Homework on Bitcoin Ecosystem - Questions

Blockchain and Bitcoin 101
#2048
  1. What is the difference between a SPV (simplified payment verification) and a full node?

SPVs are nodes without entire blockchain but a full node has entire copy of blockchain. SPVs are dependent on full node to read blockchain.

  1. What does it mean when a transaction is broadcasted?

After signed the transaction by the wallet, it can be broadcast to the network without leaking any sensitive information.

  1. How does a miner pick which transactions that gets added to the next block?

Most of the time, miners pick the transaction with a highest fee.

1 Like
#2049
  1. A SPV is only a section of the full chain and not the full blockchain itself
  2. What a transaction is broadcasted, it is your wallet submitting a transaction to the nodes/network. This is the step before a node will verify that the transaction looks valid and enter it into its mempool for miners to cormorants into a block.
  3. You want to wait for 6 more blocks to confirm your transaction to give the network enough time to propagate enough times to ensure version of the chain isn’t solved later that used a different block than the one that included your transaction leading your the block with your transaction on it to become a “stale block.”
#2050
  1. SPVs do not contain the entire blockchain history and rely on querying nodes for accuracy.
  2. When a transaction is broadcasted it is sent over the network for verification by your wallet.
  3. A miner will pick the transaction with the highest fee from the mempool to add to the next block.
1 Like
#2051

That is true, but its not how miners pick transactions in a block :stuck_out_tongue:

#2052
  1. What is the difference between a SPV (simplified payment verification) and a full node?
    A node has a copy of the full blockchain but SPV does not but will query the information from a node
  2. What does it mean when a transaction is broadcasted?
    That means a transaction with a signature from private key and public address that it is sending to is complete and is trying to be recorded in a block. Nodes will add to the mempool and miners will add it to the block.
  3. How does a miner pick which transactions that gets added to the next block?
    Since miners are incentivized by mining fees, they usually prefer choosing the transaction with the highest mining fee from the mempool.
1 Like
#2053

  1. A node has a copy of the entire blockchain. An SPV broadcasts and queries nodes because it does not hold a full copy of the blockchain.

  2. A broadcast transaction is waiting in the mempool to be picked up by a miners to be appended to the network and confirmed.

  3. Miners choose the transactions with the highest fees.

1 Like
#2054

  1. A SPV does NOT contan a full version of the blockchain a full node does.

  2. It means a wallet has broadcasted a transaction to a node which has added the tx, into the mempool

  3. Typically miners pick the tx’s with the highest payable fees

1 Like
#2055

1. What is the difference between a SPV (simplified payment verification) and a full node?
a. SPV can be considered a node
b. SPV are nodes that do not have the entire blockchain
c. They query other full-nodes when they want to read the blockchain
d. They need to do this regularly in order to know if you have received any UTXOs as they do not store any UTXO data…
e. i.e Phones can be considered SPV

2. What does it mean when a transaction is broadcasted?
a. It will be propagated to other nodes to be validated
b. Once validated, the transaction will be stored inside the mempool of full-nodes for miners to pickup

3. How does a miner pick which transactions that gets added to the next block?
a. Financially, the miner will pick the transactions with the highest sat/B ratio as this will produce the highest fees in relation to the size
b. The miner can then ‘fit’ more transactions inside a block as block size is limited, providing more returns.

1 Like
#2056

  1. What is the difference between a SPV (simplified payment verification) and a full node?
    An SPV doesn’t store all the data of a full node and it mainly queries a full node to see what UTXOs can be spent by that wallet.

  2. What does it mean when a transaction is broadcasted?
    It means that the transaction is sent to all the nodes in the network and are entered into a mempool where those transactions wait to be picked up by miners so they can be confirmed within a block.

  3. How does a miner pick which transactions that gets added to the next block?
    A miner simply picks all the transactions with the highest fees and they also go by how many satoshis/bit they can make as a return for storing the transaction data on the block. If it has a favorable satisfies/bit ratio then it will be picked up by the miner.

