Block chain

A block chain is a transaction database shared by all nodes participating in a system based on the Bitcoin protocol. A full copy of a currency's block chain contains every transaction ever executed in the currency. With this information, one can find out how much value belonged to each address at any point in history. Every block contains a hash of the previous block. This has the effect of creating a chain of blocks from the genesis block  to the current block. Each block is guaranteed to come after the  previous block chronologically because the previous block's hash would  otherwise not be known. Each block is also computationally impractical  to modify once it has been in the chain for a while because every block  after it would also have to be regenerated. These properties are what  make double-spending of bitcoins very difficult. The block chain is the main innovation of Bitcoin. Honest generators only build onto a block (by referencing it in  blocks they create) if it is the latest block in the longest valid  chain. "Length" is calculated as total combined difficulty of that  chain, not number of blocks, though this distinction is only important  in the context of a few potential attacks. A chain is valid if all of  the blocks and transactions within it are valid, and only if it starts  with the genesis block. For any block on the chain, there is only one path to the genesis  block. Coming from the genesis block, however, there can be forks.  One-block forks are created from time to time when two blocks are  created just a few seconds apart. When that happens, generating nodes  build onto whichever one of the blocks they received first. Whichever  block ends up being included in the next block becomes part of the main  chain because that chain is longer. More serious forks have occurred  after fixing bugs that required backward-incompatible changes. Blocks in shorter chains (or invalid chains) are not used for  anything. When the bitcoin client switches to another, longer chain, all  valid transactions of the blocks inside the shorter chain are re-added  to the pool of queued transactions and will be included in another  block. The reward for the blocks on the shorter chain will not be  present in the longest chain, so they will be practically lost, which is  why a network-enforced 100-block maturation time for generations  exists. These blocks on the shorter chains are often called "orphan"  blocks. This is because the generation transactions do not have a parent  block in the longest chain, so these generation transactions show up as  orphan in the listtransactions RPC call. Several pools have  misinterpreted these messages and started calling their blocks  "orphans". In reality, these blocks have a parent block, and might even  have children. Because a block can only reference one previous block, it is impossible for two forked chains to merge. It's possible to use the block chain algorithm for non-financial purposes: see Alternative chain. The block chain is broadcast to all nodes on the networking using a flood protocol: see Block chain download.