Homework on Bitcoin Ecosystem - Questions

[a.ekasdornkorn]

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

• SPV is usually used for portable wallets to work with everyday payments. It cannot mine. It will communicate to the network and get only necessary information to work with.

What does it mean when a transaction is broadcast?

• When a transaction is sent to the network, it will be propagated in a peer-to-peer manner (also known as gossipping) to all nodes.

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

• The transactions with highest fees will be picked first, then the next highest, etc.

[Long]

@ivan

• What is the difference between a SPV (simplified payment verification) and a full node?
• What does it mean when a transaction is broadcasted?
• How does a miner pick which transactions that gets added to the next block?

1. SPVs don’t have access to the full blockchain network and must query nodes, whereas full nodes have full access to the blockchain stored locally.
2. TXs are shared / propagated to other full nodes.
3. Miners are financially incentivized to to pick the TX that have the highest fee per Satoshi/Byte (sat/B) ratio. (largest block size in terms of data)

[knottymoose]

1. What is the difference between a SPV (simplified payment verification) and a full node?
   While a full node with have a copy of the blockchain locally, an SPV will not. The SPV must send a query to a full node to confirm what UTXOs are available for the private key to spend.

2. What does it mean when a transaction is broadcasted?
   A wallet will create a transaction which then must be sent to all of the nodes on the network. It will then be added to the mempool in each of these nodes so miners can add it to the next block they mine.

3. How does a miner pick which transactions that gets added to the next block?
   A miner will pick the transactions with the highest fees so they can earn more money. Fees are denominated in sats/Byte, so if a transaction is simpler (i.e one input and one output) it will have a low fee, regardless of the amount available in the UTXO. Setting a higher fee will increase the likelyhood of your transaction being confirmed.

[SecretumPrimas]

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

• The SPV would be a program type that runs on your phone, this phone based application that processes your transactions wouldn’t have the necessary hardware memory space to keep a full running copy of the blockchain like that of a server acting as a full node. So the difference is the SPV relies on a full node for it’s copy of the block chain where the full node has a copy of the blockchain.

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

• It means the wallet has sent your UTXO to the node to wait / be-rebroadcast into the network memory pool.

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

• A miner transaction fee is processed through a sotshi’s per byte metric, this metric allows the miner to garner the most fees regardless of transaction data size.

[Yrius]

1. Node: it has full copy of blockchain with all bitcoin transaction since the Genesis Block and keep updated receiving from the network information from other transactions. Because of that it has an independence from other external sources but it requires a high amount of storage space for storing all the blockchain locally and enough resources to run all required verification (validation of unconfirmed transactions, transactions into the mempool)
   SPV: Allows to operate without a full copy of the blockchain such as in mobile phones and tablets but it relies on peers (Full Nodes) to provide parts of the blockchain when necessary.

2. A transaction is broadcasted when it is validated by the nodes and sent to the mempool (unconfirmed transactions space)

3. A miner picks the transactions from the mempool. Normally transactions with high fee are selected first since miners receives fees + block rewards current in 6,25 BTC to mine a block.

[Eugene]

1. A full node has a local copy of entire blockchain network while a SPV needs a connection to a full node to fetch the copy of entire blockchain from the full node. A full node is usually run on a computer while a SPV can be run on a smartphone.

2. A full node broadcasts a transaction when it receives if from a wallet and sends it to a mempool. When a transaction is broadcasted it means it gets transmitted among the nodes and to the mempool.

3. Usually a miner picks transactions with higher fees.

[letscrypto]

1. A full node has a full copy of the blockchain, whereas an SPV relies on another node for the transactions.

2. It gets shared with other nodes of the network.

3. A miner picks the transactions with the highest fees per byte.

[Cr1ptoM]

@ivan

• What is the difference between a SPV (simplified payment verification) and a full node?
• What does it mean when a transaction is broadcasted?
• How does a miner pick which transactions that gets added to the next block?

1.- The main difference it’s a full node has the full copy of the blockchain, while the SPV only has an small part, and requires a connection to a node to get the information.

2.- It means a transactions is propagated to the full nodes, and added to the mem pool of each of them.

3.- The miners usually pick the transactions with the higher fees to make their operation more profitable.

