Homework on Bitcoin Ecosystem - Questions

Blockchain and Bitcoin 101
#1567

Transactions get broadcasted to the network before they are confirmed. Its so the miners can pick it up and confirm it :slight_smile:

Why would a miner care about that when constructing a block? All the miner cares at that time is which txs are more important to it or which ones are more profitable :wink:

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#1568

ok, got it -thank you!

#1569
  • The full node have stored the entire blockchain and the SPV just a part of it.
  • The transaction is propagated across the network to the mempool of every node.
  • The miners choose the transactions with highest fees in their mempool.
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#1570

  1. What is the difference between a SPV (simplified payment verification) and a full node?
    A SPV will have a smaller copy of the blockchain compared to a full node, a full node will have the full and complete blockchain on local memory. This means a SPV has to communicate with a full node before its transactions can be accepted onto the blockchain.

  2. What does it mean when a transaction is broadcasted?
    This means a node has decided it is a valid transaction and will thus pass this transaction to every other node in the network so it is placed in every nodes mempool to be picked up by a miner.

  3. How does a miner pick which transactions that gets added to the next block?
    The transactions with the highest fees should be picked from the mempool, they can pick a lower transaction fee if they wish, but this would result in less rewards.

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#1571

1)SPV is way for one to access the blockchain but it is not the full network. It is good for mobile devices as the full node is many gigabytes worth of data. A full node is the entire bitcoin network with its full transaction history.
2) A transaction being broadcasted means it is being sent to all the nodes in the network, which will allow the entire network to know about the new transaction.
3) A miner will pick the transaction with highest transaction fee.

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#1572

  1. An SPV does not store the blockchain, only querying several nodes for the ā€œbalancesā€ of a user. So, if I use an SPV instead of being a node and I would like to know how much ā€œfundsā€ (UTXOs) I have, I need to query several nodes to check it for me on the ledger. After most of the nodes replying the same, it can be considered as a valid information.

  2. The transaction is added to the blockchain so all nodes now see it on their ledger.

  3. Miners are adding transactions with the highest fees. All blocks have a limited storage capacity (bytes), and miners will fit transactions in these blocks. If a transaction is larger in bytes, higher fee should be paid for the miner. Miners pick transactions from their or other nodeā€™s mempool.

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#1573
  1. What is the difference between a SPV (simplified payment verification) and a full node?
    A full node has a complete copy of the blockchain on it (SPVā€™s need to query full nodes (multiple full nodes) to access information on the blockchain)
  2. What does it mean when a transaction is broadcasted?
    The transaction is visible to all available nodes possible so that it can be added to these nodesā€™ mempools so that miners can add these transaction to blocks that they will be looking to create.
  3. How does a miner pick which transactions that gets added to the next block? From the mempools that exists on visible nodes (including the miners own node, of course).
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#1574

I missed part of an answer on my last postā€¦
3)How does a miner pick which transactions that gets added to the next block?
A miner will choose transactions from the collective mempool of all visible nodes including the miners own mempool and will prioritize adding transactions that have the highest fees.

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#1575

  1. What is the difference between a SPV (simplified payment verification) and a full node?
    An SPV (e.g. smartphone wallet) does not contain a full version of the blockchain (and instead checks with full nodes).

  2. What does it mean when a transaction is broadcasted?
    It is when a wallet sends the signed transaction to the networkā€™s nodes / mempool.

  3. How does a miner pick which transactions that gets added to the next block?
    Generally, by choosing the ones with the highest fees.

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#1576

Nodes donā€™t actually see each others mempool, whey just gossip to each other what transactions they have in their mempools so when a miner is constructing a block it only looks at its own mempool at the time. :slight_smile:

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#1577

  1. SPVs are transactions requests that are proof checked before being sent out to the network. A full node is responsible for this proofing and propagating.

  2. It is sent to the pool for miners to pick up and add to the blockchain.

  3. Miners will pick transactions that they wish to completed from the pool. Generally the ones with the highest fees or the smallest ones to fill a block.

