What is a blockchain reorganization in Bitcoin?

A blockchain reorganization in Bitcoin refers to the process by which the distributed ledger undergoes a temporary restructuring due to the emergence of a longer valid chain of blocks. This event occurs when multiple valid blocks are mined and propagated across the network in close succession, leading to the creation of competing branches of the blockchain.

Here's how a blockchain reorganization typically occurs:

1. **Forking Event**: Miners on the Bitcoin network are constantly competing to add new blocks to the blockchain by solving cryptographic puzzles. Occasionally, two or more miners may find valid blocks at nearly the same time. As a result, the network temporarily splits into multiple branches, each containing a different block at the same height.

2. **Competing Branches**: When a forking event occurs, nodes on the Bitcoin network initially follow the branch with the block they received first, which may not necessarily be the longest or most valid chain. However, as subsequent blocks are added to each branch, one branch may eventually become longer than the others, indicating greater cumulative proof of work.

3. **Consensus Decision**: According to Bitcoin's consensus rules, the longest valid chain of blocks is considered the correct chain. Nodes on the network automatically switch to the longest chain, discarding shorter branches and orphaned blocks in the process.

4. **Reorganization**: If a longer valid chain emerges during a forking event, nodes on the network undergo a process of blockchain reorganization, where they discard the blocks from the shorter chain and replace them with blocks from the longer chain. This results in the restructuring of the blockchain to reflect the new consensus.

Blockchain reorganizations are a natural and essential aspect of the Bitcoin network's operation, helping to maintain consensus and ensure the integrity of the blockchain. While reorganizations are relatively rare in practice, they can occur during periods of high network activity or when there are significant fluctuations in the network hash rate. Nodes on the network automatically handle reorganizations, and transactions confirmed in orphaned blocks are typically returned to the mempool and eventually included in a valid block on the longest chain.