What’s a block?
“Blocks” are the information units of blockchain. They are made up of digital pieces of information, which include:
- Information about the changes of distributed ledgers on blockchain: make it easier to understand, blocks record all the transaction information (date, time, amount, etc.)
- Information about the participants in the transactions: technically, the information is represented as a unique “digital signature”
- Information that distinguishes this block from other blocks: each block stores a unique code “hash” that allows us to tell it apart.
Blocks are produced and ordered one by one as time flows, similar to the form of a chain. Therefore, we call it “blockchain”
How does blockchain work?
Blocks are “produced” by miners. When we say user “making a transaction on Bitcoin blockchain”, we are saying that users broadcasting digitally signed messages to the network. Participants known as miners verify and timestamp transactions into a shared public database called the blockchain so that all the distributed ledgers share the same record that is hardly to manipulate.
A miner produces blocks and lengthen the chain, that is, he/she collects pending Bitcoin transactions, verifies their legitimacy, and assembles them into what is known as a “block candidate.” Miners take the efforts because they may be rewarded with transaction fees and newly minted bitcoins. Every predetermined period, there’re bitcoin newly minted given to some specific miners, which is written in the codes of Bitcoin. How to determine which of the miners wins the prize? Technically, miners put together the hash value of last block, newly-verified transaction after last block, and a guessing of an arbitrary value X, pack them to a block candidate to make the hash value of this block candidate smaller than a given number in Bitcoin network. It is as if a calculation puzzle is open to all miners. The one who first solves the puzzle win the prize and produces the block. The total amount of bitcoin in circulation, along with this puzzle game, will increase with decreasing rate, until touching the ceiling of 21 million.