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#1578

What is the difference between a SPV (simplified payment verification) and a full node?
SPV ā€“ Simple Payment Verification - allows a lighweigth cliente (for exemple in the smartphone) to verify that a transaction is inclued in the bitcoin blockchain without dowloading the entire Blockchain. In order to do that, need to query a full node or multiple full nodes to access information (and have to trust in the nodes)
A full node have copy of the enterie blockchain offering best security and privacy.

What does it mean when a transaction is broadcasted?
When we create a transaction it goes to the mempool (it starts by being inserted in the nearest nodes and then broadcast to the remaining nodes). Then the miners take the transaction to insert it in the block that they are trying to mine

How does a miner pick which transactions that gets added to the next block?
Miners are rewarded for mining a valid block in two ways:

  • 1- allow creating bitcoin out of thin air - currently 6.25 bitcoin per block.
  • 2- collecting the fees associated with each transaction
    As each block has a limited space (approximately 1.7MB) the choice of transactions will be made by those with a higher fees in order to obtain the highest possible profit in each block.
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#1579

  1. What is the difference between a SPV (simplified payment verification) and a full node?
    SPV is not a full node. A BTC wallet is an SPV it does not hold the entire ledger but with an internet connection it can verify a transaction by getting the info from a full node.

  2. What does it mean when a transaction is broadcasted?
    When a transaction is confirmed and the block it is in is added to the blockchain.

  3. How does a miner pick which transactions that gets added to the next block?
    Normally it will be narrowed down to which transactions are paying the higher fees.

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#1580

Thanks for the clarification/correct.

#1581
  1. A full node stores all the information that contains in the blockchain and use to form a transaction, SPV can query information from nodes.
  2. When a transaction is made and propagated to the network, nodes will receive and put into mempool wait to miners to confirm and put into blockchain.
  3. Miner will priortise the transaction with higher transaction fee.
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#1582

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

A full node is a copy of the blockchain that is fully synced up to any new changes in the blockchain and is therefor able to validate transactions. An SPV is more like a wallet that is not in continuous sync with the blockchain and must check with a full node or multiple full nodes in order to validate transactions. A good example of a SPV is like an app on the mobile phone which can ā€œstoreā€ and send and receive crypto.

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

Every transaction must be broadcasted to the blockchain which is a network of nodes that can validate transactions and add them to the mempool. It means the wallet needs to communicate with the blockchain network by way of broadcasting to them.

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

A miner is usually has an incentive to pick transactions with the highest fees to be able to receive those fees along with the block reward obtain after guessing/solving a nonce first to create a new block that can be accepted by the blockchain.

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#1583

Broadcasting happens before that, the transaction is broadcasted to the nodes first so they can put in into a block. After that the block is broadcasted :slight_smile:

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#1584

  1. What is the difference between a SPV (simplified payment verification) and a full node? - A full node has the copy of the entire blockchain and have the ability to mine new blocks, but a SPV (simple payment verification) can only confirm transactions and do transactions, but it can not mine new blocks. It has enough of the entire blockchain so it can broadcast transactions.

  2. What does it mean when a transaction is broadcasted? - The transaction are put in a mempool and waiting to be a part of a new block.

  3. How does a miner pick which transactions that gets added to the next block? - It chooses the transactions with the highest fees.

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#1585

Homework on Bitcoin Ecosystem - Questions

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

A SPV is a simple verification ā€“ meaning, it does not have the full blockchain inside. Instead is has to get the verification/information from a full node. If everything if fine, itā€™ll verify the TX

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

This means that the TX is now a part of the full blockchain and can be found in all nodes on the chain. It has been spread to the network.

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

A miner wants to get the highest fee, so takes the tx that has included the highest fees first. Itā€™s not always ā€œfirst come first serveā€, itā€™s rather ā€œI pay more for faster serviceā€

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#1586
  1. An SPV is not a full node as it does not store an up to date copy of the blockchain. It will instead use a full node to request the blockchain data and generate transactions to be broadcasted.
  2. Broadcasting a transaction is a wallet or SPV which generated a new transaction and is requesting a miner to pick it up and write it onto the blockchain. Nodes pass newly updated information to other nodes and miners will broadcast the newly updated blockchain to the network.
  3. Miners will tend to pick the transactions they can see with the highest fees. This is only natural as it will maximize the profit generated by the miners work.
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