Welcome to the third piece of the BRD Learning Series where we explain the basics of all things crypto. These are short, to the point explanations that will quickly get you to conceptualize how these protocols operate.
If you read our first or second post, then you now have a basic understanding of blockchain and Bitcoin. We highly recommend carefully breaking down the “Bitcoin Transaction Explained” section of the “What is Bitcoin” post to really understand the flow of a transaction. But, if it’s still confusing then understanding what a mempool is should help in really connecting the dots. For many, understanding what a mempool is, which sounds way more complicated than it is, seems to be a huge “A-ha!” moment.
Let’s dive in..
Mempool, short for memory pool, is well, a memory pool of transactions. Specifically, it is a node’s method for storing unconfirmed transactions. In other words, it is a way of managing transactions that have not been included in a block yet, hence, they are unconfirmed.
Notice we are saying “a” mempool and not “the” mempool, this is because there is no single mempool that is agreed upon by all nodes in a network. The Bitcoin protocol (and other cryptocurrencies) receive transaction requests at different times.
Remember, when you send a transaction out, it takes time to get propagated by the network. Meaning you send it to peers, then it gets passed along to other peers and so on. This is not done in a routine fashion, so different nodes have different transactions in their mempools at different times.
What happens when a node is in a mempool?
The transaction remains unconfirmed until it is included in a block, which at that time, it is no longer in the mempool. Bringing up our “What is Bitcoin” post again, remember that there are miners in the network who validate transactions through a Proof-of-Work (PoW) scheme.
Miners choose which transactions to confirm first based on fee rates. The higher the fee, the higher the transaction is prioritized and included sooner in a block.
All in all, think of unconfirmed transactions sitting in a mempool as people waiting at a bus stop. They are waiting in line, ultimately to be admitted onto the bus when it arrives. Once eligible to ride on the bus (via a bus pass or fee), they are confirmed and on their way.
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