Compensation for block mining is a key element of the Bitcoin system. Without compensation, the system itself does not work.
A cryptocurrency researcher who uses the pseudonym Hasu explained that the working principle of Bitcoin is largely divided into two. There are two things: “Who owns what, and when.”
First, the problem of ‘who owns what’ was solved with encryption technology. This is because only people with private keys can dispose of Bitcoin. The private key acts as a kind of password to access Bitcoin.
Next, the question of “When do you own it?” was a problem that has not been solved for a long time and was not solved until Bitcoin appeared. In the past, double payments used to occur easily, resulting in many coins that did not even know the source.
Without compensation for block mining, the Bitcoin network would be in tremendous confusion, the researcher explains. If miners have strong computing power, they can attack the network by causing double payments or trading interruptions. However, in that case, the compensation for the mining blocks will be lost, so the mining compensation system becomes a device to suppress attacks.
“For the Bitcoin system to work properly, first, it must pay appropriate compensation for the miners’ legitimate block mining and second, it must pay a reasonable price for unjustified block mining.” – Michael Dubrovsky, co-founder of PoWx
In short, miners can lose money if they don’t follow established rules.
The more computing power a miner possesses for bitcoin mining, the more difficult the attack becomes. This is because in order to execute an attack, it must also have a lot of processing power known as hash rate. In the same context, the more block compensation a miner receives, the better the bitcoin mining capability and the greater the network protection capability.