Homework on Bitcoin Ecosystem - Questions

[Crypto_Tax_Fixer]

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

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

A wallet assembles a transaction based on existing owned UTXOs to convert into nex UXTOs using a private key. The transaction is then broadcast across the newtork.

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

The miner picks transactions with the largest fee.

[jxdrew]

Q1: SPV nodes are different from full nodes because they do not have a complete local copy of the blockchain and therefore it must trust & query a number of fulls node in order to report their correct transaction data. Examples of SPV are mobile phones as they do not have the storage capacity to hold the entire blockchain.

Q2: When a TX is broadcasted by a wallet it means it is sent across the whole network, nodes to node, so all nodes can confirm it is valid. Once there is consensus it is entered into each nodes Mempool.

Q3: Miners are incentivised to make money so they choose the TX’s with the highest TX fees and priority when constructing their blocks.

[Sander_Heikens]

1. What is the difference between a SPV (simplified payment verification) and a full node?
SPV allows a lightweight client to verify that a transaction is included in the Bitcoin blockchain, without downloading the entire blockchain. A full node has a entire copy of the blockchain

2. What does it mean when a transaction is broadcasted?
This means that the transaction is propagated to all of the other nodes in the network.

3. How does a miner pick which transactions that gets added to the next block?
A miner always picks the transactions with the highest fee from the mempool

[Fabrice]

@Crypto_Mofo

Looks into the Mempool and choose the blocks with the highest transaction fees.

Chooses ‘transactions’ with the highest fee listed in the mempool. (probably a typo )

[Fabrice]

@figurin

When your transaction is broadcast to the node network or gosslped.

I have a cool comic about this topic: (gossip)

[Fabrice]

@Christophe_H

When a miner get a hash below the target, they broadcast the latest blockchain to the rest of the nodes

But here we mean that a valid transaction get broadcasted to the network and will end up in the mempool of full nodes.

[Fabrice]

@Cryptocat

It is sent to nodes that either confirm it is the longest chain with the most proof of work, or rejects transactions being broadcast to it.

But first it will end up in the mempool of all nodes where miners can choose transactions to construct a block.

[Fabrice]

@RailGame

This UTXO is placed in the mempool to be confirmed by a miner.

Not the utxo is placed into the mempool, but the whole transaction. Utxo’s are just part of a transaction where you need to change ownership of those batches of bitcoin.

[Fabrice]

@Matgas

It does mean the transaction is in the Blockchain and all nodes have accepted this certain version of the truth of the blockchain.

When you broadcast a transaction, it doesn’t get accepted in the blockchain yet. First your transaction will be send and gossiping to the mempool of all nodes. Then miners pick transactions from the mempool to construct a block. Once your transaction is confirmed, it means it’s included into a block.

[Crypto_Mofo]

You’re right. the miner choose the transactions with the highest fees for the next block.

[RailGame]

Yes I understand that fully now. Thanks @Fabrice

[Fabrice]

@Neeraj_Nerlekar

The transaction is broadcasted means, the solved puzzle of the block propagates throughout the network to add it in all the nodes database.

Solving the puzzle is about mining. When you broadcast a transaction, first it will be sent to a full node that wil propagate your transaction to the mempool of all nodes. Then miners can Pick transactions to construct a block and solve ‘the puzzle’ to be a valid block

[Neeraj_Nerlekar]

Thank you, Fabrice! Yes, now I recollect it.

[cincinnato]

What is the difference between a SPV (simplified payment verification) and a full node?
A SPV has not a copy of the full chain saved locally. It is basically enquiring another node.

What does it mean when a transaction is broadcasted?
From the wallet is sent to a node and put on the mempool.

How does a miner pick which transactions that gets added to the next block?
Collecting from its own and other node mempool.

[Nickpuna1]

1. SPV doesn’t have full access to the blockchain but a Full node has complete access.

2. The transaction is propergated to all the nodes.

3. Most miners pick the TX with the most fees in the Mempool.

[FilipGuldhill]

1. An SPV is a “small version” Node which trusts a full Nodes. An SPV (ex. your phone) doesn’t have the capacity to store the entire blockchain history but trusts its full node neighbors.
2. When your wallet send out your transaction request to the blockchain network of nodes.
3. The miner usually picks transactions with the highest fees based on all broadcasted transactions which have not been verified and stored in the mempool.

[Henk1]

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

• A full node has a full version of the blockchain and a SPV doesn’t. The SPV has to access the nearest node in order to read the blockchain.

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

• After a transaction is created it is transmitted to all the nodes and miners and will be added to the mempool.

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

• The miner will pick the transaction with the highest satoshi per byte. In other words, the miner will pick the transaction with the highest transaction fee.

[MoCrypto]

1. A SPV does not have a complete copy of the entire blockchain. It works like a node and has to communicte with full nodes to get the information for the entire blockchain.

2. That means that the transaction is communicated across all nodes on the blockchain.

3. The miner solves the nonce by picking transactions that have the highest miner fees within. So the UTXOs that the miner chooses from have a many transaction within as possible in order to captures the fees for those transactions. A small number of transactions that mover a large amount of value across the network are less attractive than a large number of transactions because that large number will produce greater fees overall for the miner.

[Bunbo_Hue]

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

An SPV does not store the full blockchain, it has to query a full node in order to access the whole blockchain and send transactions.

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

Broadcasting a transaction means the node has accepted the transaction and begins propagating it to the other nodes in the network, after which it gets added to the mempool.

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

Miners will pick transactions based on the ones with the highest fees.

[Christophe_H]

Hi Fabrice, I had a confusion when re-reading it myself and it is clear now. Thanks for pointing it out!