How did Satoshi manage to mine so many bitcoins being the first user of the system?

I'm just learning about Bitcoin and if I understand its conception properly, mining bitcoins means validation of transactions by computing a hash which should satisfy some preset condition. In other words, mining == servicing network and getting money for it.

If Satoshi was the first user, how did he earn his bitcoins if there were no transactions?

I understand, that in the very beginning some geeks were involved in the network, so maybe 5 or 10 persons' (first testers) transactions and their validation (mining) generated a lot of bitcoins, because of the low difficulty and high reward. But how did the very first coins get rewarded?

Baurzhan

Posted 2014-10-05T16:36:12.803

Reputation: 143

Answers

You are making an incorrect assumption here: While blocks can validate transactions, it is not necessary for transactions to occur in order to create blocks. The only transaction that is required in a block is the Coinbase which is the transaction that creates new bitcoins. This transaction is created by each miner for their block attempts individually (as it sends money to their own address which is different for each miner), so it'll surely be available. In fact, the first non-coinbase transaction occurred in block 170.

So, since transactions are no requirement, blocks are limited differently: It happens through the difficulty. Miners create block candidates continuously, and then check each whether it fulfils the difficulty requirement. Whenever they find a block that surpasses the required difficulty, they have successfully mined a block. As the difficulty resets regularly to adapt to changes in the hashrate of the mining network, the blocks work out to be discovered approximately every ten minutes.

In the very beginning of Bitcoin, mining difficulty was very low as there were few people running their home computers to mine Bitcoin. Satoshi Nakamoto was the first one to run a computer for mining, and thus was able to mine a large portion of the early blocks.

Murch

Posted 2014-10-05T16:36:12.803

Reputation: 41 609

Still confusing as ever. I understood the question but not the answer. Could this be explained ever simpler? – invnible – 2016-01-17T08:14:23.263

@invnible: The asker thought that blocks need to confirm transactions in order to be created. However, empty blocks are allowed. Only the transaction that creates the new money is necessary, but it is created by the miner himself. – Murch – 2016-01-17T10:03:48.733

@invnible: I completely rewrote my answer. I hope you find it easier to understand now. – Murch – 2016-01-18T23:08:22.730

Transactions are not necessary to mine blocks.

In simple terms: mining a block = finding a hash that matches with the previous block's hash + optionally a bunch of unconfirmed transactions.

A block doesn't need to include any transactions. And if there are unconfirmed transactions, a block may include all, some, or none of them.

If there are, it's in the miner's best interest to include them all. He earns the mining fees on top of the block reward, and it doesn't make the hash computation of the new block any more difficult. So deliberately not including pending transactions = leaving free money on the table. But mining can still occur even if there are no transactions at all.

Besides, even if it was required to include transactions, Satoshi could of course have sent dummy transactions between addresss of his own (and collecting his own transaction fees).

RocketNuts

Posted 2014-10-05T16:36:12.803

Reputation: 714