Block

A fundamental component of blockchain technology, which underlies digital currencies. It acts as a record-keeping unit, storing a collection of transactions that have been verified and added to the blockchain. Its role in cryptocurrency:

Transaction Data: Each block contains a list of transactions. In the case of Bitcoin, for example, a transaction includes details such as the sender's and receiver's wallet addresses and the amount of Bitcoin transferred.

Block Header: This includes several important pieces of information:

• Version: Indicates the block version number to track software/protocol updates.
• Previous Block Hash: A cryptographic hash of the previous block, which links the blocks together in a chain. This ensures the integrity of the blockchain by making it extremely difficult to alter any information contained in a previous block.
• Merkle Root: A hash of all the transactions in the block. This provides a means to quickly and efficiently verify whether a specific transaction is included in the block.
• Timestamp: The time when the block was mined.
• Difficulty Target: A measure of how difficult it is to mine a new block, adjusted periodically to ensure a consistent rate of block creation.
• Nonce: A random value that miners change during the mining process to try and produce a hash that meets the blockchain's difficulty target.

Block Size: Each block has a size limit, which varies depending on the cryptocurrency. For Bitcoin, it's currently capped at 1 MB, while Ethereum's block size is determined by a gas limit per block.

Block Reward: This is the incentive for miners to add new blocks to the blockchain. The block reward includes newly created cryptocurrency (like new bitcoins) and the transaction fees from all transactions included in the block. For Bitcoin, the reward halves approximately every four years in an event known as "halving."

Mining Process: Mining involves using computational power to find a nonce that results in a block header hash that is below the difficulty target. This process secures the network and validates transactions.

Immutable Ledger: Once a block is added to the blockchain, it is nearly impossible to alter. This is due to the cryptographic linkage between blocks and the decentralized nature of the network, where multiple copies of the blockchain exist.