Transaction or Mining? (Chicken & Egg question)

[thomasadamsxp]

Hi! Me still learning the basics, please help me get clarity to this question, the answer to which I can't get anywhere.

First, here is what I understand:
1. Bitcoins come into the ecosystem by mining.
2. Mining only happens after a transaction is initiated.

If so, then I still don't seen how coins come into the ecosystem.

Because:
1. For a transaction to be initiated, the sender needs to have coins first yes? (How can you send bitcoins if you have none).
2. But mining only happens (and therefore coins only come into the ecosystem) after a transaction is initiated.
3. If the transaction cannot be initiated without a balance, it cannot be initiated, and therefore mining too does not happen.

How then can coins come into the ecosystem?

Please help understand.

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[hd49728]

Which algorithm Bitcoin uses?
Proof of work: means it needs miners to maintain operations on the network.

Where Bitcoins come from?
From source-code and the network is activated by genesis block. After that, miners do the rest works up till now.

Code - Genesis block - Proof-of-work network and mining operations (from miners)

[jackg]

You don't need transactions to mine.

When you generate a block on the bitcoin network, the only transaction you actually need is the coinbase transaction (which credits the. Lock reward to the miner).

Everything is stored in a fixed size data block with most decentralised cryptocurrencies which stores the coinbase and all the subsequent transactions the miner wants to be confirmed.

A block is added to the network after a block is found ( miners have to hash the transactions of a block and get the number below a target nonce - pre set by consensus rules of each node). On average this target is set to make the average block find time 10 minutes. Its based on the average of the last two weeks when it changes.

[witcher_sense]

Your "chicken and egg" question was well explained by A.Antonopoulos in his "Mastering Bitcoin". I strongly recommend it for reading. It is available for free https://github.com/bitcoinbook/bitcoinbook

The exception to the output and input chain is a special type of transaction called the coinbase transaction, which is the first transaction in each block. This transaction is placed there by the “winning” miner and creates brand-new bitcoin payable to that miner as a reward for mining. This special coinbase transaction does not consume UTXO; instead, it has a special type of input called the “coinbase.” This is how bitcoin’s money supply is created during the mining process, as we will see in Chapter 10.

Tip
What comes first? Inputs or outputs, the chicken or the egg? Strictly speaking, outputs come first because coinbase transactions, which generate new bitcoin, have no inputs and create outputs from nothing.

[20kevin20]

1. Bitcoins come into the ecosystem by mining.
2. Mining only happens after a transaction is initiated.

First is basically true. New Bitcoins only come through mining, or older coins get into circulation by transactions. However, the you got the second one wrong. Miners do not wait for transactions before they start mining. If so, if there was only a tx per week on the blockchain, do you think anyone would keep an entire farm alive to try their luck for a matter of minutes?

Mining happens anyway, with or without txs. We need the inflation to stay approximately the way it has been structured to be through coding, the only variable being block time. If mining only happened once txs were initiated, that would mean there would be some blockchains with a temporarily fixed supply.. as in there'd be no more coins to be mined before someone initiates a transaction..

[Charles-Tim]

How then can coins come into the ecosystem?

You need to know what genesis block is all about. In 2009 the genesis block (block 0) was mined by Satoshi Nakamoto, at the time, there was no bitcoin trasaction time, transaction time was introduced in the block 1 which is 10 minutes on average. So, the only reward for the block 0 are the bitcoin that was mined.
In block 1 and the rest up till today and until all bitcoin are mined, miners receives two rewards, one from the fee paid for transactions and the other for solving the algorithm that create another block. That is just how the algorithm works.
After all bitcoin are mined, only transaction fee will be paid as miners reward because no bitcoin will be mined again. I hope this is explained in a way you will understand the differences between bitcoin mining and transaction.

Mining happens anyway, with or without txs. We need the inflation to stay approximately the way it has been structured to be through coding, the only variable being block time. If mining only happened once txs were initiated, that would mean there would be some blockchains with a temporarily fixed supply.. as in there'd be no more coins to be mined before someone initiates a transaction..

There will be transaction in every 10 minutes with the rate of bitcoin adoption normally. But you are right, transaction can not be a prerequisite for mining. But mining is a prerequisite for transactions until all bitcoin are mined.

[hd49728]

There are blocks that are called as empty blocks. They are blocks with only block rewards and no other transactions. They only contain Coinbase rewards to miners who solve algorithm puzzle and create blocks. It will be different based on bitcoin block rewards.

And if miners (big pools) include their transactions into the blocks they found, there is no mining fees (transaction fees) with those blocks.

You are right the there are mining rewards and mining (transaction fees) but sometimes the transaction fees can be zero.

[cabalism13]

There are blocks that are called as empty blocks.

can I get a sample? a link would be fine. I'm a bit curious about these empty blocks, it really is the first ime I've ever heard this, for what I know every block has a number of transactions, even one is the least that I can think...

[hosseinimr93]

As stated in previous posts, blocks can be empty. So blocks can be mined even if there is no transaction.
tranthidung has already made a topic regarding statistics on empty blocks. Visit the link below. It's helpful.

BTC empty blocks (2009 - 5 May 2020): miners, size, daily, monthly,yearly stats

[cabalism13]

BTC empty blocks (2009 - 5 May 2020): miners, size, daily, monthly,yearly stats

Thanks! As I've checked we still having empty blocks, LoL,  I really didn't thought their would be no transaction even in this time were in. Anyways compared before it's getting small in numbers.