# How Bitcoin Works – Bitcoin Blocks

### Part Four: How Bitcoin Works – Bitcoin Blocks

How Bitcoin Works – Bitcoin Blocks . Now we come to the discussion of How Bitcoin Works – Bitcoin Blocks. Often we hear that transactions in Bitcoin will be grouped together in blocks. But we rarely know why these transactions should be grouped, right?

The only reason to answer it is none other than optimization. Every miner who follows the Bitcoin consensus on each individual transaction, the average new transaction that the Bitcoin system can accept will be much lower.

In addition, the Bitcoin chain hash chain can also be shorter than the transaction chain hash within the Bitcoin network. Since most of these transactions, can already be inserted into every block. So to verify the block data chain structure can also be more efficient.

The block block Bitcoin (Blockchain) is an intelligent combination between two different hash-based data structures. Here are two hash bases in the Bitcoin block chain:

First, is the block hash data structure. Each block has a block header, a hash pointer that shows multiple transaction data, and a hash pointer showing the previous block order.

Second , is the data structure tree of each block of all transactions that have entered into the block. This data structure is the Merkle Tree . With this Merkle Tree, it can get the whole transaction digest (core) in a more efficient way.

Then how to be able to prove that a transaction has been inserted into the block? Please re-open the discussion about the concept of Bitcoin . We try to review a bit about this. To prove the transaction has been entered into the block, can be by way of providing a path through Merkle whose size is logarithmic in the number of transactions in the block. A block consists of header data, followed by a list of transactions that have been arranged in the merkle tree structure.

In the picture, we can see the block chain contains two different hash structures.Differences of each we can see in the picture. As described above.

In the header section, most contain information related to puzzles in Bitcoin mining. Hash from this block header must start with a number of “zero” numbers to be a valid block. In addition, the header also contains “nonce” so that miners can change the time stamp, as well as “bit”. This is an indication of the difficulty level of the block to be found.

In the mining process, the only hashing done is in this header. So when verifying the block chain, the first thing to do is look at the header. Because in the header there is the only transaction data included in the merkle tree root (mrkl_root) .

Above we look at the transaction coinbase. Please note that “coinbase” here does not mean a Bitcoin wallet or exchanger. The Coinbase in question is the name used in the Bitcoin transaction processing process.

Coinbase transactions create new bitcoin coins. So there is no redemption of the previous output. Has a “zero” hash pointer. And also has a coinbase parameter that can contain arbitrary data. The value of a coinbase transaction is a reward block plus all transaction costs included in this block.

What’s interesting about the Bitcoin block here is that the blocks have special transactions in the Merkle tree. This special transaction is called a ” Coinbase ” transaction. So once again, the coinbase here is basically not the name of an Exchanger company nor a wallet name.

Frankly, one of the things that adds to the complexity of Bitcoin’s understanding is that many third-party Bitcoin companies, which also use the name of Bitcoin’s basic terms.Examples are like in the words Coinbase, blockchain, and many others.

Let’s continue the discussion on How Bitcoin Works – Bitcoin Block this time. So this transaction is a process of creating new digital money in Bitcoin. Most will look like a normal deal, but have a difference when compared to the creation of new coins in Scroogecoin. Here is the creation of new money in Bitcoin.

1. Always have one input and one output.
2. The input can not redeem the previous output. So it has the value of a “zero” hash pointer. Because it is a new Bitcoin printing, and still no coin spending.
3. The current output value slightly exceeds 25 Bitcoins. The output value here is the miner’s income from the block. It consists of two components. Namely reward blocks that have been set by the system, and divided into two if it has reached 210,000 blocks.And the second is the transaction fees collected from each transaction included in the block. This discussion can be read more on the discussion of incentives and proof of work .
4. There is a special parameter “coinbase”, which is fully arbitrary . That is, the miners can compress whatever they want there.

In the first block ever mined in Bitcoin, otherwise known as Genesis Block¸ the coinbaseparameters were discussed and referenced in the Times newspaper on January 3, 2009 .Discussion on the newspaper about the chancellor who will issue a second bailing out for the bank. Parameter is interpreted as a political discourse as a proper motivation to start Bitcoin. It is also used as evidence that Bitcoin mining is done after the media coverage is published.

Meanwhile, to give a better feel with regard to block formats and transaction formats, is to explore the blockchain itself. There are now many Bitcoin sites that allow accessing Blockchain data. Can also look at transaction graphs, look for complicated transactions with scripts, or look at block structures and also see how blocks can refer to other blocks. That can be done because the block chain (Blockchain) is public ledger.

#### Cloud Faucet Net

Cloud Faucet Net is an online medium for sharing knowledge and information about Bitcoin and cryptocurrency. It was first established in March 2017. Hopefully, it can be used as a source of information as well as a reference to the addition of useful knowledge, related to Bitcoin and the technology that surrounds it.