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I am not clear as to how the removal of transactions from the non-confirmed pool happens. I have not found any descriptions explaining how the process works.

Here are the scenarios as I see them:

A) When a node selects a set of transactions to be included in a possible block it removes them from the non-confirmed pool. So if/when the node solves the block there is no clean up necessary of the not-confirmed pool.

B) Transactions may be included in multiple potential blocks and remain in the not-confirmed pool while blocks are being solved, then when a block is solved the transactions included in the block are removed from the not-confirmed pool. This sounds to me as the most likely scenario but it is not clear at all who/when removes the transactions from the not-confirmed pool.

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    Note that there is not really a single "not confirmed pool". Every node on the network keeps track of unconfirmed transactions independently. Different clients could use different algorithms to decide how long to keep them. – Nate Eldredge Aug 5 '14 at 5:35
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In Bitcoin Core, the memory pool is a consistent set of transactions that can legally follow the best known block. As already mentioned, there is no guarantee of consistency between different nodes' mempools.

In practice that means:

  • when a new block is accepted (received from the network or locally mined), all transactions in it are removed from the mempool, while their dependencies are kept.
  • when a new block is accepted, all transactions that conflict with transactions in that block, plus all their dependencies, are removed from the mempool.
  • when a block is reorganized (disconnected), its transactions are attempted to add back to the mempool in reverse order (since they may interdependent), unless they conflict with transactions already there.
  • Peter thanks, I think I got it: as each node receives a new block from the network or solves one by itself it removes the nodes in the block from its local memory pool of not-confirmed transactions. – user2223142 Aug 5 '14 at 11:55
  • Peter tried to up vote you but I don't have enough "reputation". Are dependencies other transactions that belong to the same origin/source as ones in the new block?. Also, disconnected means "forked"? and how are conflicts created? These are new questions derived from you having provided a very thorough answer to my initial question. I wish I could up vote. – user2223142 Aug 5 '14 at 12:14
  • Dependencies of X: transactions that spend an output of X. Disconnecting: if you have a chain a-b, and you switch to a fork a-c-d, b is disconnected and then c and d are connected. Conflicts are created by attempted double spending (two transactions spending the same outputs). – Pieter Wuille Aug 5 '14 at 13:54

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