why is the transaction that creates new bitcoin called the coinbase transaction?

[TrueBeliever]

When a block is created new bitcoins are also created and assigned to the miner who found the block.  to my knowledge this is done by including what is called the "coinbase transaction" in the block.

The company coinbase.com was formed in June 2012, well after the invention of bitcoin, and Satoshi's white paper does not refer to any such 'coinbase transaction'.

Can someone with factual knowledge of how this came to be please enlighten us?

[1715550209]

1715550209

[1715550209]

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[shorena]

I dont think this is a very technical question maybe we need a history board....

I did a quick seach and the follow post from 2010 is the oldest that includes coinbase and transaction.

I market it in bold and from the looks of it, its from a log file. Which would indicate that its either directly from satoshi or one of the earliest developers.

An example of how bitcoin works on a bit-level:  Ok, I'll give it a shot.

Here's what the current best-block (according to my bitcoin client) looks like, dumped in a geek-readable format:

BLOCK 68fa61ac1f55a5787dfa0c75bc83e67376ae8356e6887a2ab74cdb0900000000
Next block: 0000000000000000000000000000000000000000000000000000000000000000
Time: Mon Jul  5 15:51:22 2010
Previous block: c18adb50289393b5a995b3506f039ac75e8de79f511515448811510200000000
3 transactions:
1 tx in, 1 out
['TxIn: COIN GENERATED coinbase:0442310d1c029c00']
['TxOut: value: 50.00 pubkey: 17sdrb1X7qpjPMJortqaNwWtBbtouSoJn2 Script: 65:046d...bb9c CHECKSIG']
1 tx in, 1 out
['TxIn: prev(580a...e82e:0) pubkey: (None) sig: 71:3044...db01']
['TxOut: value: 50.00 pubkey: 1FeFgJRvCYUTCBj1u696eL23xpAdNB4B8p Script: DUP HASH160 20:a09d...6d81 EQUALVERIFY CHECKSIG']
3 tx in, 1 out
['TxIn: prev(c0a0...6bc3:0) pubkey: (None) sig: 73:3046...0f01', 'TxIn: prev(f909...2493:0) pubkey: (None) sig: 73:3046...1601', 'TxIn: prev(bc0a...fe64:0) pubkey: (None) sig: 72:3045...6201']
['TxOut: value: 150.00 pubkey: 1BHxjkqPmtNdmJxLZgneijvGszRxM9hPkz Script: 65:04ee...1d02 CHECKSIG']

So:  that big long string of hex at the top is the block header's hash value.  Note that it ends with 8 zeroes; that's the proof-of-work  (my utility for dumping blocks doesn't bother dumping the Nonce values).

What's hashed in the block header?  The Nonce.  The block's generation time.  The previous block's hash.  And a hash of all the transactions in the block. (and probably some stuff I'm forgetting).

This block has three transactions in it.  The first is the 50.00 (which is really 5,000,000,000 of the smallest possible units) reward for finding/creating the block.  It can only be spent by whoever has the private key that matches the public key in the TxOut  (17sdrb1X7qpjPMJortqaNwWtBbtouSoJn2 -- you can think of public keys and bitcoin addresses as equivalent), which will be whoever generated the block.

The second is a payment of 50.0 from.... somebody... to... somebody.   How does Bitcoin know that transaction is valid?  Well, it:
 + Looks up the previous transaction.  That's the TxIn: prev(580a...e82e:0)  stuff-- fetch TxOut zero (which will be a coin generated txn) from previous transaction 580a....
 + EVALUATE(TxIn.pubkey + previous transaction TxOut.pubkey) and make sure it evaluates to true.  This is where the cryptography happens; the receiver uses the private key known only to them and provides a correct digital signature.

The third is a payment of 150.0 (three 50.0-value in, one 150.0-value out).

Clear as mud?

[TrueBeliever]

I agree with you that it is not a very technical question which is why I didn't post it here originally.  However after so many people eyeballing it but nobody answering it, I moved it here in desperation.

I did do a search but I didn't pick up anything that answered it, this small clue was well picked up by you.

It seems the conclusion is that coinbase.com took their name from this terminology included in the bitcoin client.

I am still interested in a reference where Satoshi or an early developer actually introduces and defines the term 'coinbase'. ie the original reference as to why it is called what it is.

[cr1776]

If you look at even the v0.1.0 source code (early 2009) you will see the term coinbase in various places - one might say it is at the base/beginning/foundation/root of each 'coin' and is the first transaction in the block, the base of the block.  BTW, Coinbase.com definitely took their name from the code, not vice versa.

See e.g. main.cpp, main.h, ui.cpp:

For example from main.cpp:

Code:

    // Coinbase is only valid in a block, not as a loose transaction
    if (IsCoinBase())
        return error("AcceptTransaction() : coinbase as individual tx");

    if (!CheckTransaction())
        return error("AcceptTransaction() : CheckTransaction failed");

    // Do we already have it?

...

    // First transaction must be coinbase, the rest must not be
    if (vtx.empty() || !vtx[0].IsCoinBase())
        return error("CheckBlock() : first tx is not coinbase");
    for (int i = 1; i < vtx.size(); i++)
        if (vtx[i].IsCoinBase())
            return error("CheckBlock() : more than one coinbase");