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What Data Does the Bitcoin Blockchain Store?

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If you deal with cryptocurrency, then you’ve certainly come into contact with a blockchain at some point. Blockchains are also relevant in supply chain management, logistics, identity verification, and a range of other fields, so you may have used this technology even if you’re not into crypto. But what data do blockchains store? And, if these blockchains are public, should you be worried about what’s on them?

A Quick Overview of Blockchain Technology

Before we discuss the data stored on blockchains, we should first go over what a blockchain is in simple terms so that we know what kind of technology we’re dealing with.

Blockchains are best imagined as virtual chains of blocks, hence the name. Each block stores data using hashing, a cryptographic method. This stops illicit individuals from exploiting blockchain data. Once one block’s capacity is reached and confirmed to join the chain, another block begins to be confirmed, be it through proof of work, proof of stake, or another consensus mechanism.

Blocks vary in size, meaning the amount of information they can store differs. A Bitcoin block, for example, is only 1MB in size. The same goes for Litecoin and Dogecoin. Bitcoin Cash, however, has a much larger block size of 32MB, meaning more transactions can be stored per block.

Bigger blocks usually give way to quicker transaction times and lower fees, but we won’t be getting into that element of blockchain technology today. Instead, let’s get started with the kind of data stored on the blockchain.

What Data Does a Block Store?

The specific kind of data a given block will store may differ depending on the purpose and nature of the blockchain. But let’s use Bitcoin, one of the world’s most popular blockchains, to get a good understanding of blockchain storage.

Bitcoin blocks are mined through the proof of work consensus mechanism, wherein miners use specialized hardware to solve complex computational problems. So far, over 760,000 Bitcoin blocks have been mined, with around 900 BTC put into circulation daily. Each block puts 6.25 BTC into circulation, which equates to the reward eligible to the miner, or mining pool, that mines the block.

Bitcoin is coming close to its supply limit of 21 million BTC. Once this cap is hit, no more BTC can be mined. But as Bitcoin transactions continue to be carried out, blocks will need to continue to be added to the blockchain to keep up the immutable ledger.

The data within a Bitcoin block is hashed using the SHA-256 cryptographic hashing algorithm. Different cryptocurrencies use different hashing algorithms. Ethereum, for example, uses Ethash. Many governments use SHA-256 to hash data, too.

A Bitcoin block consists of a few different sections. Let’s start with the block header.

A Bitcoin block header stores the following kind of data:

  • Transaction time
  • Nonce
  • Bits
  • hashMerklRoot
  • hashPrevBlock
  • Version

The transaction time contains a timestamp representing the time at which the transaction took place. Blocks store transactions in chronological order.

The nonce (shortened from “number only used once”) plays a very important role in the proof of work mining process. This is the number that a miner must reach by solving computational problems. If a miner solves the nonce, they can successfully mine the block. Over time, it becomes harder and harder to mine blocks as the Bitcoin mining difficulty (i.e., how hard it is to mine a block) increases.

Next up, we’ve got the bits. This field also relates to Bitcoin’s mining difficulty, as it contains the difficulty itself. This can increase or decrease over time. If the difficulty increases, a miner must use more hash power to mine the block. If it decreases, the miner can use less. Of course, miners prefer a lower difficulty as this saves energy and time. In general, if the number of miners increases, the difficulty increases with it.

The hashMerklRoot is associated with a Merkle Root. This is a mathematical method used to confirm the information on a Merkle tree, which is essentially a data storage structure. Merkle trees use cryptography to store data, with the hashMerklRoot being the hash of all hashes of the transactions stored in a given block.

hashPrevBlock, as the name suggests, refers to the 256-bit hash of the previous block. Every Bitcoin block on the chain contains the hash of the previous block.

Lastly, you’ve got the version. This field simply refers to the version of the Bitcoin protocol that was used. The Bitcoin protocol used today is not exactly the same as that used when Bitcoin was first launched in 2008. Updates are made every now and then to improve certain parts of the network. The most recent protocol version is 70015, which was introduced in 2017. This update provided the ability to ban invalid compact blocks from the chain.

The Remainder of a Bitcoin Block

But things don’t stop at the header. There are other kinds of data stored in each Bitcoin block, including:

  • Block size
  • Transaction counter
  • Magic number
  • Transactions

Let’s start with the block size. This field imposes a limit on the amount of data that can be stored within a block. As previously stated, Bitcoin’s block size limit is 1MB, but this changes from crypto to crypto.

The transaction counter simply counts the number of transactions recorded within a given Bitcoin block. There is no constant number of transactions that blocks store, as each transaction can have a different size. But, on average, each Bitcoin block contains between 1,500 and 2,000 transactions, give or take a few hundred on either side.

The magic number has a constant value of 0xD9B4BEF9, and identifies the file type and structure used in the block. Magic numbers also stand as a network identifier for each block. This constant value was set by Satoshi Nakamoto when Bitcoin was created.

The transactions field lists all the transactions included in any Bitcoin block (unlike the transaction counter field, which states the number of transactions in the block). As we’ve already discussed, the number of transactions stored in a block cannot surpass the 1MB capacity.

Does the Blockchain Store Your Personal Data?

Your name, contact details, payment information, and other private data are not stored on the blockchain. The only data that does relate to you is your public wallet address. In most scenarios, this is totally benign. But more sophisticated tracking tools used by government agencies and other blockchain analysts can uncover your identity via your address if they try hard enough.

Most cryptocurrencies out there are pseudonymous and traceable to a degree. This is why some prefer privacy coins, such as ZCash and Monero, as they can hide their wallet address when trading these assets.

Blockchain Data Plays a Big Role in the Network

Without block data, there would be no way to record and track transactions, which is an inherently important part of blockchain technology. Providing an immutable ledger provides security and transparency, allowing users to check various kinds of information within the network, such as transaction amounts,

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