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.
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.
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