Transaction propagation refers to the process of how a transaction is spread through a distributed network, until it is included in a block on the blockchain as confirmation.
Decentralized blockchains derive their security and maintain their integrity in part because all of the nodes participating in the blockchain network possess identical copies of the digital ledger of transactions. Transaction propagation is a critical step that makes it possible for each participant to have the same information about the state of the ledger.
How Propagation Works
When a cryptocurrency transaction takes place, it must be validated and spread across the peer-to-peer network (i.e. propagate).
Nodes in a decentralized network connect to each other either directly or indirectly through other nodes. Once received by a node, valid transactions are immediately forwarded by that node to all other nodes that it is connected to, who then do the same with the nodes to which they are connected until the transaction reaches a large percentage of the nodes in the network. This process typically takes a few seconds.
The recipient of a transaction can independently verify that the transaction is valid and contains a sufficiently large amount for the transaction fee in order to be included in a block and confirmed. At this point, the propagation process is complete and the recipient can accept the transaction without incurring significant risk, even if the transaction has not yet been included in a block on the blockchain. These so called zero-confirmation transactions are common in retail settings for small transactions such as buying a cup of coffee.
However, recipients of larger sized transactions can further reduce their risk by waiting for the transaction to actually be included in a block that goes through several confirmations. In other words, not only is the transaction included in the blockchain, but other blocks have subsequently been added to blockchain after the block that contains the transaction.
Mastering Bitcoin Ch. 2
Transaction Propagation on Permissionless Blockchains: Incentive and Routing Mechanisms
Oguzhan Ersoy, Zhijie Ren, Zekeriya Erkin, Reginald L. Lagendijk
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Bitcoin Q&A: What is the role of nodes?
- BitcoinBitcoin is a cryptocurrency and a digital payment system invented by an unknown programmer, or a group of programmers, under the name Satoshi Nakamoto. It was released as open-source software in 2009.
- Cryptocurrency miningCryptocurrency mining is the process by which transactions are validated and new coins are minted in a decentralized cryptocurrency network.
- Transaction validationTransaction validation is the process of determining if a transaction conforms to certain protocol requirements to deem it as valid.
- Cryptographic hash functionMathematical hash function that is cryptographically secure and has the properties of collision resistance, hiding, and puzzle friendliness
- DecentralizationProcess of redistributing or dispersing functions, powers, people or things away from a central location or authority
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