Block (Bitcoin Block)

AAA

DEFINITION of 'Block (Bitcoin Block)'

Blocks are files where data pertaining to the Bitcoin network is permanently recorded. A block records some or all of the most recent Bitcoin transactions that have not yet entered any prior blocks. Thus a block is like a page of a ledger or record book. Each time a block is ‘completed’, it gives way to the next block in the blockchain. A block is thus a permanent store of records which, once written, cannot be altered or removed. 

INVESTOPEDIA EXPLAINS 'Block (Bitcoin Block)'

The Bitcoin network witnesses a great deal of transaction activity. Maintaining a record of these transactions helps users track what was paid to and by whom. The transactions executed during a given period of time are recorded into a file called a block.

By way of analogy, let’s compare ordinary banking transactions to transactions over the Bitcoin network. A blockchain is like a record of bank transactions whereas a block might be a single transaction confirmation that a bank ATM prints out after you use the machine. In other words, the relationship of block to blockchain is one of part to whole.  

A block represents the ‘present’ and contains information about its past and future. Each time a block is completed it becomes part of the past and gives way to a new block in the blockchain. The completed block is a permanent record of transactions in the past and the new transactions are recorded in the current one. This way the whole system works in a cycle and data gets permanently stored. Each block comprises records of some or all recent transactions, and a reference to the block that preceded it.

A mathematical problem is linked with each block. Miners are constantly processing and recording transactions as part of the process of competing in a type of race. They race to ‘complete the current block’ in order to win Bitcoins. When a winning miner is able to solve it, the answer is shared with other mining nodes and it is validated. Every time a miner solves a problem, a newly minted 25 BTC (Bitcoin currency symbol) is awarded to the miner and enters the circulation. The first record in that next block is a transaction that awards the winning miner (who completed the previous block) the newly minted BTC. It is the difficulty of the mathematical problem that regulates the creation rate of new Bitcoins since new blocks can’t be submitted to the network without the answer. Based on the fact that it takes around 10 minutes on an average to solve the problem, approximately 25 new Bitcoins are minted every 10 minutes. 

RELATED TERMS
  1. Bitcoin Mining

    Bitcoin mining is the process by which transactions are verified ...
  2. Bitcoin

    A digital or virtual currency that uses peer-to-peer technology ...
  3. Peer-To-Peer (Virtual Currency)

    The exchange or sharing of information, data, or assets between ...
  4. Paper Wallet

    A paper wallet is an offline mechanism for storing Bitcoins. ...
  5. Litecoin

    Launched in the year 2011, Litecoin is an alternative cryptocurrency ...
  6. Altcoin

    Altcoins are alternative cryptocurrencies launched after the ...
RELATED FAQS
  1. How is a block chain network useful for trading goods and assets in virtual currencies?

    Perhaps the most famous quote associated with blockchain technology came from an anonymous virtual currency user, who described ... Read Full Answer >>
  2. What does a block chain record in a bitcoin exchange transaction?

    The bitcoin blockchain is essentially an enormous, shared, encrypted list of which addresses hold what bitcoin balances. ... Read Full Answer >>
  3. How does a block chain prevent double-spending of Bitcoins?

    Double-spending – the incidence of one individual successfully spending a Bitcoin balance more than once – is a major concern ... Read Full Answer >>
  4. Will M1 ever become obsolete?

    The form of M1 money in an economy may change over time, but M1 money will continue to exist for the foreseeable future; ... Read Full Answer >>
  5. How has the shift to e-commerce affected the profitability of companies in credit ...

    The shift to e-commerce has positively affected the profitability of companies in the credit services industry. However, ... Read Full Answer >>
  6. Why do Bitcoins have value?

    Bitcoin was launched in 2009 as the world's first decentralized, private digital currency. Because it has no physical denominations, ... Read Full Answer >>
Related Articles
  1. Investing Basics

    The Easy Way To Measure Bitcoin's Fair Market Value: A Do-It-Yourself Guide

    How do you determine the fair market value of a currency that has appreciated faster than the shares of even the hottest technology stocks?
  2. Investing News

    Will Bitcoin And Walmart Force Western Union To Change Its Business Model?

    Western Union is recognized across the globe for providing a fast, efficient way to move money. Just walk into a Western Union office and you can transfer money to friends, relatives or business ...
  3. Trading Strategies

    Winklevoss Interview: Bitcoin Payment System Worth $400 Billion

    The bull case for Bitcoin is often expressed as an estimate of the future value of all Bitcoins in circulation once it reaches its potential. The most widely known estimate of its intrinsic value ...
  4. Investing Basics

    Why Is Bitcoin's Value So Volatile?

    Bitcoin's value fluctuates due to a confluence of factors, including media hype and perceived value.
  5. Investing Basics

    Could One Bitcoin Come To Be Worth $1 Million? Q&A

    "If Bitcoin lives up to its potential and becomes the working capital of international trade, it could be used for cross border transactions."
  6. Active Trading

    What Is Bitcoin

    Bitcoin is the first decentralized digital currency. It is also sometimes referred to as a virtual currency or a crypto-currency.
  7. Investing Basics

    What is Bitcoin Mining?

    How does Bitcoin get released into circulation?
  8. Forex

    Are People Really Receiving Their Salary Through Bitcoin?

    Did you know people are having their salaries paid with Bitcoin?
  9. Investing

    Why The Winklevoss Twins' New Bitcoin ETF Matters

    The Winklevoss Bitcoin Trust, currently moving towards regulatory approval and expected out later this year, will be a Bitcoin ETF. Currently, such an investment vehicle is only available to ...
  10. Investing

    The Six Biggest Misconceptions About Bitcoin

    Bitcoin has gone mainstream. Yet it's still massively misunderstood.

You May Also Like

Hot Definitions
  1. Dog And Pony Show

    A colloquial term that generally refers to a presentation or seminar to market new products or services to potential buyers.
  2. Topless Meeting

    A meeting in which participants are not allowed to use laptops. A topless meeting organizer can also ban the use of smartphones, ...
  3. Hedging Transaction

    A type of transaction that limits investment risk with the use of derivatives, such as options and futures contracts. Hedging ...
  4. Bogey

    A buzzword that refers to a benchmark used to evaluate a fund's performance. The benchmark is an index that reflects the ...
  5. Xetra

    An all-electronic trading system based in Frankfurt, Germany. Launched in 1997 and operated by the Deutsche Börse, the Xetra ...
  6. Nuncupative Will

    A verbal will that must have two witnesses and can only deal with the distribution of personal property. A nuncupative will ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!