Timestamp
A timestamp in the world of cryptocurrency is a piece of data that is attached to a particular event, such as the execution of a transaction, indicating the exact time and date at which that event occurred.
Significance of timestamps
Timestamps hold a crucial importance in the blockchain technology underlying cryptocurrencies like Bitcoin. Blockchain is essentially a public ledger that records all transactions ever occurred, in a chronological order. To maintain this chronology accurately, each record or block in this chain contains a timestamp indicating when it was created.
Key functions of Timestamp
- Ordering transactions: Timestamps help determine the order of transactions. This is significant to prevent double-spending, which is a potential flaw in a digital cash scheme where a single digital token can be spent more than once.
- Preventing Fraud: The presence of timestamps makes it harder to alter past transaction records, thereby securing the integrity of the blockchain.
- Timescale for mining: In Bitcoin's Proof-of-Work system, timestamps also play a role in adjusting the difficulty level of mining new blocks, thereby maintaining a stable timescale for block creation.
Technicality of Timestamps
The timestamp in a cryptocurrency transaction is generally represented as a UNIX timestamp, which is a way of expressing time as the number of seconds that have passed since the 'epoch' - January 1, 1970 at 00:00:00 UTC. For example, the timestamp "1514764800" represents the time "2018-01-01 00:00:00 UTC."
Timestamp adjustment
Given the distributed nature of blockchain, it's important to account for minor discrepancies in local times of different network nodes. Bitcoin protocol therefore allows a degree of flexibility in timestamps of new blocks; they can be set up to two hours into the future compared to the current network time, allowing the network to agree on a single, unified transaction history.