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BITCOIN ARCHITECTURE

The Bitcoin ecosystem emerged over the need to provide services to different nodes depending on their available resources. We describe in the following the different node types in Bitcoin and how they interoperate in the network.

Confirming transactions in Bitcoin

Figure 3.7 Confirming transactions in Bitcoin.

Node Types

Due to the heterogeneity of nodes in the network in the Bitcoin ecosystem, multiple nodes types are supported in the system.

Miner

Miners perform the proof-of-work in order to find and broadcast blocks in the Bitcoin network. Their operations consists mainly of quickly retrieving information about the newest blocks and validating transactions that are included in new blocks. Miners typically operate dedicated mining hardware to perform as many hash operations as possible, and can use dedicated communication links to efficiently spread found blocks to the whole network. Note that the term “mining” originates from the traditional process of acquiring scarce/precious material (e.g., gold)— hence the analogy to Bitcoin mining.

As mentioned earlier, every discovered Bitcoin block provides a monetary reward to the miner. Miners typically organize themselves in groups, commonly referred to as mining pools. Because of its higher collective hashing power, a mining pool has a higher probability to find a block, and mining pool members can consequently receive larger payouts than individual miner. We discuss the impact of mining on the security of Bitcoin in Chapter 4.

 
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