[Marc-C]

1. What is the difference between a SPV (simplified payment verification) and a full node? The full node contains an entire copy of the blockchain. The SPV connects to a node to verify information.
2. What does it mean when a transaction is broadcasted? The transaction is spread through all the nodes
3. How does a miner pick which transactions that gets added to the next block? The miner chooses the transactions with the highest fees from the mempool

[Ciaran]

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

An SPV cannot store a copy of the blockchain and has to communicate with it through a node.

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

A TX is broadcasted when it is being propagated through the network and checked to be valid. It will be added to the mempool by each node that receives it and checks it is valid.

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

The miner chooses the TXs which offer the highest fees from the mempool, as they receive those fees and so earn more

[bobchain]

1. What is the difference between an SPV (simplified payment verification) and a full node?
   An SPV is basically a third party (ex: phone app) way of confirming a tx, by confirming tx with a minor which has the full blockchain node. Because a full blockchain node requires more gigabytes than an app can carry on its system.
2. What does it mean when a transaction is broadcasted?
   It means all nodes in the network receive the same data about a tx just created, so that a tx can be confirmed by at least 6 nodes, and it can be added to the blockchain.
3. How does a miner pick which transactions that gets added to the next block?
   Being that miners get paid for mining, the tx with the highest fee (reward) will be added quicker to a block. Satoshis per byte = fees. Space in the block becomes important due to, more bytes more GPU power needed.

[manted]

• What is the difference between a SPV (simplified payment verification) and a full node?
  SPV doesnot have whole blockchain on it, full node does.

• What does it mean when a transaction is broadcasted?
  transaction was broadcasted across network int mempool where it will b epicked up by mimner and added to chain.

• How does a miner pick which transactions that gets added to the next block?
  Miner picks transaction with highest transaction fee.

[Mauro]

@Timothy

2. It means that the transaction has been sent to the network

Yes. The network is propagating through the network, and will eventually reach every node.

[Mauro]

@MarkusJohansson

3. How does a miner pick which transactions that gets added to the next block?
   picks the one with TX fee

Every transactions must have a fee. I assume you meant to say that they pick the ones with the highest fees. Which would be correct.

[Mauro]

@Cupid

SVC doesn’t have the full copy of the blockchain info it’s like half a node, therefore, it needs to ask a full node to read the blockchain for them

SPV is very small compared to a full node. Not even 1%. They are usually made for computers, laptops and mobile phones. If you are not a miner, you are most likely using an SPV.

[Mauro]

@StintheKid

2. What does it mean when a transaction is broadcasted?
   When a TX is broadcasted, it is accepted in a mined block and that block is then spread across the entire network.

Before it gets mined in a block, it gets propagated through the network. It goes from one full node to another. Each of the miners put that transaction in their mempool. Once a miner mines a block including that transaction, it finally gets to be a part of the blockchain.

[Mauro]

@Viktor252

SPV is for mempool. full node is for the blockchain

Wrong. An SPV cilent is a lightweight client in which you don’t need to download the entire blockchain in order to make a transaction. The only way it can do a transaction is by a help of another full node. A full node must have the entire blockchain in order to make transactions.

[Mauro]

@knottymoose

How does a miner pick which transactions that gets added to the next block?
A miner will pick the transactions with the highest fees so they can earn more money. Fees are denominated in sats/Byte, so if a transaction is simpler (i.e one input and one output) it will have a low fee, regardless of the amount available in the UTXO. Setting a higher fee will increase the likelyhood of your transaction being confirmed.

A simpler transaction will have a lower fee, but it will also take less space. That’s why we calculate fees as satoshi per byte. The size is not important, as long as the satoshi per byte is high a miner will accept it.

[Mauro]

@Yrius

2. A transaction is broadcasted when it is validated by the nodes and sent to the mempool (unconfirmed transactions space)

Keep in mind that every node has their own mempool.

[Mauro]

@bobchain

2. What does it mean when a transaction is broadcasted?
   It means all nodes in the network receive the same data about a tx just created, so that a tx can be confirmed by at least 6 nodes, and it can be added to the blockchain.

2. Only one miner has to mine a block in order for it to be added to the blockchain. We can wait for 5 more blocks to ensure our transaction wasn’t in a stale block. This is what we mean by 6 confirmations.

@bobchain

3. Space in the block becomes important due to, more bytes more GPU power needed.

The block space is important, but it does not get harder if miners add more transactions. The block space is limited to 1 megabyte. Because it is limited, miners want to choose the transactions with the highest fees to gain the most profit from 1 block.