Working of Bitcoins!!!
Many hear the word bitcoin, and few people are going crazy and investing in this digital currency today. There is a lot of future that investors are seeing in it and are investing. Some exchanges are started on the virtual platform. This allows people to buy the bitcoins for cash and sell them when the bitcoin price goes high.
Few are making use of bitcoins to make offline and online purchases. Bitcoin transactions are not so simple. There are a lot of complications involved. You can send the bitcoin amount to the recipient, but in a limited amount.
One should know about bitcoin before taking a plunge into the world of bitcoin trading. The coin is not having a single record. You do not find this like the regular transactions that you can check on the bank statement.
The bitcoin has a file with some value that would register the transaction when you start the payment. There are three things that you find in the bitcoin. One is the transaction input, the other is the transaction output, and the last element is the amount.
The transaction input would be the bitcoin address from where you are sending the money, and the transaction output would be the address of the bitcoin to where you are sending the money.
If the bitcoins are stored in the wallet, then the lesson would be related to the bitcoin wallet in this bitcoin pro.
Working of the bitcoin transactions
The bitcoin you send to a recipient would be the bitcoin you might have received from someone else.
When the person sends the bitcoin to your wallet, the bitcoin’s address will get registered on the bitcoin blockchain as the transaction input. The address to which the bitcoin would be sent would be written as the transaction output.
When you are sending the bitcoin to a person, the wallet would be generating a transaction output. This would be the address of the person to whom you are sending this coin.
This transaction would get registered with the bitcoin network with your bitcoin address as the transaction input.
When the person is sending the bitcoin to someone else, their speech would be noted as the transaction input, and the person to whom the bitcoin is sent their address would be registered as the transaction output.
With the bitcoin network’s help, it becomes easier for the people to track all the transactions that are carried out since the day of inventing the bitcoin. The system would be highly transparent, as you would check all the transactions from time to time.
Amount and bitcoin address
The critical problem with the bitcoins is that the amount linked to the transaction input and output cannot be divisible.
For example, if the person has a bitcoin address, which holds one bitcoin, and this person wants to spend half the bitcoin to the recipient on the other end, she has to send the complete address to the other person.
The bitcoin network would come into the picture to create 0.5 bitcoin and send the amount to the recipient with the third address. The third address would now act as the transaction output.
This address would have many transaction outputs. The bitcoin wallet would have many addresses with different amounts of bitcoin and would change with the bitcoin transaction.
How to send a small number of bitcoins?
Can you send a small amount of bitcoin to the recipient? Is it possible? This is a familiar doubt that many would have. Yes, you can slice the bitcoin into small fractions and send it to the people.
The divisible part of the bitcoin is known as Satoshi. It would be the one 100 millionths of a single bitcoin. However, it is merely impossible to send on Satoshi over the network as it is too small.
Many small bitcoin transactions would jam the network. The smallest of the transactions would be 546 satoshis, which is very tiny. Bitcoin transactions would also have a transaction fee.
This means that you also have to pay this small amount and the amount you are transferring to the recipient. If you do not transfer this fee, it fails.
The best part of the bitcoin transaction is that you can track every transaction on the network.