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How do Bitcoin Transactions Work? - Reasons365

How do Bitcoin Transactions Work?

Simplified version:

If I want to send some of my bitcoin to you, I post my intention and nodes to scan the entire bitcoin network to verify that I 1) have bitcoin that I want to send, and 2) do not send it to someone else. Once the information is confirmed, my transaction will be included in a “block” linked to the previous block – hence the term “Blockchin”. It is not possible to cancel or cancel the transactions, since this means the execution of all the blocks that come after.

A little more complicated:

My bitcoin wallet does not actually hold my bitcoin. What she does is hold my bitcoin address, which keeps a record of all my transactions, and therefore my balance. This address – a long string of 34 letters and numbers – is also known as “my public key.” I do not care that the whole world can see this sequence. Each address / public key has the corresponding “private key” of 64 letters and numbers. This is private, and it is important that I keep it secret and safe. Both keys are related, but there is no way you can understand my private key from my public key.

This is important because every transaction I publish from my bitcoin address should be “signed” with my private key. To do this, I also put my private key and transaction details (how many bitcoins I want to send, and to whom) into the bitcoin software on your computer or smartphone.

With this information, the program emits a digital signature, which is sent to the network for authentication.

This transaction can be verified, that is, you can confirm that I own the bitcoin that I transfer to you, and that I have not sent it to someone else – by connecting my signature and public key (which everyone knows) to the bitcoin program. This is one of the bitcoin’s brilliant parts: if the signature was made with the private key corresponding to the public key, the program will verify the transaction without knowing what the private key is. very wise.

Then the network confirms that I have not wasted the past bitcoin by running my address history, which it can do because it knows my address (= my public key) and since all transactions are public on the bitcoin log.

Even more complicated:

After my transaction has been validated, it is included into the “Block”, along with a bunch of other deals.

A short detour to discuss what “hash” is, because it is important to the following paragraph: hash is produced by the “hash function,” which is a complex mathematical equation that reduces any amount of text or string data 64 characters. It is not random – each time you put the specific data set through the hash function, you will get the same 64-character string. But if you change so much as a comma, you’ll get a completely different 64-character string. Each article can be reduced to hash, and if I do not change, remove or add anything to the text, the same hash can be produced repeatedly. This is a very effective way of knowing if something has changed, and how a blockchain can confirm that a transaction has not been dealt with.

Back to our blocks: Each block includes, as part of its data, a block of the previous block. This makes it part of the chain, hence the term “blockchin”. Therefore, if a small portion of the previous block was treated, the hash of the current block had to change (remember that one tiny change in the input of the hash function changes the output). So if you want to change something in the previous block, you also need to change something (= hash) in the current block because it is currently contained is no longer true. This is very difficult to do, especially because by the time it has reached half way, there is probably another block on top of the current one. So you also need to change it. And so on.

This is what makes Bitcoin almost a sabotage proof. I say almost that it is not impossible, only very very, very, very, very difficult and therefore unlikely.

And if you want to indulge in some unguarded charm, you can sit at your desk and watch bitcoin deals float by. Blockchain.info is good for it, but if you want a fun version makeover, try BitBonkers.

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