What Is the Economic Incentive for Honest Miners to Maintain a High Hash Rate?
Honest miners are primarily incentivized by the block reward (newly minted coins) and transaction fees. A higher hash rate increases their chance of mining the next block and receiving this reward.
Furthermore, by collectively maintaining a high hash rate, they secure the network, which sustains the coin's value. If the coin's value drops due to an attack, the profitability of mining also falls, creating a self-reinforcing economic incentive to maintain security.
Glossar
Economic Incentive
Incentive ⎊ An Economic Incentive is a financial reward or penalty structurally embedded within a blockchain protocol or smart contract designed to guide participant behavior toward actions beneficial for the network's security and operation.
Miners
Validation ⎊ Miners, within the cryptocurrency ecosystem, represent network participants who compete to bundle pending transactions into blocks, subsequently adding these blocks to the blockchain through computationally intensive processes.
Higher Hash Rate
Security ⎊ A Higher Hash Rate signifies an increased aggregate computational power actively dedicated to solving the cryptographic puzzles on a Proof-of-Work blockchain.
Honest Miners
Miner ⎊ The term "Honest Miners" within cryptocurrency, options trading, and financial derivatives signifies participants exhibiting a commitment to protocol integrity and market efficiency, particularly within proof-of-work consensus mechanisms.
Incentive
Mechanism ⎊ Incentive structures within cryptocurrency, options trading, and financial derivatives function as engineered protocols to align the interests of diverse participants, influencing behavior and mitigating agency problems.