Bitesize Bitcoin - Mining Transactions.

To begin with, what is Bitcoin? When bit 47? A lot of people are familiar with lightning and liquid is effectively a layer two. That one, two, nine. What is taproot? Sure, in taproot, that's the first new protocol upgrade since Zagwet.

Difficulty adjustment. How do mnemonic seed words work? UTXO management.

Early Bitcoin Adopter, Mike Hearm writes to Satoshi on April 12, 2009. Hi, Satoshi. I read your paper on Bitcoin with great interest. I found it a bit confusing, though. I believe it may be easier to follow if you provide some examples.

Specifically, it's not quite clear to me what blocks contain. He then goes on to ask if only one chain is recording all of the transactions or the story of the economy, as Mr. Hearm states.

Satoshi responds 10 hours later. Hi, Mike. I'm glad to answer any questions you have. If I get time, I ought to write an FAQ to supplement the paper. He follows with, "There is only one global chain.

The two continue their back and forth for two weeks, chatting about the protocol and even talking about sending transactions back and forth." Unfortunately for Mike Hearm, Satoshi doesn't directly answer the initial question.

What do blocks contain? But fortunately for you, at Ungovernable Misfits, we have the Bite Size Bitcoin series. In this episode of Bite Size Bitcoin, we will use our previous Bite Size's hash to extend our chain of understanding of Bitcoin block creation and cover how transactions make their way into a block to be recorded

on the one global chain forever. Have you committed the components of the block header to memory? In case you haven't. They are version number, the previous block's hash, the Merkle root of proposed transactions, time stamp, target for proof of work, and a nonce.

These are the components of the block header. The bulk of the block is transaction data. When a mining node is attempting to solve for the next block, they are doing so by using a candidate block filled with proposed transactions as transactions are the building blocks of the network, the transfer of value from one address to another.

A transaction makes it into the memory pool or mem pool by first being broadcast to a node after it passes its validation checks, ensuring that the transaction is properly formatted, that the inputs are valid, have sufficient funds, and that the transaction signature is valid.

The transaction data within a Bitcoin block contains information about each transaction included in the block. Some of the key characteristics and definitions of the transaction data include input and output addresses.

Every transaction in the Bitcoin network involves transfer of Bitcoin from one or more input addresses to one or more output addresses. Amount of Bitcoin, each transaction includes information about the amount of Bitcoin being transferred.

This is information represented as a decimal number and is specified in Bitcoin, not Satoshi's. The transaction fee, that's self-explanatory, and signature data. In order for a transaction to be valid, it must be signed by the owner of the input address using a digital signature.

The signature data provides proof that the owner of the input address authorizes the transaction and is included in the transaction data. You also have scripts. Scripps can be used to specify the conditions under which the Bitcoin being transferred can be spent.

Now the transactions have to get into the block. Miners use the block template to create a candidate block, as we know. Once again, it's a blueprint that provides the necessary information for a miner to create a candidate block.

In other words, a candidate block is a block that has been partially created and is waiting to be solved by a miner. The candidate block contains all the necessary information to become the next block.

Just going to get that nonce right, that's the rub. When a miner requests a block template from the network, the template includes a list of transactions that the miner can then choose from.

The miner selects the transactions that they want to include in the block based on a criteria that they choose, such as transaction fees. The priority of the transaction, miners can also prioritize transactions with a smaller size, as this allows them to include more transactions in each block.

Thus, earning them more fees overall. Transaction priority is another factor that miners consider when selecting transactions. Priority is calculated based on the age, size, and value of the inputs used in a transaction, with older inputs and larger values being given higher priority.

This is because these inputs have a higher opportunity cost for the sender, and thus they are more likely to be willing to pay a higher fee to have the transaction processed quickly. In general, miners have their own priorities and preferences.

I repeat, the miners have their own priorities and preferences. Miners and incentives are normally whatever allows them the most bitcoin, but sometimes they don't prioritize the highest transaction fees.

Because miners don't have to pull from the mem pool to decide what transactions to mine. They can decide on transactions based on other criteria, not choosing transactions from the mem pool is considered out of band.

A mining pool can accomplish this by supplying the transaction data directly to a miner. The pool puts that transaction data into their candidate block. They generate the Merkel route of the transactions, and send that candidate block header to its miners to hash.

That's why in the last episode of Bite Size Bitcoin we asked the question, do you know what your pool's candidate blocks look like? Are they being upfront with their miners about how they construct their candidate blocks?

When all the transactions a miner has chosen are placed into the block, the block is characterized by having a certain weight. In a Bitcoin block weight refers to a metric used to determine the size of a block in terms of its impact on the network's overall capacity.

The weight of a block is calculated as a multiple of a unit called a weight unit, WU, well that makes sense, doesn't it? Before the introduction of Segwit, the size of a block was simply the sum of its serialized bytes, and the maximum block size was limited to one megabyte.

With the activation of Segwit, however, the weight field was introduced as a new way of measuring block size that takes into account the structure of the block data. The weight of a block is calculated as the sum of the weight of its transactions, where each transaction is assigned a weight based on its size and structure.

The weight field is used in the Bitcoin network to enforce the block size limit and to ensure that the network remains secure and efficient. By using the weight field to measure block size, the network is able to effectively increase its capacity while also ensuring that blocks remain small enough to be easily propagated

and validated by nodes on the network. I know, heavy stuff. Maybe that's why Satoshi didn't just outright answer my current when he asked him, what do blocks contain? But here at Ungovernable Misfits, we don't mind answering Bitcoin questions in the form of a bite-sized Bitcoin or FUDBUSTER.

If you have a question about Bitcoin or a friend or family member has a question about Bitcoin and you just can't quite answer it or are too aggravated with them to answer it, let us know and we will try to cover it.

Additionally, if you would like to record a bite-sized Bitcoin or FUDBUSTER, let us know too. We'd be happy to pass off some of our workload to you. It doesn't pay, but we'd be eternally grateful.