Bitcoin's blockchain consists of blocks, each containing one or more transactions. The first transaction in every block is called the Coinbase transaction.
Understanding Coinbase Transactions
A Coinbase transaction is created by miners to reward their efforts in PoW mining.
The reward comprises two parts:
- Block Reward: A fixed amount (currently 6.25 BTC per block, halving every four years).
- Transaction Fees: The sum of all fees from transactions within the block, paid to the miner.
Unlike regular transactions, Coinbase transactions have no "parent transaction." Standard transactions rely on inputs from previous outputs, but Coinbase transactions generate coins directly from the system.
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What Does "Coinbase" Mean?
The term coinbase refers to system-generated coins. It’s also called a "Generation Transaction" because it creates new Bitcoin from scratch.
Technically, coinbase is the input in this generation transaction—representing newly minted Bitcoin.
Data Inside a Coinbase Transaction
Each Coinbase transaction includes:
- 1 Input (Coinbase): The system-generated coins.
- 1 Output: Sent to the miner’s address, combining the block reward + fees.
- Optional Data (≤100 bytes): Stores arbitrary information (e.g., the genesis block’s headline: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks").
The first few bytes encode the block height—the number of blocks since the genesis block (height = 0).
Key Takeaways
- Purpose: Miners create Coinbase transactions to claim block rewards and fees.
- Coinbase Term: Represents the "first Bitcoin generated by the system."
- Structure: 1 input, 1 output, and optional data (≤100 bytes).
⚠️ Note: Do not confuse this with Coinbase, the U.S. cryptocurrency exchange.
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FAQs
Q: How often does the block reward halve?
A: Every 210,000 blocks (~4 years).
Q: Can Coinbase transactions be spent immediately?
A: No—they require 100 confirmations (~16 hours) to prevent double-spending.
Q: Why is the genesis block’s message significant?
A: It timestamped Bitcoin’s creation during the 2009 financial crisis.
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