How do transactions work in Bitcoin?

We all know what Bitcoin is and how it works, but not everyone knows how Bitcoin transactions work. Bitcoin transactions are more complicated than we think. Bitcoin is designed to work as a digital money. No matter if you are buying or selling Bitcoin, it is important to know how a Bitcoin transaction works.

Bitcoin works on a digital platform known as the blockchain, and its work is far more complex than the common transactions we all know. Bitcoin transactions are digital and they are digitally signed with cryptography. After that, they are sent to the network for verifying. All of the Bitcoin transactions can be seen publicly on the blockchain, but we cannot see the names of the users who have performed the transactions.

The blockchain is a shared public software where the whole processes of Bitcoin are placed. Each transaction is placed in the blockchain. Blockchain enables Bitcoin wallets to evaluate their balance, and to confirm all transactions. This works successfully due to the cryptography.

Sign Up Today!
Sign Up Today!

Bitcoin transactions include transferring value among Bitcoin wallets that are placed in the blockchain. These wallets have private data known as private key, and that key is used for signing the Bitcoin transactions. Private keys give a crypto graphical proof that a person is the owner of a particular wallet.

So, how Bitcoin transactions work?

Simply explained, a Bitcoin transaction works as a process that allows someone to send a particular amount of Bitcoins to another person. If you want your transaction to be successful, there must be one input at the minimum.

If a person A wants to send bitcoin to a person B, the person A should publish their aim about performing a bitcoin transaction, so that the nodes can scan the whole network. The nodes should verify that the person A possesses the amount of bitcoin that they want to send, and that the person A haven’t send that bitcoin to some other person.

When this is verified, the transaction will be performed and will be added to the previous block (and that’s how the term blockchain is born). Once performed transaction cannot be modified or drawn back, because if that happens, all of the blocks that came after should be modified too.

Overall, a Bitcoin transactions is composed of three main parts: transaction input, transaction output, and the amount. The transaction input is actually the user’s Bitcoin address from which the bitcoins will be sent. The transaction output is the user’s Bitcoin address that will accept the bitcoins. Finally, the amount is actually the Bitcoin amount that was transferred from one user to another.

There are different ways of sending Bitcoins to another user. For example, if you want to send someone a Bitcoin, you can ask for their bitcoin address and send the Bitcoin through the bitcoin software. Also, you can send Bitcoins from your smartphone by scanning a QR code.

Moreover, you can get Bitcoins by a process called Bitcoin mining. Bitcoin mining is the process of producing Bitcoins on a computer. It requires powerful processor that will be able to solve complex mathematical problems.


The information contained within this website and resource section is not intended to be a substitute for financial advice or promotional offer on the investment or purchase of cryptocurrencies, digital tokens or related assets. Although care has been taken in preparing the information provided to you on this site and in the resource section, we are not held responsible for any errors or omissions and accept no liability whatsoever for any damage or loss you may incur through the result of your own actions and decisions when deciding to purchase or invest in cryptocurrencies or related digital assets. You should never engage in trading unless you fully understand the nature of the transactions you are entering into and the extent of your exposure to loss. We recommend you always seek financial/or legal advice counsel relating to your investment and purchase circumstances. This material has been prepared for informational use only.

Was this article helpful?

CryptoSouk The No.1 Crypto Currency Trading Platform! is a powerful web-based, highly secure FIAT and Crypto Currency trading platform designed for speed and performance and built for all levels of investors and traders.

You can Buy, Sell, Deposit and Withdraw between FIAT currencies (USD, GBP, EURO) and the most popular Crypto Currencies (BTC, ETH, LTC, BCC, XRP, XLM). We facilitate 1000s of orders a day across our platform and we are adding new features and upgrades on a regular basis.


View all posts by Cryptosouk →