@ -235,7 +235,7 @@ If Bob's bitcoin wallet application is directly connected to Alice's wallet appl
=== Bitcoin Mining
((("mining","blockchains")))Alice's transaction is now propagated on the bitcoin network. It does not become part of the _blockchain_ until it is verified and included in a block by a process called _mining_. See <<ch8>> for a detailed explanation.
((("mining","blockchains")))Alice's transaction is now propagated on the bitcoin network. It does not become part of the _blockchain_ until it is verified and included in a block by a process called _mining_. See <<bitcoin_network_ch08>> for a detailed explanation.
The bitcoin system of trust is based on computation. Transactions are bundled into _blocks_, which require an enormous amount of computation to prove, but only a small amount of computation to verify as proven. The mining process serves two purposes in bitcoin:
@ -265,7 +265,7 @@ You can see the block that includes https://blockchain.info/block-height/277316[
Approximately 19 minutes later, a new block, #277317, is mined by another miner. Because this new block is build on top of block #277316 that contained Alice's transaction, it added even more computation to the blockchain, thereby strengthening the trust in those transactions. Each block mined on top of the one containing the transaction counts as an additional confirmation for Alice's transaction. As the blocks pile on top of each other, it becomes exponentially harder to reverse the transaction, thereby making it more and more trusted by the network.
In the diagram in <<block-alice1>> we can see block #277316, which contains Alice's transaction. Below it are 277,316 blocks (including block #0), linked to each other in a chain of blocks (blockchain) all the way back to block #0, known as the _genesis block_. Over time, as the "height" in blocks increases, so does the computation difficulty for each block and the chain as a whole. The blocks mined after the one that contains Alice's transaction act as further assurance, as they pile on more computation in a longer and longer chain. By convention, any block with more than six confirmations is considered irrevocable, because it would require an immense amount of computation to invalidate and recalculate six blocks. We will examine the process of mining and the way it builds trust in more detail in <<ch8>>.
In the diagram in <<block-alice1>> we can see block #277316, which contains Alice's transaction. Below it are 277,316 blocks (including block #0), linked to each other in a chain of blocks (blockchain) all the way back to block #0, known as the _genesis block_. Over time, as the "height" in blocks increases, so does the computation difficulty for each block and the chain as a whole. The blocks mined after the one that contains Alice's transaction act as further assurance, as they pile on more computation in a longer and longer chain. By convention, any block with more than six confirmations is considered irrevocable, because it would require an immense amount of computation to invalidate and recalculate six blocks. We will examine the process of mining and the way it builds trust in more detail in <<bitcoin_network_ch08>>.
@ -76,7 +76,7 @@ As with real life, the bitcoin application can use several strategies to satisfy
A transaction consumes previously-recorded unspent transaction outputs and creates new transaction outputs that can be consumed by a future transaction. This way, chunks of bitcoin value move forward from owner to owner in a chain of transactions consuming and creating UTXO.
The exception to the output and input chain is a special type of transaction called the _coinbase_ transaction, which is the first transaction in each block. This transaction is placed there by the "winning" miner and creates brand-new bitcoin payable to that miner as a reward for mining. This special coinbase transaction does not consume UTXO, instead it has a special type of input called the "coinbase". This is how bitcoin's money supply is created during the mining process, as we will see in <<ch8>>.
The exception to the output and input chain is a special type of transaction called the _coinbase_ transaction, which is the first transaction in each block. This transaction is placed there by the "winning" miner and creates brand-new bitcoin payable to that miner as a reward for mining. This special coinbase transaction does not consume UTXO, instead it has a special type of input called the "coinbase". This is how bitcoin's money supply is created during the mining process, as we will see in <<bitcoin_network_ch08>>.
[TIP]
====
@ -278,7 +278,7 @@ Hints:
[[tx_fees]]
==== Transaction Fees
((("fees, transaction", id="ix_ch06-asciidoc6", range="startofrange")))Most transactions include transaction fees, which compensate the bitcoin miners for securing the network. Fees also serve as a security mechanism themselves, by making it economically infeasible for attackers to flood the network with transactions. Mining and the fees and rewards collected by miners are discussed in more detail in <<ch8>>.
((("fees, transaction", id="ix_ch06-asciidoc6", range="startofrange")))Most transactions include transaction fees, which compensate the bitcoin miners for securing the network. Fees also serve as a security mechanism themselves, by making it economically infeasible for attackers to flood the network with transactions. Mining and the fees and rewards collected by miners are discussed in more detail in <<bitcoin_network_ch08>>.
This section examines how transaction fees are included in a typical transaction. Most wallets calculate and include transaction fees automatically. However, if you are constructing transactions programmatically, or using a command-line interface, you must manually account for and include these fees.
@ -31,7 +31,7 @@ One way to think about the blockchain is like layers in a geological formation,
[[block_header]]
=== Block Header
((("block headers")))((("blocks","headers")))The block header consists of three sets of block metadata. First, there is a reference to a previous block hash, which connects this block to the previous block in the blockchain. The second set of metadata, namely the((("difficulty target","in block header")))((("nonce,","in block header")))((("timestamping blocks","in block header"))) _difficulty_, _timestamp_, and _nonce_, relate to the mining competition, as detailed in <<ch8>>. The third piece of metadata is the merkle tree root, a data structure used to efficiently summarize all the transactions in the block. <<block_header_structure_ch09>> describes the structure of a block header.
((("block headers")))((("blocks","headers")))The block header consists of three sets of block metadata. First, there is a reference to a previous block hash, which connects this block to the previous block in the blockchain. The second set of metadata, namely the((("difficulty target","in block header")))((("nonce,","in block header")))((("timestamping blocks","in block header"))) _difficulty_, _timestamp_, and _nonce_, relate to the mining competition, as detailed in <<bitcoin_network_ch08>>. The third piece of metadata is the merkle tree root, a data structure used to efficiently summarize all the transactions in the block. <<block_header_structure_ch09>> describes the structure of a block header.
[[block_header_structure_ch09]]
@ -47,7 +47,7 @@ One way to think about the blockchain is like layers in a geological formation,
| 4 bytes | Nonce | A counter used for the proof-of-work algorithm
|=======
The nonce, difficulty target, and timestamp are used in the mining process and will be discussed in more detail in <<ch8>>.
The nonce, difficulty target, and timestamp are used in the mining process and will be discussed in more detail in <<bitcoin_network_ch08>>.
[[block_hash]]
=== Block Identifiers: Block Header Hash and Block Height
Matthew Hacker
7 years ago