Is it in someway related to the transaction cost charged by ethereum for each transaction ?
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2 Answers
Rewards for mining a block is the way crypto coins are generated in general. This is the only mode of "supply" of crypto currencies. Of course, Ethereum and some others had a crowd sale of Ethers even before the network was alive.
Another way to think about this is - Miners spend energy to secure the network and hence the reward.
If you are asking why is the reward "5 ETH", then...it comes down to how much you want to supply ETH overtime in the market and that is pre-determined by the creators of Ethereum.
It is not related to transaction cost charged by Ethereum. Transaction fees, you would have to pay when you execute a transaction anyways.
answered Aug 10, 2016 at 13:32
Giving to miners a reward for successfully mining a block is a general practice in a lot of Proof Of Work crypto-currency technologies. This is so the miners have incentives to mine and to have a correct behavior. They spend money to purchase hardware and run it and they expect to gain something. This discourages validating invalid transactions since the other miners will reject your block and you will gain nothing even if you got lucky and solved the puzzle first.
This is only part of the incentive, the other being the transaction fees.
At least from my understanding the block reward is only used to bootstrap the technology and in the future it is expected that the main incentive is the transaction fee. The best case to show this is in Bitcoin where the block reward decreases constantly and at some point it will reach 0. If this is true remains to be seen...maybe if the block reward is 0 the crypto currency dies altogether.
