Episode 7 of Satoshi's Complete Writings explores the structure of blocks within the Bitcoin blockchain, emphasizing their role in security and efficiency.

Key Topics:

Summary:

The episode begins by establishing that Bitcoin nodes consider the longest chain to be the correct one and continue to extend it. It then transitions into an examination of block structure, highlighting blocks as the fundamental units of Bitcoin's distributed ledger. Each block bundles transactions together, timestamps them, and links to the previous block.

The block header, an 80-byte summary, is described as containing the version number, hash of the previous block, Merkle root of all transactions, timestamp, difficulty target, and nonce. Miners hash the header repeatedly while varying the nonce to find a valid proof of work. Satoshi wrote that to modify a past block, an attacker would have to redo the proof of work of that block and all subsequent blocks, and then surpass the work of the honest nodes. Every block consists of the block header and the transaction data.

The conversation shifts to Merkle trees, which are defined as binary trees of hashes where each leaf is a transaction hash and each parent is the hash of its children. The root hash, known as the Merkle root, commits to all transactions. A user only needs to keep a copy of the block headers of the longest proof-of-work chain and obtain the Merkle branch linking the transaction to the block it's time stamped in.

Each block header contains the hash of the previous block header, creating a chain where any alteration to a historical block would change its hash, breaking the link to all subsequent blocks. The deeper a block is in the chain, the more secure it becomes. Altering a block 100 blocks deep would necessitate redoing 100 blocks' worth of proof of work, while honest miners continue to extend the chain.

The difficulty target is a 256-bit number that valid block hashes must be below. Lower targets mean more leading zeros are required, resulting in more hashes on average to find a valid block. The network adjusts this target every 2016 blocks to maintain 10-minute block times. A block can contain thousands of transactions, but the header only has room for 32 bytes to commit to them. The Merkle tree solves this by hashing all transactions into a single root hash that commits to every transaction in the block.

The key takeaways from the episode are summarized as follows: Each block has an 80-byte header containing the previous block hash, Merkle root, timestamp, difficulty target, and nonce. Blocks are linked by hashes, meaning that changing any block invalidates all subsequent blocks, requiring their proof of work to be redone. Merkle trees compress all transactions into a 32-byte root and enable efficient verification proofs. SPV clients can verify transactions with only block headers and Merkle proofs, enabling lightweight wallets. The difficulty target determines how hard it is to mine a block, as the hash must be below this threshold. The episode concludes by previewing the next episode on difficulty adjustment, explaining how Bitcoin automatically adjusts mining difficulty to maintain 10-minute block times regardless of how much hash power joins or leaves the network.