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Author Topic: Two questions about how bitcoin processes transactions and the block chain.  (Read 376 times)
Slight0
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October 31, 2013, 01:45:12 AM
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I originally came to know bitcoin in 2011, did some basic mining, and eventually deemed it not worth my time and thought of it as a sort of internet fad. I now realize I was really just sowing the seeds of regret. Anyway, I did some more research into the technical aspects (though I didn't read the author's full papers) and was hoping someone could clear up some things.

For one, if transactions are processed and confirmed in new blocks that are mined, then what happens when new blocks become scare and are mined very slowly at the rate of say 1 block per day for the whole network? Bitcoins are finite so doesn't that mean that new blocks are finite and thus new transactions will be slowed to a craw? I feel like I'm mistaken here, so what will really happen to the way miners process transactions when bitcoins/new blocks become scarce?

Secondly, if every node has to download the entire block chain which is a history of all transactions, won't the block chain quickly become extremely large and force normal PC's out of the network due to hardware requirements?

Thanks for any info.
The Bitcoin network protocol was designed to be extremely flexible. It can be used to create timed transactions, escrow transactions, multi-signature transactions, etc. The current features of the client only hint at what will be possible in the future.
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October 31, 2013, 02:04:06 AM
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For one, if transactions are processed and confirmed in new blocks that are mined, then what happens when new blocks become scare and are mined very slowly at the rate of say 1 block per day for the whole network? Bitcoins are finite so doesn't that mean that new blocks are finite and thus new transactions will be slowed to a craw?
No. Blocks are, and always will be, mined at a rate of 6 per hour (on average). The mining difficulty is adjusted every two weeks to ensure this is the case even with increases (or decreases) in mining power. The number of bitcoins per block is what decreases to ensure the money supply is finite, not the number of blocks. Eventually, the number of new bitcoins per block will reduce to zero, and no more bitcoins will ever be produced, however blocks will still be mined because miners also receive transaction fees. Currently transaction fees are negligible, however that will change as transaction volume increases.

Secondly, if every node has to download the entire block chain which is a history of all transactions, won't the block chain quickly become extremely large and force normal PC's out of the network due to hardware requirements?
Every full node has to download the entire blockchain. Not everyone has to run a full node, and in fact, most ordinary users shouldn't. In any case, hard disks are cheap and are only going to get cheaper.

Will pretend to do unverifiable things (while actually eating an enchilada-style burrito) for bitcoins: 1K6d1EviQKX3SVKjPYmJGyWBb1avbmCFM4
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