Coinbase Transaction

tl;dr: A coinbase transaction is a special type of transaction in cryptocurrency, created by miners when they validate a block. It rewards the miner with newly issued cryptocurrency tokens (block reward) and any transaction fees associated with the transactions in the block. The coinbase transaction serves as an incentive for miners to maintain the network's security and integrity. The block reward and transaction fees may vary depending on the specific cryptocurrency and the current network conditions.


What Is a Coinbase Transaction?

A coinbase transaction is a unique transaction within a block that miners create when they successfully validate a candidate block in Bitcoin and other cryptocurrencies. This special transaction rewards the miner with newly issued cryptocurrency tokens (block reward) and any transaction fees associated with the transactions in the block. The coinbase transaction is typically the first transaction recorded in a block and serves as an incentive for miners to maintain the network's security and integrity by participating in the mining process.

A coinbase transaction can be represented as follows:

Miner's Address: 1GinkuKexAZM8FzxUQGBz6YCuaRfkE8ofi
Block Reward: 6.25 BTC
Transaction Fees: 0.125 BTC

In this example, the miner has successfully validated a candidate block for the Bitcoin network. The coinbase transaction sends a total of 6.375 BTC (the block reward of 6.25 BTC plus 0.125 BTC in transaction fees) to the miner's designated address (1GinkuKexAZM8FzxUQGBz6YCuaRfkE8ofi).

It's important to note that the block reward and transaction fees may vary depending on the specific cryptocurrency and the current network conditions. The example provided here is based on the Bitcoin network, with a block reward of 6.25 BTC as of 14th April 2023.