Miners are getting paid for their work as auditors. They are doing the work of verifying previous bitcoin transactions.
This convention is meant to keep Bitcoin users honest and was conceived by bitcoin’s founder, Satoshi Nakamoto. By verifying transactions, miners are helping to prevent the “double-spending problem.”
Double spending is a scenario in which a bitcoin owner illicitly spends the same bitcoin twice. With physical currency, this isn’t an issue: once you hand someone a $20 bill to buy a bottle of vodka, you no longer have it, so there’s no danger you could use that same $20 bill to buy lotto tickets next door. With digital currency, however, as the Investopedia dictionary explains, “there is a risk that the holder could make a copy of the digital token and send it to a merchant or another party while retaining the original.”
Let’s say you had one legitimate $20 bill and one counterfeit of that same $20. If you were to try to spend both the real bill and the fake one, someone that took the trouble of looking at both of the bills’ serial numbers would see that they were the same number, and thus one of them had to be false. What a bitcoin miner does is analogous to that—they check transactions to make sure that users have not illegitimately tried to spend the same bitcoin twice. This isn’t a perfect analogy—we’ll explain in more detail below.
Once a miner has verified 1 MB (megabyte) worth of bitcoin transactions, known as a “block,” that miner is eligible to be rewarded with a quantity of bitcoin (more about the bitcoin reward below as well). The 1 MB limit was set by Satoshi Nakamoto, and is a matter of controversy, as some miners believe the block size should be increased to accommodate more data, which would effectively mean that the bitcoin network could process and verify transactions more quickly.
Note that verifying 1 MB worth of transactions makes a coin miner eligibleto earn bitcoin—not everyone who verifies transactions will get paid out.
1MB of transactions can theoretically be as small as one transaction (though this is not at all common) or several thousand. It depends on how much data the transactions take up.
“So after all that work of verifying transactions, I might still not get any bitcoin for it?”
That is not correct.
To earn bitcoins, you need to meet two conditions. One is a matter of effort; another one is a Best from Rest Software like Minertools
1) You have to verify ~1MB worth of transactions. This is the easy part.
2) You have to be the first miner to arrive at the right answer to a numeric problem. This process is also known as proof of work.