Homework on Bitcoin Ecosystem - Questions

Blockchain and Bitcoin 101
#2188

  1. SPV does not contain a copy of the block chain. It must contact a full node to read the block chain.

  2. Transactions are forwarded from node to node till all nodes are aware of it.

  3. Miners are allowed to pick transactions however they want but generally Miners will pick transactions that give them the best price per Kb.

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#2189

  1. The difference between a SPV and a full node is that a SPV does not have the entire blockchain on it but instead has a link to a node which contains the full blockchain so that only the most pertinent transaction data is obtained. This reduces overhead and therefore the amount of time to access blockchain transaction data.

  2. Broadcasting is when a blockchain transaction appended to the blockchain and that information is shared with all the other nodes in the network.

  3. A miner will normally select the transactions which has the highest transaction fees.

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#2190

Homework on Bitcoin Ecosystem - Questions

  1. What is the difference between a SPV (simplified payment verification) and a full node?
    SPV reads blockchain from full nodes
  2. What does it mean when a transaction is broadcasted?
    When a transaction is signed by the private key owner
  3. How does a miner pick which transactions that gets added to the next block?
    Miners normally pick a transaction from the mempool that have the greatest fees
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#2191
  1. An SPV does not store the full blockchain and relies on (trusts) a full node for querying the blockchain for payments. A full node constantly maintains an up to date version of the blockchain.
  2. Broadcasting a transaction means propagating the digitally signed and validated transaction throughout the network, subjecting it to validation by all nodes in the network before being added to the mempool.
  3. Miners pick transactions based on their transaction fees. The transactions that provide the best rate (i.e. satoshis/byte) are likely to get chosen first.
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#2192
  1. A SPV does not hold the data of the entire blockchain and therefore needs to connect to a full node to obtain this info.
  2. When a transaction is broadcasted it does to the nodes where it is spread to other nodes, eventually reaching all nodes in the network.
  3. The miner will pick transactions from the mempool likely choosing the transaction with the highest fee.
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#2193

1:spv does not have a copy of the blockchain but rather is a “satellite” that gets its data from full nodes.

2:it means that said transaction is being broadcasted through the entire network of nodes.

3:the miner picks transactions from the mempool, usually picking the ones with the highest fees.

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#2194

1- A full node stores a full copy of the BC, which is built by the node itself by independently verifying all txns starting from the genesis block. A full node also receives data from the network about new blocks, verifies the data, and adds it to its local copy of BC. A full node also receives, verifies, and stores data of unconfirmed txns in a local mempool until they are confirmed by miners. Storage and resources are costly to run a full node on the bitcoin network.

For this reason, in order to greatly minimize cost, a SPV node can be used instead of a full node to operate on the bitcoin network. SPV node stores only block header information and no txn data. However SPV node must communicate regularly with other full nodes. Whenever the SPV node requires txn data, it will query other random full nodes for the data and trust that the data is verified correctly by the full nodes. For this reason running a SPV node is less secure than running a full node.

2- When a txn is created by a wallet, the inputs of the txn are determined through the private keys (UTXOs) and the outputs are generated. If the txn is valid, the wallet will digitally sign the txn using the private keys. The SPV node of the wallet will then notify its peers of a new txn. If the connected peers don’t already know about the txn they will send a request for the data. This process continues onward until all nodes learn of the new txn.

3- The miner picks which txns get added to the next block from the mempool of a particular node. The miner is free to pick any txn in the mempool as long as the txn is valid. However, the miner is incentivized to prioritize the txns with the highest fees because when the block is added to BC, the miner will be rewarded with the block reward and all txn fees of that block.

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#2195

  1. Spv queries different nodes and returns the utxo taking the response of those nodes as valid. Spv only store relevant transactions (those associated with the wallet). Full node has the full blockchain and can also verify that transactions are valid.

  2. When a full node receives a new block produced by a miner or from other nodes in the network, it verifies it is a valid block and if so, broadcast to the rest of the network the new information.

