Word of the Day: Coinbase Transaction

Coinbase Transaction is a special transaction that is created by miners. It consists of 2 key things:-

1. Mining reward (new supply of coins being added into circulation)

2. Fees (which the sender pays to the miner who successfully mined the block).

What is CoinBase?

There can only be ONE Coinbase Transaction per block; it will then be added to the block which the miner is trying to solve the proof of work for.

An example of a Coinbase Transaction would be https://blockchain.info/tx/cf989a0374e664cb626d816a21529ca13fb7d48501a8d0a40eda459babf001ac

The easiest way to identify a Coinbase Transaction is to notice that there are “no inputs” (as stated on the left hand side of the image below) within the transaction.

To break that transaction down:

1. The transaction amount totals up to 25.02953906 BTC.

2. The mining reward at that time is 25 BTC (which are new supply of coins being added into circulation accounting towards the 21 million BTC maximum supply)

3. The mining fees can be calculated by subtracting the mining reward from the total Coinbase Transaction amount eg. 25.02953906 - 25.0 = 0.02953906

4. The total fees being paid by transaction senders for this given block is 0.02953906 BTC.

5. 1CjPR7Z5ZSyWk6WtXvSFgkptmpoi4UM9BC is (most likely) the miner’s address and it is where the mining reward and fees are being sent to.

The term Coinbase Transaction should not be confused with the name of a Bitcoin service company, Coinbase. Coinbase is a Bitcoin wallet & payment platform for consumers, merchants, and developers. It provides an easy way to buy Bitcoins in the US and some parts of Europe.

Join Coinbase 

Learn something new everyday! What do you think about this byte-sized word of the day segment. Let me know in the comments :)