Bitcoin Consensus Rules

[Audrey Simmons]

Bitcoin Consensus Rules: There are rules designed, some by Satoshi when he first released Bitcoin whitepaper, other rules also came as BIP (Bitcoin Improvement Proposal), these rules must be followed by each node, to verify if the transaction or block to be added is valid.

Consensus rules was not specifically designed by one individual, it is a collective suggestions agreed upon by different individuals, different group and jointly agreed by developers, and all rules must be obeyed, if a block breaks any of the rules, it will be rejected by the node.

Most common consensus rules:

1. Bitcoin at 21 million cap: Bitcoin has been fixed into 21 millions coins that can exist, it is the total supply cap.

2. Proof Of Work (POW): This is a consensus algorithm, where miners competes to solve a puzzle, compete to add a block and validate the block before accepting or rejecting.

3. Avoiding Double Spending: Node verifies and refuse to spend the same UTXOs.

4. Block Size/Weight: Bitcoin has it's maximum block size and weight, any added block will be rejected by the node.

5. Verify Signature: Signatures are verified by nodes, valid signatures are accepted while invalid signatures are rejected by the node. A valid signature proves that the coins in the transaction belongs to the person controlling the private keys.

6. Block Halving: Into approximately 4 years, the block rewards for miners are halved.

Importance of Consensus Rules

1. Maintain the 21 million Bitcoin supply.

2. Validate signature if it is cryptographically accurate to avoid spending someone else coin.

3. Prevent double spending.

4. To accept or reject blocks when valid or invalid.