Bitcoin Blocks So now let's discuss about how Bitcoin blocks get put together. In this article, we'll go over how transactions are grouped into blocks and why that's done. In-depth knowledge of the block chain data structure and its low-level implementation is the goal of this article. You will know more about the operation of Bitcoin blocks and their function in the mining process at the end of this essay. The Importance of Grouping Transactions into Blocks All of the information in the lecture up to this point has only discussed individual transactions becoming published; nevertheless, bitcoin transactions are organized into blocks. But why do we compile transactions into blocks in the first place? There are a few causes, actually. One benefit is that it gives miners a good single unit of labor that is larger than the size of each individual transaction. It would be too much overhead if the miners had to perform labor and add metadata for each transaction in the system. Since we only require one block for a lot of transactions, clustering transactions into blocks shortens the hash chain of blocks. We can now more easily check the block chain data structure as a result. The Block Chain Data Structure The block chain data structure combines two distinct hash-based data structures in a rather ingenious way. We have a block hash chain at the top. Each one has a block header, a pointer to some transaction data, a pointer to the block before it, and a pointer to the sequence. And keep in mind that these are hash pointers. And then we have a tree of all the transactions that are included in each block. This is a hash tree, or what's called a Merkle tree, which commits to all of the transactions in the block in a quite efficient way. So it's easy to provide just the path to the tree, which will be logarithmic in size to prove that the transactions included in a specific block. The Block Structure in Practice So, how does a low-level Bitcoin block actually appear in use? A Bitcoin block looks like this: there is the Merkle tree of transactions and what is known as the block header, which contains all of the metadata for that block. In essence, a long list of transactions is represented by a tree structure in which all of the hashes are ordered, allowing you to quickly establish which transactions belong to a block. The most important part, of course, is the header, which mostly has information related to the mining puzzle, which was talked about in the lecture on consensus and will be revisited in the lecture on mining. But recall that the most important thing here is that the hash of the block header has to start with a large number of zeros for the block to be valid. And then there's some other data to make that happen. There are the nodes that miners can change, there's the timestamp, and there's an indication of how difficult this block was to find. That's all stored in the header. The header is the only thing that's hashed during mining. To verify that chain of blocks, all you need to do is look at the headers. The only transaction data that's included in the header is that one root of the transaction tree. So that's this Merkle root parameter. The Coinbase Transaction The coinbase transaction is one unique transaction in a block's Merkle tree that stands out from all the others we've previously seen. This is another intriguing aspect of blocks. This is where Bitcoin and new coin production takes place. The value of this transaction is going to be equal to currently a little over 25 bitcoins. This is a flat mining reward, which is set by the system and which is halved every four years.