Chain reorganization is a process in blockchain technology that allows node operators to replace blocks and adopt new ones, in order to create new, longer chains of data.
Blockchain technology is a complex combination of processes which ensure that data is stored and distributed among node operators securely. Every active copy of the distributed ledger or blockchain is considered a node. Nodes have a responsibility to keep their copies of the blockchain updated, in order to be able to successfully verify transactions — this is where chain reorganization plays a vital part. Each blockchain consists of a long string of blocks, connected in a distributed ledger. Each block, in turn, is a collection of hundreds and thousands of processed transactions.
However, as the blockchain develops, more and more transactions are completed, making the string of blocks larger. Chain reorganization is the process during which a node will deactivate blocks in its old longest chain, in order to add the latest blocks, that are the building elements of the new longest chain.
Chain reorganization usually happens in busier blockchains like Bitcoin and Ethereum, where nodes might happen to build a new block at exactly the same time, and at the same position. If this occurs, when the two nodes engage in updating their copy of the ledger, the node that has produced a shorter follow-up chain undertakes chain reorganization. In essence, chain reorganization allows all node operators to have the same copy of the distributed ledger.
Considering this, chain reorganization is a central process that facilitates the successful operation of blockchains. If chain reorganization was not possible, the concept of a unified ledger existing with each node would have been impossible.
Even so, there are analysts saying that chain reorganization can potentially leave users with a lot of rejected transactions. In theory, this is possible if your transactions are recorded in the orphan block that is rejected. However, this rarely happens. More often than not, the transactions recorded in the orphan block, and the block that brings in the new longest chain are the same.
As a relatively straightforward process, chain reorganization is executed in seconds and does not slow down the processing times for new transactions. This essential mechanism allows blockchain technology to be so versatile in its applications and use cases. Thanks to chain reorganization, all copies of the ledger saved across the different nodes are identical, thus ensuring the validity of all recorded transactions.
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