In Blockchain, all transactions are combined together into special structures called blocks. Information recorded in the blocks not encrypted and can be accessed by anybody with the use of a program that allows browsing the Blockchain – Blockchain explorer.
Each block contains its sequence number and a hash of the previous block. All blocks are aligned in a chain-like manner creating a Blockchain, which holds data about all transactions that have ever been made.
The first transaction in the block is always automatically generated and transfers a fee for the creation of the block. The rest of the information is retrieved from the transaction queue, which has not yet been written to the previous blocks in the chain. The person creating the block can exclude or include transactions based on specific parameters, for example, it is possible to exclude transactions without specified commission.
How blocks are created
Blocks are formed in the process called mining. Essentially every block contains a mathematical riddle that needs to be solved for the block to be submitted to the Blockchain. A miner searches for the correct answer by using the computing power of his or her PC. Usually, a GPU or specially designed processors are used for this task. The system can then check if the submitted answer is correct and if it is – the miner receives a reward and the block is appended to the chain.
It is possible that two miners arrive at the same conclusion and consider the same block the previous one, which triggers an event called “branching” when a Blockchain is divided into a fork-like structure. The system is designed to resolve these situations, and in the end, only one branch survives.
The system constantly controls and adjusts the difficulty level of mining so that the average rate at which blocks are created stays at approximately one block per 10 minutes. Every four years the difficulty level increases, demanding more computing power to achieve the same mining results.