1 Like
#2057
  1. SPV does not a full copy of the blockchain. It’s reduced a copy of the blockchain and does not have the same capabilities as a node. Nodes have a fully copy of the blockchain and can propagate transactions throughout the network and push transactions to the mempool.
  2. When a transaction is broadcasted it is sent out to the network for the nodes to review. If the nodes agree with the transactions they will start to push the transaction to the mempool for the miners to verify and append to the blockchain.
  3. Miners choose the transactions with highest fees because it pays them the most.
1 Like
#2058

Thanks for the reply. I appreciate learning and input as I’m trying to learn the overview of the network and keeping facts straight. I’ll post this question in the forum as well but I guess a question I have at this point is how Miners select transactions from mempool.

Can miners cherry pick the transactions with the highest fees from each mempool or do they select entire mempools that cumulatively have the highest sums of fees?

#2059

Each node has its own mempool, and its not necessarily the same on each one because some transactions might not propagate to all nodes yet.
And yes miners can pick transactions as they please, mostly they prefer ones with the highest transaction fees :slight_smile:

1 Like
#2060

With how competitive it is to find a block quickly, do miners only build a block of what is in their personal mempool at the time a previous block is found and immediately start building a new block? Or do they spend anytime between when a block is found, and crunching nonces themselves to search for higher fee transactions in other mempools?

#2061
  1. An SPV doesn’t have all the information and has to connect to a full note for all data from the blockchain.
  2. All other Nodes are informed.
  3. Miners will look for the highest transaction fees.
1 Like
#2062

Well the less time they spend doing nothing the higher the chance someone else will find a block instead. So as soon as they are able to construct a new block they start mining the correct nonce for said block. :slight_smile:

2 Likes
#2063

  1. What is the difference between a SPV (simplified payment verification) and a full node?
    SPVs are like helpers to the full node. They don’t hold copies of the blockchain but they can get information about UTXOs that are relevant to the transactions they are working on. They can query the blockchain on the full node, and they can communicate with wallets, but they cannot make blocks.

  2. What does it mean when a transaction is broadcast?
    It means that it is sent to all the other participants (nodes, miners, SPV, etc) in the blockchain network in a decentralized way.

  3. How does a miner pick which transactions get added to the next block?
     Usually the miner picks the transactions from the mempool that have the largest fees since the miner earns the block reward PLUS all the transaction fees.

2 Likes
#2064
  1. The difference between a SPV and a full node is that an SPV does not have a copy of the blockchain and needs to connect to the node to get the information. The node has the entire copy of the blockchain, verify it is correct and verify transactions.
  2. A transaction being broadcasted means it is propagated to all of the nodes or spread to all of the nodes like gossip.
  3. A miner picks transactions from a mempool and chooses the ones with the higher transaction fees.
1 Like
#2065

Homework on Bitcoin Ecosystem - Questions

1. What is the difference between a SPV (simplified payment verification) and a full node?

An SPV only stores transactions relevant to addresses derived from its private key, and trusts a full node instead (which has a complete copy of the blockchain) to verify it’s transactions.

It can also query the blockchain to update information on it’s pending transactions.

2. What does it mean when a transaction is broadcasted?

Once the transaction has been constructed by the wallet, and signed with the private key, it is then broadcast to the nodes of the network, where it will remain in the mempool of each node that has received it until it is added to a new block and mined.

3. How does a miner pick which transactions that gets added to the next block?

The block size for bitcoin is 1MB, so only a limited number of transactions can fit into a single block. If network users pay higher transaction fees, the miners are incentivised to favour those transaction over cheaper ones, as they will make more profit.

These fees are measured in Satoshi per byte, and are added to the transaction before it is broadcast.

1 Like
#2066

What is the difference between a SPV (simplified payment verification) and a full node?
A full node has a full copy of the entire blockchain, whereas an SPV has to rely on a full nodes version of the blockchain because it doesn’t have it’s own copy.

What does it mean when a transaction is broadcasted?
The transaction is sent from node to node throughout the entire network so all the local node copies of the blockchain can be updated properly.

How does a miner pick which transactions that gets added to the next block?
They try to pick the transactions that will give them the highest fees with the least amount of data sent.

1 Like
#2067
  1. A SPV does not have the full block chain whereas a full node has the full version of block chain. SPV confirm a transaction by looking at full nodes.
    2.It means that the transaction data is propagated between all the nodes in the network.
    3.Miner picks transactions with highest transaction fees from the mempool to add into the next block.
1 Like