Blockchain Under the Hood: Blocks, Mempools, Finality, and Why It Matters

The Basics: What Is a Blockchain?

A blockchain is a chain of blocks. Each block contains transactions. Blocks are linked together cryptographically - each block references the previous block's hash. This creates an immutable chain.

Think of it like a ledger book where each page (block) references the previous page. If you change one page, all subsequent pages become invalid. This is how blockchains prevent tampering.

Blocks: The Building Blocks

A block contains:

• Block header: Metadata (previous block hash, timestamp, nonce, etc.)
• Transactions: List of transactions included in this block
• Block hash: Cryptographic hash of the entire block

Blocks have size limits (e.g., Bitcoin ~1MB, Ethereum ~15M gas). This limits how many transactions fit per block, which affects fees and confirmation times.

Block Time

Block time is how often new blocks are created:

• Bitcoin: ~10 minutes per block
• Ethereum: ~12 seconds per block
• Solana: ~400ms per block

Faster block times = faster confirmations, but can reduce security (less time for network to agree).

Transactions: From Initiation to Confirmation

Here's what happens when you send a transaction:

Step 1: You Create a Transaction

You want to send 1 ETH to someone. Your wallet creates a transaction with:

• From: Your address
• To: Recipient address
• Amount: 1 ETH
• Gas price: How much you'll pay
• Nonce: Transaction number (prevents replay attacks)
• Signature: Cryptographic proof you authorized it

Step 2: Transaction Enters Mempool

Your wallet broadcasts the transaction to the network. It enters the mempool (memory pool) - a pool of pending transactions waiting to be included in a block.

Mempool characteristics:

• Not a single place - each node has its own mempool
• Transactions compete for inclusion (higher gas = priority)
• Can be large (thousands of transactions during congestion)
• Transactions can sit here for hours if gas is too low

Step 3: Validator/Miner Selects Transactions

A validator (PoS) or miner (PoW) selects transactions from the mempool to include in the next block. They usually prioritize:

• Higher gas fees (more profit)
• Valid transactions (correct signatures, sufficient balance)
• Not conflicting with other transactions

If your gas is too low, your transaction might sit in the mempool for a long time or never get included.

Step 4: Block Is Created and Broadcast

The validator/miner creates a block with selected transactions, solves the proof-of-work puzzle (PoW) or is selected (PoS), and broadcasts the block to the network.

Step 5: Network Validates Block

Other nodes receive the block and validate it:

• Are transactions valid? (signatures, balances, etc.)
• Does block reference previous block correctly?
• Does proof-of-work/proof-of-stake check out?

If valid, nodes add the block to their chain. If invalid, they reject it.

Step 6: Confirmation

Your transaction is now "confirmed" - included in a block. But it's not final yet. More blocks need to be added on top to make it irreversible.

Consensus: How Networks Agree

Consensus is how the network agrees on which blocks are valid and in what order. Different blockchains use different mechanisms:

Proof of Work (PoW)

Miners compete to solve cryptographic puzzles. First to solve gets to create the block and earn rewards. This is energy-intensive but secure.

How it works:

• Miners try different nonces until block hash meets difficulty target
• This requires massive computation (energy)
• First miner to solve broadcasts block
• Network validates and accepts if valid

Security: Requires 51% of hash power to attack. Very secure but energy-intensive.

Proof of Stake (PoS)

Validators stake tokens to participate. They're randomly selected to create blocks. More stake = higher chance of selection.

How it works:

• Validators lock tokens (stake)
• Algorithm selects validator to create block
• Validator creates and broadcasts block
• If validator misbehaves, stake can be slashed (lost)

Security: Requires 51% of staked tokens to attack. More energy-efficient than PoW.

Finality: When Is a Transaction Really Final?

Finality means a transaction can't be reversed. But it's not instant - you need multiple confirmations (blocks on top) to be confident.

Why Multiple Confirmations?

Blockchains can reorganize (reorg) - if two blocks are created simultaneously, the network might choose one, then switch to the other. Your transaction could be in the "wrong" chain and get reversed.

More blocks on top = less chance of reorg = more finality.

Confirmation Requirements

Different use cases require different confirmations:

• Small amounts: 1-3 confirmations (low risk)
• Medium amounts: 6-12 confirmations (moderate risk)
• Large amounts: 12+ confirmations (high security)

Bitcoin: 6 confirmations (~1 hour) is standard for exchanges.

Ethereum: 12-32 confirmations (~5-10 minutes) is common.

Probabilistic vs Absolute Finality

Probabilistic (PoW): More blocks = higher probability of finality, but never 100% (theoretical reorg possible).

Absolute (PoS with finality): After finality checkpoint, transaction is 100% final (can't be reversed).

Ethereum PoS has checkpoints that provide absolute finality after ~15 minutes.

Why This Matters for Users

Understanding Confirmations

When you see "3/12 confirmations," it means your transaction is in a block, and 2 more blocks have been added on top. You need 9 more for full confidence.

Understanding Fees

Higher gas fees = faster inclusion (validators prioritize you). Lower fees = slower or might not get included. Understanding mempools helps you set appropriate fees.

Understanding Security

More confirmations = more security. For large transactions, wait for more confirmations. Don't trust "1 confirmation" for important transfers.

Understanding Delays

Network congestion = full mempool = slower confirmations. This is normal. Be patient or pay higher fees.

Common Misconceptions

"My Transaction Is Stuck"

Transactions aren't "stuck" - they're in the mempool with low gas. Either wait (might get included eventually) or replace with higher gas.

"Blockchains Are Instant"

They're not. Even fast chains take seconds. Finality takes minutes. This is a trade-off for decentralization and security.

"More Blocks = Better"

Not necessarily. Faster blocks can reduce security (less time for network agreement). It's a trade-off.

Final Thoughts

Understanding how blockchains work helps you use crypto more effectively. You'll understand why transactions take time, why fees vary, and why confirmations matter.

Blockchains are complex systems balancing security, decentralization, and speed. Understanding blocks, mempools, consensus, and finality gives you insight into how they work and why they behave the way they do.

The key takeaways: transactions sit in mempools until included in blocks, consensus determines which blocks are valid, and finality takes time (multiple confirmations). Be patient, set appropriate fees, and understand that blockchain isn't magic - it's a distributed system with trade-offs.