The network and the ledger

Transactions travel peer to peer#

When someone sends bitcoin, their wallet signs a transaction and hands it to a few computers of the network. Each one checks it and passes it on to its neighbours, and within seconds it has reached thousands of computers around the world. There is no central server to go through.

Until a miner includes it in a block, the transaction waits in each computer’s mempool, a waiting room of valid but unconfirmed transactions.

Everyone keeps the same ledger#

The computers that keep the ledger are called nodes. Tens of thousands of them each hold a full copy of the blockchain, every block since January 2009, and check every rule themselves: valid signatures, no coin spent twice, no reward larger than allowed.

Nobody has to trust anybody: a node that receives an invalid block simply rejects it, whoever sent it.

The problem mining solves#

Copies of a ledger are easy to keep. The hard part is agreeing on the order of transactions. If Alice sends the same coin to Bob and to Carol at the same time, the network must agree on which payment came first, without a bank to decide.

Mining settles it: transactions are confirmed only once they are inside a block, and adding a block costs real computing work that anyone can verify in an instant. The next pages show how.

In Mini Miner#