How does a Bitcoin Transaction Work?
Check out the process for Bitcoin Transactions
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How does a Bitcoin transaction work?
If you are a beginner and have no clue about Bitcoins, refer to our prior articles about Bitcoin
(http://www.newsandstory.com/story.php?nid=0212270758201796706 Why is Bitcoin Better than Money?)
(http://www.newsandstory.com/story.php?nid=01121152130201783058- How to earn Bitcoins)
Now coming onto the Bitcoin Transaction, Bitcoin maintains a public record of every transaction. In order to stop double spends, all the Bitcoin transactions are displayed publicly. This allows anyone to verify that a new transaction isn’t spending assets that were spent in a previous transaction. This public record of every transaction is called the blockchain.
Bitcoin transactions are sent from or to electronic Bitcoin wallets and are digitally signed for security. Everyone on the network knows about a transaction, and the history of a transaction can be traced back to the point where the Bitcoins were produced. Once you have installed a Bitcoin wallet on your computer or mobile phone, it will generate your first Bitcoin address and you can create more whenever you need one. You can disclose your addresses to your friends so that they can pay you or vice versa.
Bitcoin transactions are divisible. A Satoshi is one hundred millionth of a Bitcoin, and it is possible to send a transaction as small as 5430 satoshis on the Bitcoin network.
Cryptographic signatures- Bitcoin relies on digital signatures, a cryptographic technique which functions similarly to physical signatures in that a signature cannot be forged by anyone but the signee. This means that if someone sends Bitcoin to your address, then you are the only person who can now spend (i.e. sign a transaction) the Bitcoin.
Bitcoin wallets keep a secret piece of data called a private key or seed, which is used to sign transactions, providing a mathematical proof that they have come from the owner of the wallet. The signature also prevents the transaction from being altered by anybody once it has been issued. All transactions are broadcast between users and usually begin to be confirmed by the network in the following 10 minutes, it is done by miners through a process called mining.
A Bitcoin miner is simply a person who contributes arbitrary amounts of computing power to the network in order to update the ledger, confirm a pending transaction, and mint new Bitcoins to send into circulation. first, check that you haven’t sent those funds before, then it begins the cryptographic work of hashing the block which will confirm the transaction and include them into the network and the miner received the Bitcoin reward amount as well as the sum total of all the transaction fees in their block.
Who pays the miners?
The mining is paid for by the people who are willing to operate mining nodes. So, the mining is essentially paid for by the Yuan, the Dollar, and to a lesser extent, the Euro. Bitcoins are basically just electricity being gauged and converted into the virtual currency that yields value.
Transaction Fees- sometimes a transaction fee is charged, transaction fees are calculated using various factors. Some wallets let you set transaction fees manually. Any portion of a transaction that isn’t picked up by the recipient or returned as change is considered a fee. This then goes to the miner lucky enough to solve the transaction block as an extra reward. Right now, many miners process transactions for no fees.
How to cash out Bitcoins?
Bitcoin Debit card-There are a bunch of Bitcoin debit cards around and they all serve much the same function but remember you are still paying with a Fiat Currency such as EUR, GBP or USD. There are a number of prepaid debit cards that can receive Bitcoin as a top-up method but they are converted to the Fiat currency for use with the card.
Exchange -You would need to create an account at one of the many exchanges (e.g. Kraken, Bitstamp) and there you would have a new Bitcoin wallet to transfer your Bitcoin. After your Bitcoin have arrived your new wallet you will be able to sell them and transfer the fiat amount (money/ currency in USD) to your bank account.
Payout service-There are a few services that will accept Bitcoin for fiat this means you send them your Bitcoin from your wallet of choice and they will transfer the amount (minus a fee 0.5%) to your account. Eg-
For more information about Bitcoin, Transactions