How Do Miners Verify Transactions?
Miners play a crucial role in the Bitcoin network by verifying transactions and adding them to the blockchain. The process involves several key steps:
1. Transaction Broadcasting
When a user initiates a Bitcoin transaction, it is broadcasted to the network. This transaction includes the sender's and receiver's addresses, transaction amount, and a cryptographic signature.
2. Transaction Pool
Once broadcasted, the transaction enters the mempool, where it waits to be confirmed. Miners access this pool to pick up transactions they wish to include in the next block.
3. Validating Transactions
Before including a transaction in a block, miners validate it to ensure it follows the network's rules. They check for sufficient balance, correct format, and digital signature verification, ensuring the sender has the necessary funds.
4. Creating a Block
After validation, miners group several transactions into a block. Each block contains a hash of the previous block, linking the blocks together in chronological order, which forms the blockchain.
5. Proof of Work
Miners then compete to solve a complex mathematical problem known as Proof of Work. This requires substantial computational power and energy, ensuring that adding new blocks is a resource-intensive process.
6. Broadcasting the Block
Upon solving the problem, the miner broadcasts the new block to the network. Other nodes verify the block's validity, ensuring all included transactions are legitimate.
7. Finalization
If the block is validated by the majority of nodes, it is added to the blockchain, and the transactions are confirmed. The successful miner is rewarded with newly minted bitcoins and transaction fees from the included transactions.