Homework on Bitcoin Ecosystem - Questions

Blockchain and Bitcoin 101
#1868

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

A “SPV” is in essence a node that does not store a full copy of the blockchain. Instead it connects to a full node to fetch the data needed for propagation.

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

When a wallet signs a transaction with the private key, it will be broadcasted to the network. After the majority of nodes reach consensus that the transaction is valid, it will be placed in the mempool until it is put in a block by a miner.

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

A miner makes profit by way of receiving the block reward and the transactions fee’s of that block.
“A miner wants to make profit” So they will pick the transactions with the highest fee paid for them.
This would simply result in more reward for their effort when picking the transactions with high fee’s.

1 Like
#1869
  1. What is the difference between a SPV (simplified payment verification) and a full node?

SPV does not have a copy of the full blockchain and needs to connect to the node to access that information.

  1. What does it mean when a transaction is broadcasted? Gossiped across the nodes within the network as the truth.

  2. How does a miner pick which transactions that gets added to the next block? Picks the transactions offering the highest fees.

1 Like
#1870

  1. A node contains the full version of the blockchain, an SPV doesn’t, it only directs transactions to other nodes

  2. A Nodes adds a transaction into the mempool for miners to pick it up and add it to the blockchain

  3. They decide based on transaction fees, the ones with highest paying fees get prioritized

1 Like
#1871

  1. SPVs are typically software wallets that do not do transaction validation.

  2. This means a wallet, node or miner has transmitted the transactions awaiting to be picked up and added to a block. This will eventually result in confirmation.

3.A miner can set prerequisites to what transactions to pick. F.eg they may choose the most profitable ones per size (sat/byte) so their block becomes more profitable.

1 Like
#1872
  1. SPVs get their data by querying nodes; they are mostly used on mobile devices so they don’t have to store the whole blockchain itself.
  2. This means that the transaction-data is propagated to all nodes which are reachable at the time of doing so.
  3. Miners will always pick the transactions with the highest fees (because they want to make money, of course).
1 Like
#1873

Transactions get broadcasted before they are confirmed. They get send to nodes that verify them and if they are valid they get send through the network until a miner picks them up and puts it in a block which then also gets propagated.

A miner first picks transactions for the block and they usually prefer txs with higher sat/byte ratio :slight_smile:

1 Like
#1874

  1. What do the difference between a SPV (simplified payment verification) and a full node?
    The main difference between a full node and a SPV is that the full node has to download a copy of the blockchain. When you are using an SPV (for example on your phone), you have to reach out to a full node to look at his copy of the blockchain. They both store your private key. They also have to use the internet when you are creating a transaction.

  2. What does it mean when a transaction is broadcasted?
    When a transaction is created with all your inputs and outputs, then your transaction will be unconfirmed. It will be broadcasted to the mempool. After that you will have to wait for a miners to put your transaction into their block for it to be confirmed

  3. How does a miner pick which transactions that get added to the next block?
    The way miners get payed is through the block reward and transaction fee’s. A transaction you send will always have. a transaction fee. The way to calculate this is by finding the difference the all of your UTXO’s and the outputs. Miners are usually going to take the transactions with the most transaction fee. Your transaction fee might vary depending on the size of your transaction. This is measured with s/b (Satoshi/Byte).

1 Like
#1875

1.The SPV has a smaller copy of the block chain, so it queries the full block in order to confirm transactions. A full node does contain a full copy of the blockchain.

  1. The transaction has been broadcasted when the transaction has been added to the blockchain all around the world. At least 6 nodes contain the transaction to confirm.

3.Miners normally pick the transaction with the highest value from the mempool in order to receive higher incentives.

1 Like
#1876
  1. SPV doesn’t store transaction and connects to network via a full node. also doesn’t have the whole blockchain due to the high volume of data.

2.when a transaction accepted and propagated through the network, called broadcasted.

3.Transactions with the highest fee (sat/B) chosen by miner from mempool.

