Baskadia

Computers in the Bitcoin network use a process called proof-of-work (PoW) to validate transactions and secure the network. Proof-of-work is the Bitcoin blockchain’s “consensus mechanism.”

While Proof-of-Work was the first and is generally the most common type of consensus mechanism for cryptocurrencies that run on blockchains, there are others — most notably proof-of-stake (PoS), which tends to consume less overall computing power (and therefore less energy).

Proof-of-work elevates certain network contributors to the role of “validators” – more commonly known as “miners” – only after they have proven their commitment to the network by dedicating an immense amount of computing power to discovering new blocks — a process that typically takes approximately 10 minutes.

When a new block is discovered, the successful miner who found it through the mining process gets to fill it with 1 megabyte’s worth of validated transactions. This new block is then added to the chain and everyone’s copy of the ledger is updated to reflect the new data. In exchange for their efforts, the miner is allowed to keep any fees attached to the transactions they add, plus they’re given an amount of newly minted bitcoin. The new bitcoin created and handed to successful miners is known as a “block reward.”

All Bitcoin users have to pay a network fee each time they send a transaction (usually based on the size of it) before the payment can be queued for validation. Think of it like buying a stamp to post a letter.

The goal when adding a transaction fee is to match or exceed the average fee paid by other network participants so your transaction is processed in a timely manner. Miners have to cover their own electricity and maintenance costs when running their machines all day to validate the bitcoin network, so they prioritize transactions with the highest fees attached to make the most money possible when filling new blocks.

You can view the average fees on the Bitcoin mempool, which can be likened to a waiting room where unconfirmed transactions are held until they are selected and added to the blockchain by miners.