Data Blocks

What are data blocks, and what information do they contain? How does mining affect data blocks? Coin Pursuit will walk you through what miners do.

Whenever any amount of a digital currency is used in a transaction, the information for that transaction is placed into a digital file. These can be trades between investors or purchases made from vendors. Since many transactions are made in short periods, several new blocks can be generated within an hour's time—this varies from one currency type to another (for example, Bitcoin adds a new block of data every ten minutes). As soon as these blocks are generated, their information is available for miners to process.

As blocks are created, they go to the end of the line, and include information from the block immediately before. This interlinked series of data blocks is called a block chain, and offers not only a good historical look at transaction data, but provides enhanced security, as well. Here's how that happens: when the block containing the original data for a transaction is processed, the transaction is confirmed. When each subsequent block is mined, that transaction's data is reconfirmed repeatedly. After several future blocks are successfully processed, the transaction in question now has several layers of confirmation; each block that's processed after the transaction validates its information even further and makes that transaction's information more secure.

We mentioned that when blocks are mined, they generate new coins. What happens if a digital currency has a mining cap, and all the coins that are going to be created already have been? Block generation will never stop as long as transactions are taking place. When this scenario takes place—and it could be several years in some cases before it does—miners will still be able to earn a percentage of transaction fees as their reward. It's projected that, by then, fee rewards will be big enough to make up for the lack of new coins being rewarded to miners.

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