The blockchain technology behind bitcoin isn’t just going to change financial industry. It’s going to revolutionize everything from contracts to voting through the construction of internet applications. But, what exactly are the components of these of applications?
Joel Monegro took the time to identify the most common patterns and trends that made up the architecture of bitcoin applications, which he calls the ‘Blockchain Application Stack.’ This stack includes the following components; Miners and the Blockchain
As Joel reminds us, “miners are the nodes in a network of computers who, together, verify all Bitcoin transactions. In exchange, the algorithm rewards them with Bitcoin.”
Bitcoin Wiki provides us with a little in-depth explanation of the process of mining and how the blockchain is involved;; Mining is the process of adding transaction records to Bitcoin’s public ledger of past transactions. This ledger of past transactions is called the block chain as it is a chain of blocks. The block chain serves to confirm transactions to the rest of the network as having taken place. Bitcoin nodes use the block chain to distinguish legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere. Mining is intentionally designed to be resource-intensive and difficult so that the number of blocks found each day by miners remains steady. Individual blocks must contain a proof of work to be considered valid. This proof of work is verified by other Bitcoin nodes each time they receive a block. Bitcoin uses the hashcash proof-of-work function. The primary purpose of mining is to allow Bitcoin nodes to reach a secure, tamper-resistant consensus. Mining is also the mechanism used to introduce Bitcoins into the system: Miners are paid any transaction fees as well as a “subsidy” of newly created coins. This both serves the purpose of disseminating new […]
