Block Chain

The following subsections briefly document core block details.

Block Headers

Block headers are serialized in the 80-byte format described below and then hashed as part of Bitcoin’s proof-of-work algorithm, making the serialized header format part of the consensus rules.

The hashes are in internal byte order; the other values are all in little-endian order.

An example header in hex:

02000000 ........................... Block version: 2

b6ff0b1b1680a2862a30ca44d346d9e8
910d334beb48ca0c0000000000000000 ... Hash of previous block's header
9d10aa52ee949386ca9385695f04ede2
70dda20810decd12bc9b048aaab31471 ... Merkle root

24d95a54 ........................... Unix time: 1415239972
30c31b18 ........................... Target: 0x1bc330 * 256**(0x18-3)
fe9f0864 ........................... Nonce

Block Versions

• Version 1 was introduced in the genesis block (January 2009).

• Version 2 was introduced in Bitcoin Core 0.7.0 (September 2012) as a soft fork. As described in BIP34, valid version 2 blocks require a block height parameter in the coinbase. Also described in BIP34 are rules for rejecting certain blocks; based on those rules, Bitcoin Core 0.7.0 and later versions began to reject version 2 blocks without the block height in coinbase at block height 224,412 (March 2013) and began to reject new version 1 blocks three weeks later at block height 227,930.

• Version 3 blocks were introduced in Bitcoin Core 0.10.0 (February 2015) as a soft fork. When the fork reach full enforcement (July 2015), it required strict DER encoding of all ECDSA signatures in new blocks as described in BIP66. Transactions that do not use strict DER encoding had previously been non-standard since Bitcoin Core 0.8.0 (February 2012).

• Version 4 blocks specified in BIP65 and introduced in Bitcoin Core 0.11.2
• (November 2015) as a soft fork became active in December 2015. These blocks now support the new OP_CHECKLOCKTIMEVERIFY opcode described in that BIP.

The mechanism used for the version 2, 3, and 4 upgrades is commonly called IsSuperMajority() after the function added to Bitcoin Core to manage those soft forking changes. See BIP34 for a full description of this method.

As of this writing, a newer method called version bits is being designed to manage future soft forking changes, although it’s not known whether version 4 will be the last soft fork to use the IsSuperMajority() function. Draft BIP9 describes the version bits design as of this writing, although it is still being actively edited and may substantially change while in the draft state.

Merkle Trees

The merkle root is constructed using all the TXIDs of transactions in this block, but first the TXIDs are placed in order as required by the consensus rules:

• The coinbase transaction’s TXID is always placed first.

• Any input within this block can spend an output which also appears in this block (assuming the spend is otherwise valid). However, the TXID corresponding to the output must be placed at some point before the TXID corresponding to the input. This ensures that any program parsing block chain transactions linearly will encounter each output before it is used as an input.

If a block only has a coinbase transaction, the coinbase TXID is used as the merkle root hash.

If a block only has a coinbase transaction and one other transaction, the TXIDs of those two transactions are placed in order, concatenated as 64 raw bytes, and then SHA256(SHA256()) hashed together to form the merkle root.

If a block has three or more transactions, intermediate merkle tree rows are formed. The TXIDs are placed in order and paired, starting with the coinbase transaction’s TXID. Each pair is concatenated together as 64 raw bytes and SHA256(SHA256()) hashed to form a second row of hashes. If there are an odd (non-even) number of TXIDs, the last TXID is concatenated with a copy of itself and hashed. If there are more than two hashes in the second row, the process is repeated to create a third row (and, if necessary, repeated further to create additional rows). Once a row is obtained with only two hashes, those hashes are concatenated and hashed to produce the merkle root.

TXIDs and intermediate hashes are always in internal byte order when they’re concatenated, and the resulting merkle root is also in internal byte order when it’s placed in the block header.

Target nBits

The target threshold is a 256-bit unsigned integer which a header hash must be equal to or below in order for that header to be a valid part of the block chain. However, the header field nBits provides only 32 bits of space, so the target number uses a less precise format called “compact” which works like a base-256 version of scientific notation:

As a base-256 number, nBits can be quickly parsed as bytes the same way you might parse a decimal number in base-10 scientific notation:

Although the target threshold should be an unsigned integer, the original nBits implementation inherits properties from a signed data class, allowing the target threshold to be negative if the high bit of the significand is set. This is useless—the header hash is treated as an unsigned number, so it can never be equal to or lower than a negative target threshold. Bitcoin Core deals with this in two ways:

• When parsing nBits, Bitcoin Core converts a negative target threshold into a target of zero, which the header hash can equal (in theory, at least).

• When creating a value for nBits, Bitcoin Core checks to see if it will produce an nBits which will be interpreted as negative; if so, it divides the significand by 256 and increases the exponent by 1 to produce the same number with a different encoding.

Some examples taken from the Bitcoin Core test cases:

Difficulty 1, the minimum allowed difficulty, is represented on mainnet and the current testnet by the nBits value 0x1d00ffff. Regtest mode uses a different difficulty 1 value—0x207fffff, the highest possible value below uint32_max which can be encoded; this allows near-instant building of blocks in regtest mode.

Serialized Blocks

Under current consensus rules, a block is not valid unless its serialized size is less than or equal to 1 MB. All fields described below are counted towards the serialized size.

The first transaction in a block must be a coinbase transaction which should collect and spend any transaction fees paid by transactions included in this block.

All blocks with a block height less than 6,930,000 are entitled to receive a block subsidy of newly created bitcoin value, which also should be spent in the coinbase transaction. (The block subsidy started at 50 bitcoins and is being halved every 210,000 blocks—approximately once every four years. As of November 2014, it’s 25 bitcoins.)

Together, the transaction fees and block subsidy are called the block reward. A coinbase transaction is invalid if it tries to spend more value than is available from the block reward.