A coinbase transaction or generation transaction is always created by a miner and is the first transaction in a block.
It includes a special field, also called coinbase, which acts as an input to the coinbase transaction.
From Initiation to Immutable Confirmation (Part 2)
This transaction also allows up to 100 bytes of arbitrary data that can be used to store arbitrary data.
In the genesis block, this transaction included the most famous comment taken from The Times newspaper: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” This message is a proof that the genesis block was not mined earlier than January 3, 2009.
This is because first Bitcoin block (genesis block) was created on January 3, 2009 and this news excerpt was taken from that day’s newspaper.
A coinbase transaction input has the same number of fields as usual transaction input, but the structure contains coinbase data size and coinbase data fields instead of unlocking script size and unlocking script fields.
Also, it does not have a reference pointer to the previous transaction.
This structure is shown in the following table: Field Size Description Transaction hash 32 bytes Set to all zeroes as no hash reference is used Output index 4 bytes Set to 0xFFFFFFFF Coinbase data length 1-9 bytes 2 bytes-100 bytes Data Variable Any data Sequence number 4 bytes Set to 0xFFFFFFFF
Why This Matters for Blockchain Technology
Understanding Coinbase transactions is not just an academic exercise — it has real-world implications for how blockchain systems are designed, deployed, and secured. Whether you are a developer building decentralized applications, a business leader evaluating blockchain adoption, or a curious learner exploring the technology, this knowledge provides a critical foundation.
Key Points to Remember
- Coinbase transactions A coinbase transaction or generation transaction is always created by a miner and is the first transaction in a block.
- It includes a special field, also called coinbase, which acts as an input to the coinbase transaction.
- This transaction also allows up to 100 bytes of arbitrary data that can be used to store arbitrary data.
- In the genesis block, this transaction included the most famous comment taken from The Times newspaper: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” This message is a proof that the genesis block was not mined earlier than January 3, 2009.
Conclusion
Coinbase transactions represents one of the many innovative layers that make blockchain technology so powerful and transformative. As distributed systems continue to evolve, a solid understanding of these core concepts becomes increasingly valuable — not just for developers, but for anyone building, investing in, or working alongside blockchain-powered systems.
Whether you are just starting your blockchain journey or deepening existing expertise, mastering these fundamentals gives you the tools to think clearly about decentralized systems and make smarter decisions in this rapidly evolving space.