A collection of transactions confirmed on the blockchain, each block building upon the previous one.
A block is a collection of transactions that have been confirmed and added to the blockchain. Each block builds upon the previous one, creating a chain of blocks back to the genesis (first) block. This chain of blocks is known as a blockchain.
Blocks serve as the fundamental units of a blockchain, permanently recording transaction data. They function much like pages in a ledger or record book, with each new page (block) containing a set of recent entries (transactions) and a reference to the previous page (block).
The structure of a block typically includes a block header and the transaction data. The header contains metadata such as a timestamp, a reference to the previous block (known as the "previous hash"), a Merkle root (a hash representing all transactions in the block), and other technical information specific to the blockchain protocol.
Bitcoin's blocks contain an average of 1,500-2,500 transactions, while Bitcoin Cash blocks, with their larger size limit, can accommodate significantly more transactions per block, allowing for higher transaction throughput and generally lower fees.
When a miner successfully validates a set of transactions, this is known as finding a block. Once a block is found, it is broadcast to the rest of the network. Other miners then validate the block and begin the process of finding the next block.
The process of finding a block varies based on the consensus mechanism used by the blockchain. In Proof of Work (PoW) systems like Bitcoin and Bitcoin Cash, miners compete to solve a complex mathematical puzzle. The first miner to solve the puzzle gets to add the block to the blockchain and claim the block reward.
Each time a transaction is included in a confirmed block, its confirmation count increases by one. Every subsequent block found adds another confirmation to the transaction.
The more confirmations a transaction has, the more secure it is considered. Depending on the value of the transaction, the hashrate, and other properties of the blockchain, payments can be considered sufficiently secure after anywhere from 0 to 10 confirmations.
For small Bitcoin Cash transactions, merchants often accept 0-confirmation transactions due to the low incentive for double-spend attacks, allowing for near-instant payments. For larger transactions, waiting for multiple confirmations (typically 6 or more) is recommended for greater security.
Block size and time between blocks (block time) are crucial parameters that affect a blockchain's performance characteristics:
Block size: Determines how many transactions can fit in a single block. Bitcoin has a practical limit of around 1MB per block, while Bitcoin Cash increased this to 32MB to allow for more transactions per block and lower fees.
Block time: The average time between blocks being added to the blockchain. Bitcoin and Bitcoin Cash both target a 10-minute average block time, while other cryptocurrencies like Ethereum aim for faster block times (around 13-15 seconds).
These parameters represent fundamental tradeoffs in blockchain design. Larger blocks can increase transaction throughput but may require more bandwidth and storage resources from network nodes. Shorter block times can make transactions confirm faster but may lead to more frequent chain reorganizations (orphaned blocks).
During the 2017 debate over Bitcoin's scaling approaches, the Bitcoin Cash fork opted for larger blocks to maintain low fees and reliable transaction confirmation, allowing a single block to contain thousands of transactions rather than being constrained by the 1MB limit.
Block security is critical to the integrity of a blockchain network. Several mechanisms ensure that blocks remain secure and tamper-resistant:
Cryptographic hashing: Each block contains a hash of the previous block, creating a chain where altering any block would require changing all subsequent blocks.
Proof of Work/Stake: The energy or capital investment required to add blocks makes attacks economically unfeasible.
Network consensus: For a block to be accepted, it must conform to all the rules of the network and be validated by a majority of nodes.
Block maturity: As more blocks are added after a transaction, the transaction becomes increasingly secure as it would require exponentially more resources to reverse.
Block reorganizations ("reorgs") can occur when two miners find valid blocks almost simultaneously, creating a temporary fork in the chain. The network eventually resolves this by following the longest chain with the most accumulated proof of work.
If an attacker wanted to reverse a Bitcoin transaction with 6 confirmations, they would need to control more than 50% of the network's mining power and re-mine 6 blocks faster than the honest network can mine 1 block—a feat that becomes exponentially more difficult with each additional confirmation.
The economics of blocks are designed to incentivize network security and participation:
Block rewards: Miners receive newly created cryptocurrency as a reward for successfully mining a block. This reward is typically halved at predetermined intervals (e.g., approximately every 4 years for Bitcoin and Bitcoin Cash).
Transaction fees: Users attach fees to their transactions to incentivize miners to include them in blocks. During periods of high network activity, higher fees may be necessary to ensure prompt inclusion.
Block subsidy vs. fees: Initially, block rewards dominated miner income, but as block rewards decrease over time due to halvings, transaction fees are expected to become increasingly important for maintaining network security.
The block reward and fee dynamics create a delicate balance that affects both network security and user experience. Cryptocurrencies must maintain sufficient incentives for miners while keeping transaction costs reasonable for users.
As of 2023, Bitcoin miners receive 6.25 BTC per block plus transaction fees, while Bitcoin Cash miners receive the same block subsidy but typically lower total fees per block due to less congestion—demonstrating different approaches to the fee market and block space economics.
All terms and definitions may update as the Cryptionary improves.