What is Chain Reorganization?

Chain reorganization is the process when the nodes in a blockchain network deactivate blocks in the longest old chain and add new blocks to create the new longest chain.

Blockchain networks diligently store data among node operators that ensure security. All active copies of the distributed ledger are considered to be nodes that are responsible for continuously updating their blockchain copy. Nodes are used to verify transactions on the blockchain. Chain reorganization ensures that all node operators have the exact copy of the distributed ledger.

Blockchains are structured as long strings of blocks bound together in a distributed ledger. The blocks hold data about transactions processed on the chain. With each new transaction, the string of blocks becomes longer. Thus, sometimes the process of chain reorganization is required.

Large-scale blockchains like Bitcoin or Ethereum may require chain reorganization as nodes are likely to build new blocks at the same time and place them in the same position due to the large data traffic. In this scenario, as the two nodes update their ledger copies, the one that built a shorter follow-up chain initiates chain reorganization.

Chain reorganization can be considered to be the central process ensuring that the blockchain is working in order. Without the process of chain reorganization, it would be impossible to maintain a unified ledger between all blocks in the blockchain.

According to some analysts, chain reorganization may have some downsides, as the shifting of blocks could lead to some transactions getting rejected. While it may happen if the transaction is recorded in a rejected orphan block, it is a very rare occurrence. Typically, the data contained in the orphan block and the record on the last block on the new longest chain match.

Chain reorganization is a near-instantaneous process, as it only takes a few seconds and does not affect the processing speed of other transactions taking place. This process ensures that all transaction information in the ledger is the exact copy across all nodes in the network. All recorded transactions are therefore verified and confirmed as valid.