Homework on Bitcoin Ecosystem - Questions

Blockchain and Bitcoin 101
#1346

The tx gets confirmed as soon as its mined, you do have to wait a few confirmations to be sure its not part of a stale block :slight_smile: but before that it must be broadcasted to the network so the nodes and miners are aware of the tx :slight_smile:

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#1347

More complex transactions are not necessarily the most expensive option based on sat/B :slight_smile:

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#1348

  1. A node stores the entire blockchain locally, whereas an SPV does not. Instead, an SPV “queries” some trusted nodes when it wants to read from the blockchain.

  2. It means that a wallet has been used to create, sign, and broadcast a transaction which has one or more UTXO input(s) and one or more outputs.

  3. Miners can choose any transactions they would like, though they will obviously pick those with the greatest profit potential, i.e., those with higher fees.

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#1349
  1. A SPV is used with a mobile phone which does not have the memory to hold the entire blockchain held on a node. Instead, enough information is read from the accessed node to conduct the transaction.
  2. Once a transaction is verified, it is put into the mempool and spread (broadcasted) through the nodes with the expectation a miner will pick up the transaction and include it in a block.
  3. The miner in order to earn money will usually pick the transactions from the mempool with the highest transaction fees.
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#1350

  1. What is the difference between a SPV (simplified payment verification) and a full node?
    It’s a wallet that has to query a node for the blockchain data.

  2. What does it mean when a transaction is broadcasted?
    It means the transaction has begun being propagated throughout the blockchain’s node network.

  3. How does a miner pick which transactions that gets added to the next block?
    They pick the transaction according to the highest available transaction fee.

I also have an additional question. Are hardware wallets, like the Ledger Nano S for example, considered to be SPV wallets?

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#1351
  1. SPV doesn’t have to store the full blockchain and ledger whereas a full node does. SPV is like being “selfish” in that you only download part of the blockchain that is needed to verify transactions that concern you. Don’t need to worry about anyone else.
  2. Broadcasting a transaction means it is in the mempool and ready for a miner to accept it and add it to a block to be added to the network.
  3. Miners will go to the mempool and select transactions that will maximise their rewards ie. Those that have the highest fees will be picked first.
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#1352

Not really :slight_smile: HW don’t connect to the internet at all, all they do is hold the private keys and sign transactions. You can however connect a HW wallet to an SPV node to send a transaction :slight_smile:
The reason is because SPVs are not really wallets. They are so called “Light nodes” that can communicate with the Bitcoin network using a Full node, but most SPVs (also full nodes) have a wallet part built on top of them :slight_smile:

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#1353

Ah ok. Thanks much for the clarity, as usual! :grin:

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#1354

A full node keeps a copy of the entire Bitcoin blockchain (and its transactions). It receives, verifies, and adds new blocks and transactions to the local copy. A simplified payment verification node doesn’t copy the entire blockchain to verify transactions, rather it queries that information from full nodes.

It means that a transaction is dispersed across the network from one full node to the next.

Transactions with higher fees are prioritized by miner than transactions with lower fees.

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#1355 
   A.) a SPV has only part of a blockchain and 
 needs 
 to dial up a full bitcoin node to get updates of the 
 blockchain.
 B.)a node has the ful blockchain and can chech 
 TXs

  1. it is added to the blockchain

  2. the wone with the most satochie per byte.

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#1356

SPV´s don´t store the full Information but need Information from a full Node to get updated.

A full Node is sharing the Information with an other full Nodes and so on…….

He picks the highest Fee.

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#1357

What is the difference between a SPV (simplified payment verification) and a full node?
It does not have a copy of the blockchain.
Instead it queries full nodes for information.

What does it mean when a transaction is broadcasted?
A transaction is distributed for inclusion in the mempool, and subsequently, into a block.

How does a miner pick which transactions that gets added to the next block?
A miner is free to pick any transactions it wants from the mempool. Most likely transactions with high transaction fee’s, will be picked first.

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#1358

  1. An SPV wallet does not have a copy of the blockchain like a full node, but connects to another full node/server to see what is in the blockchain. Example: Electrum.

  2. The transaction is being sent to the “nearest” full nodes and then they relay the transaction onwards to other nodes. The miners add the transaction in their mempool where it waits to be included in a block-candidate.

  3. The transactions with the highest fees are selected first.

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#1359
  1. What is the difference between a SPV (simplified payment verification) and a full node?
    R: A full node have the full copy of the entire blockchain and an SPV don`t have a copy of the entire blockchain but can query the blockchain from the full node.
  2. What does it mean when a transaction is broadcasted?
    R: When a transaction is broadcasted all nodes receive it in an unconfirmed state and at that moment is not added to the blockchain.
  3. How does a miner pick which transactions that gets added to the next block?
    R: Miners pick transaction based on the highest transaction fee.
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#1360

Homework: Bitcoin Ecosystem:

  1. SPV vs. Full Node - SPV doesn’t have a version of the full blockchain. It can query the blockchain and send tx data, but doesn’t keep a full version of all UTXOs. SPV needs to connect to full node.
  2. TX is brodcasted means that TX inputs, TX outputs and UTXOs are being sent through the node network and put into mempool.
  3. Miners pick txs based on fees.
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#1361

  • What is the difference between a SPV (simplified payment verification) and a full node?
    An SPV only holds UTXO data relevant to its own address, whereas a full node contains the full version of the blockchain

  • What does it mean when a transaction is broadcasted?
    the tx is added to a block, and propagated throughout the network

  • How does a miner pick which transactions that gets added to the next block?
    they analyse the fees, and usually select the highest fees, as they collect those fees.
    Although, lower fees transactions may be selected if the transaction data is minimal when compared to a higher fee but multi-addressed block - the amount of data in a block is limited, so maximising profits may mean accepting more, slightly cheaper tx’s

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#1362
  1. The difference between an SPV and a full node is that the full node has the entire blockchain on it. An SPV only has part of the block chain and has to connect to a full node.
  2. When transactions are broadcasted to the network they spread like fire until all the node have the list of transactions.
  3. Miners will pick the ones with the highest fees.
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#1363

  1. Full nodes store the whole blockchain while SPVs mostly store transactions relevant to its addresses and requires a full node to send transactions.

  2. It propagates the transaction to the network.

  3. Miners pick the unconfirmed transactions from the mempool based on transaction fees and hash rates.

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#1364

When transaction is broadcasted its not put into the blockchain yet. It is announced to the network so a miner can pick it up an put it in a block :slight_smile:

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#1365

You mean a valid transaction? :slight_smile:

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