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Lesson 2 of 6 · 3 min read

How Bitcoin works: nodes, mining, and supply

See how nodes check rules, miners propose blocks, and issuance follows a schedule.

By BTCFQ Editorial Team

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The idea to take with you

Nodes enforce validity. Miners compete to add valid blocks. Scheduled scarcity does not guarantee demand or price.

Nodes check; miners propose

A full node verifies transactions and blocks against its own consensus rules. Miners assemble candidate blocks and compete to produce valid proof of work. Finding a block does not give a miner permission to break the rules: validating nodes reject invalid blocks.

Wallets, nodes, and miners have different jobs. Some wallet software connects to a service’s node; other setups let you verify with your own.

Why blocks form a chain

A block groups transactions and refers to a previous block. Those references connect the history. Altering an older block changes its hash and requires rebuilding later proof of work to compete with the accepted history.

Nodes follow the valid chain with the most accumulated proof of work. This is why a screenshot of a payment is weaker evidence than a transaction verified against the network.

New bitcoin follows a schedule

A valid block can include a subsidy, which creates new bitcoin, plus transaction fees. Under the current consensus rules, the subsidy halves every 210,000 blocks. This issuance schedule approaches a limit of about 21 million bitcoin.

Miners cannot simply award themselves more: nodes enforce the permitted reward. The supply schedule explains issuance, not what someone will pay for bitcoin.

Time is an average, not a timer

The system targets an average block interval of roughly ten minutes by adjusting mining difficulty. Individual blocks can arrive much faster or much slower. Waiting ten minutes does not guarantee your particular transaction will be included.

Confirmation confidence grows as later blocks build on a transaction’s block. The appropriate waiting policy depends on the payment and its risks.

Try the idea: a rule-breaking block

Imagine a miner proposes a block that awards too much new bitcoin. The proof of work might be real, but your validating node rejects the block because its reward is invalid.

This separates two ideas: proof of work establishes the work behind a proposal; consensus validation decides whether that proposal follows the rules. Both matter.

A common misconception: miners decide every rule

Mining power helps determine which valid history accumulates the most proof of work. It does not make an invalid transaction acceptable to a node following unchanged rules. Nodes and miners therefore have different roles rather than a simple boss-and-worker relationship.

Before you move on, describe what happens when a node sees an invalid block. Then explain why a valid block with more work behind it matters when nodes compare competing histories.

Keep exploring

Pause and reflect

Check your understanding

What can a miner do if a block breaks a consensus rule?

Choose the best answer
Keep exploring

Explore Nodes

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