How transactions are verified in Bitcoin Blockchain - Longest chain rule explained

How transactions are verified in Bitcoin Blockchain - Longest chain rule explained
Watch our earlier Blockchain videos
Have you wondered how transaction get approved in a Bitcoin block chain? Why you need to wait for 3 to 6 confirmations for the transactions to appear in your wallet. This video attempts to explain how a Bitcoin transaction is approved and the process behind it.
Let’s assume Mr. Gobish transferred Bitcoin worth 100$ from one crypto exchange to another. Once he does the transfer, the transaction message is sent to the network and passed around all the network participants which are also called nodes. This is added to the transaction pool. Currently, the transaction is in an ‘unconfirmed’ state. All the transactions in the transaction pool will be in an unconfirmed status.
Now we will understand who is a miner. In simple words, those who validate new transactions and record them on the global ledger of Blockchain are called miners and this activity is called mining.
To make it simple, let’s assume there are currently 3 miners who are trying to confirm the transactions from transaction pool including Gobish’s transaction of $ 100. Normally miners will select those transactions which will generate a higher transaction fees for them.
Currently, the numbers of confirmed blocks in the Blockchain public ledger is 998.
Once the miners identify that the 998th block is a valid block they will try to create a candidate block by adding unconfirmed transactions from the transaction pool. Now these miners are trying to add the 999th block. To add the blocks they have to solve a complex mathematical problem. This is known as Proof of Work (POW).
Let’s assume all the 3 miners were able to solve this problem and have Proof of Work.
Now we have 3 different candidate blocks, let’s call them 999 A, 999B and 999C
Now which of these block will form part of the valid block will depend upon the longest chain rule.
Let’s understand what is longest chain rule is.
Now there are other miners who are trying to create other valid blocks and based upon the speed by which a block is created others miners will keep on adding their blocks on top of the earlier blocks.
Here in this case Minor C had a better processor which was able to create a block faster than the miner A and B and hence new blocks were created on top of the block 999C. Now the longest chain is the one created by 999C and it will be keep on adding other blocks like 1000, 1001 and so on as miner C solved the proof of work before miner A and B.
So what happens to the blocks 999A and 999B? They have to create the Proof of Work again with new set of transactions from the transaction base.
Each confirmations represent adding each block. Each confirmation will take on an average of around 10 minutes or more per block.
Applying the longest chain rule and proof of work, unconfirmed transaction will become a confirmed transaction and added to the Blockchain ledger
Once the blocks are added miner will receive a transactions fees and block fees which will be the new Bitcoin created as an incentive for approving the transactions.
Block rewards will be reducing every year and in the end only transaction fees will be there as new Bitcoins will not be created.
We will get in to more details about mining and the incentives in our subsequent video.

[JanPBtest]

3:11 It would be worth adding here the importance of the proof-of-work (or not even proof-of-work _per se_ but the 10-minute delay that it implies): without this forced delay in new block production, the "longest chain rule" would not work! The blockchain would be very quickly _smothered_ by a _huge mass_ of candidate blocks and the "longest chain rule" would _never_ be able to catch up and sort it all out. It's a bit like critical mass, the whole thing would just blow up in a mass of contradictory sidechains. So the forced few minutes of delay between blocks stops the blockchain from reaching this explosive "critical mass" so the "longest chain rule" is able to work its magic in (relative) peace.

[Sky_Hustle]

The last Bitcoin will actually be mined around the year 2140 NOT 2050.

[mueslikruemel]

Oh my god thank you so much! This is the first explanation of the verification process that explains it well and in detail!

[RN-uovo]

Yes, but (at 1:43) how do the miners verify block 998? Why does everyone skip over this important part? How are transactions actually confirmed? Adding a bunch of transactions to a block with a nonce and hashing it hoping for a low value doesn't verify anything. This is the hundredth video I have checked and it seems to me that no one actually understands how transactions are verified. To my best guess transactions are ONLY verified before they are sent out - namely, the input UTXOs are verified. And that's it. All this 'miners verify transactions' seems to me to be entirely incorrect. I suppose I am incorrect, but I cannot understand why? Any help would be appreciated.

[arvindmannem]

I've seen plenty of videos on Blockchain
But u were the one to give me the clear representation
Thank you very much
Please proceed with the proof of stake and proof of concept

[felixvanderhaar]

@FINMAESTRO Which programm did you use to create this anime explaining video

[cardsigner]

Question: Do every mining nodes are trying to construct similar blocks (ie, same list of unconfirmed transactions), which means, each mining nodes are trying to solve the same problem? Or do every mining nodes are trying to construct slightly different blocks?

[emmanuelkevin]

i was sent some coins but i don't see the transaction when i track it on blockchain, i have gotten no notification on my wallet and i'm so confused, what could be the cause?

[phanisrk]

if a transaction requires 3 confirmations and as per the video 999C is added to Blockchain but 999A and 999B aren’t added to chain . In that case how can we get other two confirmations?

[tabmax]

What if a miner picks from the transaction pool a transaction that never took place? And then they are able to solve the mathematical problem using the erroneous transaction block?

[indigo]

Do candidate blocks A B C have the same transactions, or do some have transactions that the others do not have?

[akintolasamueloladipupo]

What happened when the transaction id is showing invalid when receiving from Blockchain wallet

[arvindmannem]

Could u'll explain that one the transaction is being included in the block and that particular block has been appended to the Blockchain (i.e getting one confirmation)is why not sufficient
Why should we wait for 3-6 confirmations depending on the amount
According to the definition even one confirmation should be able to resist the reversal of transaction

[Burst]

Thank for the video. Maybe you do consider to make a brave wallet so we could give you BAT.

[popoize]

i correct u, 5 transaction makes 1 block not 6...

[isahbala]

Nice video, Please how do you make an animated video like this??

[amantekk]

I now have 70 more confirmations, shipping only 0.14 BTC. How long will I wait?

[babastyler]

please can anyone help me? where can I see how much confirmation I have on a transaction? i am new and made a transaction on G2A but they said my payment didnt reach em. where can I see how much confirmation I have?

[SFbased]

Your accent suggests you are from Trinidad. Am i right?

[nickmanziel]

One part is difficult to understand. If the transactions in rejected blocks get put back into a transaction pool, it can take an eternity for any of those transactions to ever be included in a valid block. So if I create a transaction that is in miner A's block but spending the same money later is picked up by a faster miner, the second spend will be added to the chain and the first transaction will be eventually picked up and attempted to be added and deemed invalid -- even though that transaction was submitted first.