distributed ledger of ALL transactions ever made
each node in the network has a copy
- Transactions
are divided into blocks each block contains hash of a previous block
How it works? II.
- Distributed Consensus
mechanism that makes all nodes agree on order of transactions
- Proof of Work
Miners have to perform difficult mathematical operations in order to guess a puzzle
The one who is first wins a block reward and has right to propose a block
- Hashrate the more computing power the more often you get reward
more miners --> bigger hashrate --> more secure --> difficulty increase (adjusted each 2016 blocks)
Hash Function
How transactions work?
New transactions are broadcast to all nodes
Each node collects transactions into a block
In each block a random node gets to transact its block
Other nodes accept the block only if it contains valid transactions (unspent, valid sigs)
Node express their acceptance of the block by including its hash to a next block they create
