” for this transaction in the header of the block (the first part of the block). This fee is usually paid to Bitcoin.
Remuneration is calculated as 12.5 bitcoins per block, and over time it has increased with the size of the network. The blocking compensation is intended to stimulate miners to continue validating transactions and maintaining a blockchain.
Why Ethereum is different from Bitcoin?
Ethereum has a different approach to mining compared to Bitcoin. Although both cryptocurrencies use evidence (POW) consensus algorithms, the Ethereum uses a different smart contract called “Smart Agreements” to approve transactions.
Smart contracts are self -filling contracts with special terms and conditions that automatically meet when certain actions take place. This allows for more sophisticated and decentralized applications on the Ethereum network.
Why is Ethereum’s Block Reward not so lucrative?
The Bitcoin blocking reward system was designed to stimulate miners to mine new blocks and add transactions blockchain. However, as the cryptocurrency market wide increases and a decentralized application (DAPP) increase, miners have less chance of generating revenue.
In addition, the Bitcoin network has become more powerful, making it less economically viable for individuals or organizations to create mining platforms.
Conclusion
In summary, the Ethereum block reward system is designed to stimulate miners to confirm transactions and maintain a blockchain. Although the reward has increased over time, they are not as lucrative as once related to factors such as scalability problems and transition to decentralized applications.
As we continue to study and develop new cases of cryptocurrency use, it will be interesting to see how the block remuneration system develops and whether it is still the main driver of mining activity.