1 Like
#1877

The wallet stores your private key and there is no need for even an SPV node to have it. Bitcoin allows for a tx to be signed offline and then be sent to a node (either full or an SPV) to propagate it through the network. There are services that allow you to send a tx via SMS for example. :slight_smile:

1 Like
#1878

1.The difference between a SPV and a full node is that an SPV does not have a copy of the blockchain and needs to connect to the node to get the information. The node has the entire copy of the blockchain, verify it is correct and verify transactions.
2. A transaction being broadcasted means it is propagated to all of the nodes or spread to all of the nodes like gossip.
3. A miner picks transactions from a mempool and chooses the ones with the higher transaction fees.

1 Like
#1879

  1. SPV only runs a small version of the blockchain due to the memory needed. SPVs are usually run on mobile devices. A node runs the entire blockchain. SPVs check with nodes to get accurate data.

  2. When a wallet submits a tx, nodes will check the UTXOs of the wallet the tx is being sent from. If the nodes verify your wallet has the valid UTXOs required to make such a tx, the tx will be put into the nodes mempool and then be sent to other nodes to verify and then be put in their mempools. This is what is meant when a tx is said to be broadcasted.

3, Miners usually select txs out of the mempools with the highest transaction fees.

1 Like
#1880

full node stores whole bitcoin history … if SPV needs to search blockchain, it receives data from node

Wallet send it into network and if it is valid, will be added into mempool by nodes

By fees

1 Like
#1881

1- Wallets dont store all unspent tx outputs, and they have to get the information from nodes.
2- It means that is spread thru the network
3- Miners pick transactions from a mempool, and the choose the ones wit the higher fees

1 Like
#1882
  1. What is the difference between a SPV (simplified payment verification) and a full node?

A full node has a latest full version of the blockchain locally stored, a SPV not.
A SPV uses a full node to get information about the blockchain and thus to check transactions.

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

The wallet broadcast your transaction to the network, respective to the nodes, so they can prove the transaction whether it makes sense. If the transaction is valid, it is coming into the mempool.

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

The miner check the mempool and will pick the transaction with the highest fees.

1 Like
#1883

  1. The difference between a SPV (simplified payment verification) and a full node is that an SPV wallet does not have a full copy of the UXTO’s in the blockchain and only queries the full nodes for the UXTO data it requires, a full node has a full copy of the UXTO’s in the blockchain, assists in submitting tx to the mempool and updates its copy of the blockchain once the newest block of tx are confirmed.

  2. When a transaction is broadcasted it means that a wallets private key has announced a transaction to the network and the full nodes place them into the mempool to be confirmed by the miners.

  3. A miner picks which transactions gets added to the next block from the mempool and usually does it in the order of highest to lowest fees paid. Provided the tx is valid, it will be added to the next block in the chain by the miner that solves the difficulty PUZZLE first.

1 Like
#1884
  1. What is the difference between a SPV (simplified payment verification) and a full node?

SPV does not have the complete version of the blockchain, but it has the ability to query full nodes.

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

It is the action that the wallet does when it has constructed the transaction and communicates it to the nodes.

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

It can pick any transactions up to the limit size of the block, or none. Normally, through the economic incentives that it has, the miner will pick the transactions that have a higher fee, as from them they will earn a higher reward.

1 Like
#1885
  1. An SPV doesn’t have an copy of the block chain, it need to connect to an node in order to verify
  2. When an transaction has been done on an wallet, the transaction it is pushed to the network to be confirmed by an node added to the block chain
  3. From the mempool the miner will pick the one depending on the best reward and the highest fees paid to them
1 Like
#1886

  1. An SPV wallet does not store all the UTXO data and must query a full node and pull the data from there.

  2. A transaction that has been broadcast is being propagated to all of the nodes on the network.

  3. A miner will select transactions with the highest transaction fees.

1 Like
#1887
  1. What is the difference between a SPV (simplified payment verification) and a full node?

An SPV wallet may be utilised by an app on a phone it doesnt have the ability to store the blockchain data as it is to large, it connects with another node that is a full node that holds the full blockchain to get all the data (UTXO’s) so it can carry out a transaction.

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

it means that a transaction is sent to the mempool and that it is the accepted by all other nodes.

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

Miners can choose which transactions to mine by the transaction fee applicable for the transaction, they will often pick the transactions with the highest fee so they are able to receive a greater return on the investment they have by using electricity.

1 Like