Topic: Mining blocks - subsidies (Read 954 times)

Yes*(See edit)  The rules of the network are what make the network.  If multibit didn't have the rules it would have no way of validating blocks and transactions.  It would have no way of knowing the coins someone sent you were valid or not.  Each nodes validates everything it receives from another node.  So if your node receives a tx from me (maybe not even a tx to you) it will validate the tx before relaying it.  If your client receives a block it will first validate every tx in the block, then validate the merkle tree and calculate the merkle tree root, then validate the block header and finally recompute the hash and ensure it meets the difficulty requirements.  Only when the node is sure that the block is valid does it relay it.  And despite your node validating a block every node it relays it to will treat it as untrusted until it validates every aspect all over again.

Bitcoin = (the set of rules created and enforced by consensus)

If you think about it in a decentralized network that is the only method possible.  Each node* builds the entire blockchain from scratch not trusting anything it gets from anyone else before validating it.  Thus there are thousands of identical independently verified copies of the same blockchain.

You could easily modify your node to allow a 50,000 BTC block subsidy.  It would only require changing one line.  Your node could hash a block and it would be promptly rejected by every other node on the network as incompatible.

On edit:
* Note I used the term "node" a lot. There are lite clients, eWallets, etc which don't have a complete copy of the blockchain and thus rely on a third party.   Multibit is a lite client which relies on a server to do the validation of the blockchain.  All "full nodes" (including the multibit server) implicitly distrust anything (tx, blocks, etc) they receive from other nodes.

This amount of bitcoin per block mined algorithm is programmed into every single bitcoin program? (eg multibit has this programmed into it?)

There is no such thing as "the part" of the network when it comes to decentralized networks.  Every single node on the network runs a complete copy of the Bitcoin protocol.  So in theory if you changed 100% of nodes, both online and offline, including all source code copies, and archived versions and did this simulataneously while somehow ensuring no copies with the current rules exist anywhere (not even in anyone's mind) then yes you could change it.

If you don't acheive that then the network will fork. You will have your new incompatible fork and the current Bitcoin will still exist.  Maybe your new fork will even become more popular than Bitcoin but Bitcoin will always exist.

What part of the network controls the amount of money that the miners receive?
Is it something someone can technically change for everyone?

Not the date but the block height.  The subsidy is right shifted (binary halving) every 210,000 blocks.  If the network is on target that is roughly 4 years but it can vary slightly based on changes in hashing power and the general randomness of finding a block. 

I see, which part of the system checks the date and figures out how much BTC to create for the newly finished block?

When you mine a block, you add a special transaction to the block that sends a reward plus the fees to you. That's all. Also, if you try to cheat, then all of the other miners will reject your block so you don't get the reward after all.

In order to solo mine you must be running a bitcoin wallet. The bitcoin software will construct a new block and insert a special transaction called the "coinbase" which takes the subsidy + all fees and transfers that value to an address your wallet designates.

For example in this block
http://blockchain.info/block-index/331991/00000000000004f3b0ce8abf320ff150f8298e72fe81e05d91e690fca5c1202d

you will notice the first transaction is creating 25 BTC + the transaction fees for the block and sending it to the address controlled by the miner (either an individual or the pool shared wallet)
http://blockchain.info/address/1NEU779yvLaFk39k4Q3QdLjwpWTdWCbzqL

Imagine I am I miner. I have set up some computers to do some mining in a warehouse.
I have a digital wallet on my laptop.
Just now one of my computers happen to generate a block.
From what I understand, 25 BTC is supposed to appear 'somewhere' out of 'nowhere'.
How do I place this money into my wallet on my laptop?

To add to the above post, once the block reward nears zero, the idea is that adoption will be high enough that tx fees will be the subsidy for miners.
That said, 90% of BTC will be mined somewhere around 2030 with the last new piece of coin mined around 2130.
https://en.bitcoin.it/wiki/Controlled_supply

The subsidy is the newly created coins.  All 21M coins that will be created will come from one of the initial 9,630,000 blocks where they are minted into existence as a subsidy to miners.  Miner total compensation = block subsidy/reward (initially 50, now 25 declining to 12.5 BTC in ~4 years) + transaction fees.   Over time the share of miner compensation that comes from the subsidy will decline and the share from fees will increase.

https://en.bitcoin.it/wiki/Controlled_supply

The Bitcoin specification defines that the block reward will start at 50 BTC/block, and diminish by half every 210,000 blocks.  The coins are essentially created "out of thin air" but also only after putting in a significant amount of work (computational power).  This is how Bitcoins are created.  (Just like paper money is printed by a government mint, but only the mint can decide how much money to print.  There is no central authority governing Bitcoin, so the mining proof-of-work is necessary otherwise anyone could easily create coins, leading Bitcoins to be as worthless as Monopoly money)

Where do the subsidies come from?