...by Daniel Szego
"On a long enough timeline we will all become Satoshi Nakamoto.."
Daniel Szego

Thursday, August 9, 2018

How to implement a Blockchain from scratch - tasks of a miner

As opposed to the common idea, the task of the miner is not only to calculate the hashes. Its task in a blockchain system is to create a new block with a set of valid transactions and state information. The most important tasks are the followings in an accoun/balance based blockchain system:

- Choose one of the top block of the different partly competing blockchains: as the top of the blockchain always forks, one task of the miner or validator is to pick one of the possible top blocks and start building on top. As these top blocks are competing with each other a heuristic has to be used to choose a blockchain that will most likely the longest one. Miners or validators are cryptoeconomically incetivized to pick the most probable longest block.  

- Pick a valid set of transactions from the transaction pool. If a transaction is valid or not depends highly on the transaction itself. The transaction has contain a valid signature, its from and to address should either contain valid account or the related account should be able to add to the transactions. Transactions for double spending or replay attacks must be avoided. There might be further considerations for picking the transactions, like there might be transaction fee included that has to be maximized and there can be a limit for the available transactions as well.  

- Apply transactions to the state. How it is exactly carried out is again highly dependent on the transactions. If it is a transfer transaction, than the related balances of the related accounts have to modified. If it is a state modifying transaction, the state of the corresponding account has to be modified.  

- As soon as the set of transactions is chosen and the state is calculated, merkle or patricia root both for the transactions and for the state has to be calculated. 

- As a last but one step, proof of work has to been done, meaning that nonce values have to be fine-tuned until the hash value will be less than the given difficulty. 

- As a last step, the new block has to be boradcasted to the system.