  3. They are financially incentivized to include first the ones with the highest fees.

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#2196

This is when the block propagates through the network. But first the transaction must propagate on its own so the miners can pick it up and eventually put in a block. :slight_smile:

#2197

  1. What is the difference between a SPV (simplified payment verification) and a full node?
    A) A SPV is like a ‘mini’ node on your cell phone. (unable to download the whole blockchain) the SVP will confer with a full node for verifications,

  2. What does it mean when a transaction is broadcasted?
    A) A broadcasted transaction means the wallet or SPV has communicated the transaction to a node, to validate the transaction to be confirmed by the miner.

  3. How does a miner pick which transactions that gets added to the next block?
    A) The miner will choose validated transactions by the node from the memepool and will pick the one with the highest fee per byte

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#2198

  1. SPV is really just a light node. It has the ability to update current UTXOs that it holds and to check in with a full node, but it doesn’t keep track of the full history of the blockchain.

  2. A transaction is broadcasted by a wallet to one or several blockchain nodes. These nodes then pass this transaction information on and also verify if this is a valid transaction based on information from the full history of the blockchain.

  3. A miner is maintaining a full node which is constantly keeping track of all of the transactions in the mempool. The miner then selects the transactions that will grant her or him the highest transaction fees. These will be included in the block up into the maximum space of about 2MB. It’s all about financial incentives.

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#2199

Bitcoin has a block size of 1MB but since the segwit update it can also store up to 4MB of witness data. :slight_smile:

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#2200
  • What is the difference between a SPV (simplified payment verification) and a full node?

An SPV does not store all of the data on the blockchain and needs to connect to a full node to get information.

  • What does it mean when a transaction is broadcasted?

Transactions are being propagated to other nodes in the network.

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

Miners choose transactions based on the highest fees/kb

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#2201

Questions

  1. What is the difference between a SPV (simplified payment verification) and a full node?
    SPV always needs confirmation from a full node as it does not have all data
  2. What does it mean when a transaction is broadcasted?
    It means that a node is sending data into the network for confirmation and verification to be recorded into the blockchain.
  3. How does a miner pick which transactions that gets added to the next block?
    based on highest incentive for the transactions based on fee per byte
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#2202

1- Full nodes store whole blockchain database, SPVs generally store transactions relevant to its addresses and do not have blockchain database
2- The node accepts new transaction and propagates through the network.
3- miners prefer and pick transactions from the mempool with the highest fee reward incentive.

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#2203
  1. Full node has the complete version of blockchain. SPV has a piece of it and has to be connected to a full node in order to make transactions.
  2. The transaction is broadcasted when it is accepted by one node and then sent out to all the other nods in the world (the network) so they can all validate it.
  3. Based on fees and how much space/bytes the transaction actually takes. Idealy high fee low bytes :slight_smile: (The Satoshi/byte ratio)
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#2204

Thanks mate for your answer! :slight_smile:

#2205

  1. SPV is not a full node and does not have a copy of the full ledger which includes all UTXO information to verify its transactions. Hence, it has to communicate with a full node in order to confirm a transaction is put onto a block.

  2. A transaction being broadcasted is when a transaction is sent to other full nodes on the network to be picked up by a miner; to be added to a block in order to confirm the transaction.

  3. Miners pick transactions from a mempool located on nodes. Miners are incentivized to pick transactions with the highest sat/byte in order to earn higher rewards based on transactions they pick to be put in their block.

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#2206

I should’ve been more specific. When I said “and now is being picked up by nodes” I meant that it is being picked up by a node from the mempool. and then I mention “picked up by nodes for it to travel to every single node to verify the transaction…” I was saying that after the first node got it from the mempool then other nodes are getting it to verify and it spreads on. and yes either a miner can create their own block to add to the network or pick up someone elses from the nodes all gossiping a transaction.

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#2207
  1. What is the difference between a SPV (simplified payment verification) and a full node?

SPV does not carry full version of blockchain. SPV continuously checks with a full node to see if UTXO’s on wallet still make sense.

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

Nodes receives a transaction and it propagates from node to node until transaction is on entire network.

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

Miner picks transaction with highest transaction fee first.

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