Most of the people on the Steemit platform and outside of it have already made Bitcoin transactions.Some of them are aware how the transactions really work but there are also people who have no idea how it really works . This is what we are going to cover on today's article.
What are transactions ?
The transactions represent the entity on top of which the blockchain is built.They are result of fantastic collision of cryptography, non turing complete scripting, and data structures.In order to understand how Bitcoin and transactions in general work you will need to know stuff about Bitcoin such as nodes and blockchain. The role of the node is to maintain its own blockchain version and update it whenever there's a new one.
How do transactions work ?
The transactions are sent from and to electronic Bitcoin wallets ( online and offline) and they are digitally signed for security reasons.It's important to mention that transactions can be tracked back to the moment where the bitcoins were created.The fact is that the Bitcoins don't exist.They aren't held in an address and they cannot be found on a hard drive.So where are they ? Where are they stored ? Well , transactions are stored in a vast public ledger called Blockchain.
If John sends some bitcoins to Jane, the transactions is gonna consist of:
- Input = The record
- Amount = The amount you're sending
- Output = Jane's Bitcoin address
What you need to have in order to be able to send the Bitcoins is an address ( which represents a sequence of numbers and letters ) and a private key ( which also is a sequence of numbers and letters, the only difference is that they key is kept secret).
When John sends Bitcoins to Jane he uses the private key to sign a message that contains the input , amount and output which in our case is Jane's.
Transactions tend to take some time until a mining process is finished but its also good to mention that some transactions are instant which means you don't have to wait for the transaction to be confirmed even though such transactions are only present when the value is low.Transactions are separate.There could be many transactions connected to one Bitcoin address.
Whenever Jane receives the Bitcoins, they sit there as records.
The Fees
Fees are almost everywhere, even in the cryptocurrency world.They can be very high or they can be very low that really is situational.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.
Difference between Bitcoin and Cash payments / transactions
Bitcoin and cash payments are not so different in terms of transactions. The amount of bitcoin associated with all of the transaction inputs combined can be greater than the amount of money being spent, which creates “change.” With traditional fiat currency, change is issued to the customer in either bills or coins. With bitcoin, change is issued in the form of digital ownership of BTC associated with your wallet address. Should the amount of inputs be greater than the amount associated with the transaction outputs, an additional output to the originating address will be created for the “change” amount.
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