Block Rewards are incentives or prizes given to miners after they use their computing resources to successfully validate a new block of transactions and add them to the blockchain.
Miners on Proof-of-Work (PoW) blockchains use specialized computer equipment, or mining equipment, to solve complex hashing problems.
This is called mining.
Once the hashing problem is solved and the new block is added to the blockchain, the miner receives a reward in the form of the native cryptocurrency for that specific blockchain for all of the work they have done.
Remember, blockchains are just sequences of individual blocks, where each block contains a record of transactions that have taken place on the blockchain over some time period, along with a hash that is a reference to the preceding block.
The hash is a security feature that makes it almost impossible to forge the blockchain.
Each one of these blocks also contains a hashing puzzle or hashing problem, which needs to be solved before any other miner, before the block (collection of transactions) can be validated and added to the blockchain.
With potentially several hundred thousand transactions happening every day, like with bitcoin (BTC), it’s important to validate transactions as fast as possible.
Block rewards make this possible, as it’s more likely for a blockchain user to help the blockchain validate transactions if they’re getting paid.
Mining has now turned into an enterprise-sized market, with companies using server farms comprised of thousands of specialized mining servers and spending millions on monthly energy costs to run those servers, in an effort to be the miner of choice when it comes to validating transactions.