Why are transactions recorded into blocks?

[titus]

Why not just send every transaction to every client?

Is it

- because transactions are only validated during the creation of a block?
- so that there is a way to generate new bitcoins?
- so that new clients don't have to download old transactions, just the block chain?
- something else?

[DeathAndTaxes]

Transactions ARE sent to every client, however until they are included in a block they are unconfirmed (0-confirms).  The blockchain is a way to force a consensus which is mandatory for the system to work.

Imagine I have 1 BTC.  I send the 1 BTC to John and I sent the 1 BTC to Jane.  I send them at the same time.  John's client believes it has received 1 BTC and Jane's believes it has received 1 BTC.  Two people can't own the same coin.  Did I just magically create a coin out of thin air (counterfeiting)?  

Bitcoin only works if the entire world has a single consensus view of where the coins are.  If there is a dispute only one version of a coins history will end up in a block.  The blockchain forces a consensus so in the transaction above if John's coin ends up in the block then Jane's coin ceases to exist (she has been double spent).  Harsh but Bitcoin can only work if there is a single global view of the current location of the coins.  If Jane tries to spend that coin it will be rejected by the network as every client will see John is the correct owner of the coin.

[remotemass]

'Blocks' are expensive to generate and to change a block you would have to redo all the work chained after it, so blocks are a way to make it more and more impossible to change the history of transactions, and have a so-called 'timestamp server' that ensures the chronological order of valid transactions.

Maybe you should have a look at 'Satoshi paper'.
http://bitcoin.org/bitcoin.pdf

Also, here is a nice link for you: http://www.splitbrain.org/blog/2011-07/29-bitcoin_for_beginners_like_me

[titus]

Ah thank you. Blocks solve the double spend problem.  Should have occurred to me.

[solex]

Arguably, the Bitcoin blockchain (taken logically as a single data-set, now 5.5Gb) is the single most information-dense object in the known universe.

Remarkably, it is really easy to copy, so there are thousands of copies around the world. At the same time ridiculously hard to counterfeit, for practical purposes - nearly impossible, to make a new one of comparable size, especially as it keeps growing!

Satoshi Nakamoto, take a bow. I want to see the day he gets a Nobel prize (Economic Sciences) for this invention. Maybe he'll turn up for it?