Bitcoin Block Chain Ledger

A Bitcoin Block Chain Ledger is a distributed shared public ledger used by a Bitcoin system to record bitcoin transactions.

• Context:
  • It can (typically) contain all Confirmed Bitcoin Transactions.
• See: Public Database, Shared Database, Ledger.

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References

2015

• https://bitcoin.org/en/how-it-works
  • QUOTE: The block chain is a shared public ledger on which the entire Bitcoin network relies. All confirmed transactions are included in the block chain. This way, Bitcoin wallets can calculate their spendable balance and new transactions can be verified to be spending bitcoins that are actually owned by the spender. The integrity and the chronological order of the block chain are enforced with cryptography.

• https://en.bitcoin.it/wiki/Block_chain
  • A block chain is a transaction database shared by all nodes participating in a system based on the Bitcoin protocol. A full copy of a currency's block chain contains every transaction ever executed in the currency. With this information, one can find out how much value belonged to each address at any point in history.

    Every block contains a hash of the previous block. This has the effect of creating a chain of blocks from the genesis block to the current block. Each block is guaranteed to come after the previous block chronologically because the previous block's hash would otherwise not be known. Each block is also computationally impractical to modify once it has been in the chain for a while because every block after it would also have to be regenerated. These properties are what make double-spending of bitcoins very difficult. The block chain is the main innovation of Bitcoin.

    Honest generators only build onto a block (by referencing it in blocks they create) if it is the latest block in the longest valid chain. "Length" is calculated as total combined difficulty of that chain, not number of blocks, though this distinction is only important in the context of a few potential attacks. A chain is valid if all of the blocks and transactions within it are valid, and only if it starts with the genesis block.

    For any block on the chain, there is only one path to the genesis block. Coming from the genesis block, however, there can be forks. One-block forks are created from time to time when two blocks are created just a few seconds apart. When that happens, generating nodes build onto whichever one of the blocks they received first. Whichever block ends up being included in the next block becomes part of the main chain because that chain is longer. More serious forks have occurred after fixing bugs that required backward-incompatible changes.

    Blocks in shorter chains (or invalid chains) are not used for anything. When the bitcoin client switches to another, longer chain, all valid transactions of the blocks inside the shorter chain are re-added to the pool of queued transactions and will be included in another block. The reward for the blocks on the shorter chain will not be present in the longest chain, so they will be practically lost, which is why a network-enforced 100-block maturation time for generations exists.

    These blocks on the shorter chains are often called "orphan" blocks. This is because the generation transactions do not have a parent block in the longest chain, so these generation transactions show up as orphan in the listtransactions RPC call. Several pools have misinterpreted these messages and started calling their blocks "orphans". In reality, these blocks have a parent block, and might even have children.

    Because a block can only reference one previous block, it is impossible for two forked chains to merge.

    It's possible to use the block chain algorithm for non-financial purposes: see Alternative chain.

    The block chain is broadcast to all nodes on the networking using a flood protocol: see Block chain download.

• http://www.economist.com/blogs/graphicdetail/2015/01/daily-chart-3
  1. ) Payers initiate a bitcoin payment using "wallet" software.
  2. ) This and other pending transactions are broadcast on the global bitcoin network.
  3. ) Once every ten minutes or so, "miners", specialised computers (or groups of computers) on this network, collect a few hundred transactions and combine them in a "block".
  4. ) In order to mine a block and validate the transaction, miners compete to solve a difficult mathematical equation (a "hash function"). The miner that solves the equation first further processes the block and broadcasts this "proof-of-work" to the bitcoin network.
  5. ) The other miners check the proof-of-work and the validity of the transactions. If they approve, the winning miner gets a reward of 25 newly minted bitcoin (about $6,900 at current prices), which is the incentive for miners to provide computing power. Adjusting the difficulty of the puzzle ensures that the supply of new bitcoins remains steady.
  6. ) The mined block is added to the “blockchain", a big, unbreakable ledger that lives on the bitcoin network and serves as a record of all transactions.
  7. ) The payee can use his wallet software to see whether the bitcoin have arrived.

2014

• (Wikipedia, 2014) ⇒ http://en.wikipedia.org/wiki/Bitcoin#The_block_chain_ledger Retrieved:2014-6-28.
  • All bitcoin transfers are recorded in a computer file that acts as a public ledger called the block chain, which everyone can examine. Where a conventional ledger records the transfer of actual bills or promissory notes that exist apart from it, bitcoins are simply entries in the block chain and do not exist outside of it.

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