The VAX is running

[der Mouse]

>>> How does magtape avoid the stream-of-bytes issue?
>> Magtape has blocks.

> What exactly is a block?

> Is it defined as a sequence of bits or as a sequence of bytes?

It depends on the tape technology.  The most classical one in my
(admittedly limited) experience has blocks that are variable-sized
strings of bytes.  That is, it would be accurate for these purposes to
model the tape as a stream of symbols from a 258-symbol alphabet: 256
bytes plus "block boundary" and "tape mark", where block boundaries
delimit blocks and tape marks delimit files.  I'm not sure this model
is totally accurate - for example, I'm not sure a zero-length block is
possible - and it's definitely not a close match to the implementation.
But it's probably close enough to get the flavour.

More recent technologies are a bit different.  Some (all?) QIC tapes,
for example, are not streams of variable-sized blocks but streams of
512-octet blocks.

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