Transaction fees when a block chain is discarded

I’m a bit new to the bitcoin system, so I apologize if this is a “noob” question.

A user attempts to take all the unverified transactions it knows about and aggregate them in a chain block. The same applies to all the users world wide – they all attempt to aggregate all the unverified transactions into a block chain with a 1 success every 10 minutes on a global scale rate

But – I imagine that when all the devices are trying to do this, all the devices have a slightly different list of unverified transactions, since it takes a while for a transaction to propagate to all the devices world-wide

So let’s say device A and device B both create a block at the same time, when some
transactions in A don’t appear in B and vise-versa. Then, more block chains are created and after some time the shorter one is discarded – all the transactions which appeared as verified in the shorter block chain now become unverified again?

If this is the case, what happens to the transaction fees & the 25 bitcoin award given to the guy who created the “bad” block?

I mean, fine – the 25 bitcoin award could theoretically stay with the guy who created the block, since he did do the work, but the transaction fee? It would need to be paid to the next guy who verifies the transaction, shouldn’t it?

Or in this case, would the user need to pay 2 transaction fees?

Answer

The blocks on the chain that loses are essentially forgotten. (It’s better to call them losing blocks, than “bad” blocks, because they were legal and offered in good faith. They just lost a network race.)

Thus on the winning chain, there’s no record of the losing-block reward, or the transaction fees. If there’s no record of it in the common history, you don’t have it. It’s as if the reward and fees on the losing branch never happened.

Many transactions likely already existed in both blocks. (Most redundant blocks happen by accident, and can already contain most of the same transactions.) Despite these transactions, with their fees, appearing in two places for a time window of uncertainty, since only one set of consistent blocks will eventually win, those fees are only meaningfully spent, and then re-spendable, in the winning chain.

Any transactions missing from the winning chain are still eligible for inclusion, as long as they’re still consistent with the cemented-history. Anyone building on the winning chain, who still knows about the unverified transactions, might add them on a subsequent block. Anyone interested in ensuring they’re still widely-known may continue to broadcast them to peers.

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