Blockchain

The Bitcoin blockchain is a public ledger that describes the original creation and chain-of-ownership of every bitcoin amount. This chronological record of all accepted transactions allows a Bitcoin client to determine the authenticity of any past or future payment. Particularly, this solves the problem of determining when a bitcoin amount has been spent, so further attempts to double-spend particular bitcoins are not possible.

About every ten minutes, a group of pending transactions is packaged together into a transaction block, which is transmitted to all Bitcoin nodes. When a transaction has been included in a block, it is considered to have been confirmed, meaning that it very likely to become part of this record of transactions.

The contents of a block are protected from alteration by a cryptographic hash function which is very difficult to compute. Each block also contains identity information about the correct previous block, so as future blocks are added to this chain of blocks, altering the contents of the blockchain or replacing a block with another becomes even harder. By this mechanism, the blockchain becomes a cryptographically protected permanent store of all past transactions.

The size of the blockchain is continuously growing, and the reference Bitcoin client requires a complete download of the entire transaction record to function as a wallet. Using a full Bitcoin client supports the operation of the Bitcoin network, but new users may find a “light” client or a web wallet a faster introduction to Bitcoin.

Next: Mining >>