Coinbase Transaction

A trade on a popular cryptocurrency exchange.

You may think this term refers to any transaction on the popular cryptocurrency exchange Coinbase -- but that’s not true.

A coinbase transaction is a unique type of bitcoin transaction. Only a Bitcoin miner can create a coinbase transaction. Why?

Because a coinbase transaction is the very first transaction for each new block. It’s the transaction where the newly minted bitcoins are sent to the miner along with any mining fees. 

This transaction has no inputs -- because the newly minted coins are coming from the bitcoin protocol itself. 

The miner rewarded with the coinbase transaction chooses whether to have the block reward and transaction fees sent to one bitcoin address or a multitude of different addresses. 

An interesting note for anyone looking to become a potential bitcoin miner is that this first coinbase transaction from the genesis block cannot be spent. 

No one knows why that is for sure. Maybe it was simply an oversight by Satoshi Nakamoto, the creator of bitcoin. You can find the transaction in the blockchain if you look for it but there is no way to spend bitcoins from how do they enter circulation?

Bitcoins in a coinbase transaction can eventually be spent when they’ve received 100 confirmations in the blockchain, which equals roughly 16 hours and 40 minutes.

So if you’re getting into bitcoin mining -- keep all that in mind!