The bitcoin blockchain is, as its name suggests, a linked chain of historic bitcoin transactions recorded into successive timestamped blocks of data. This provides the accurate settlement history record that any monetary system requires.
The blocks are bound together using timestamps and cryptographic hashes and are created (via the Mining process) at intervals of roughly 10 minutes, which adjusts its difficulty every two weeks to achieve that (detailed below).
Each block of transactions has a hash to validate the integrity of the previous ensuring a sequential pattern of blocks called the blockchain.
The first block in the Bitcoin network is called the Genesis block because it does not reference any previous block. Instead, it was hard-coded into the source code by Satoshi.
Each block size is no bigger than 1MB, with a capacity to accommodate about 4,000 transactions (each transaction size is an average of 250 bytes). The size limitation is crucial to the objective of decentralisation because any increase in storage makes the IBD larger.
Too big and it limits who can participate, which is the antithesis of openness and inclusivity. This will make more sense as we fill in the details of the system participants that produce blocks, validate and verify transactions.
Just as a database is modelled, the Bitcoin network functions as a replicated database where each contains the same list of previous Bitcoin transactions. Full Nodes propagate this “transaction data” (payments) and “block data” (additions to the ledger).
The complexity of the Bitcoin architecture is in ensuring nodes acts independently of each other while still maintaining a highly secure and anonymous network. Although not all cryptocurrencies follow the Bitcoin network architecture, it the first successful and currently largest cryptocurrency network, and has been used as a model for many subsequent cryptocurrencies, adapting its rules and functions.
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