Bitcoin it the hottest theme on the market right now. With its consistent growth, this cryptocurrency gives the investors in love with high risks a great opportunity to build their wealth. And since the thing is not likely to stop anytime soon, there are a series of questions related to the specifics of every aspect of the bitcoin transaction.
Today, we want to share some thoughts on how the transaction works, and what can you expect from it.
Bitcoin transactions: a road to the imaginary
Let’s be clear on one thing: Bitcoin is not like any other currency. There’s no sign of the physical form of the cryptocurrency, only the digital trace of the transaction made in any part of the world. The premise on which the cryptocurrency revolves is aligned with the thought of letting the market of currency holders and makers decide how many bitcoins will be produced, purchased, and sold.
Now, the first thing that boggles someone’s mind (especially if they’ve not been on the market for a long time) is how the bitcoins can be purchased. There is a wallet, your digital depository, which trace the transactions you make in time. The digital wallet keeps the information about how many bitcoins you owned and sent to other users. The difference between the traditional portfolios (found on PayPal, for example) and a bitcoin wallet is that everyone involved in the bitcoin share can see the transaction you’ve made. That means the total transparency of the process, which is one of the core premises installed in the philosophy of a bitcoin.
So, there are no bitcoins?
It sounds odd, but yes, there are no actual bitcoins. The only thing that you can hold on to in a bitcoin transaction is the transaction itself. That’s the integral aspect of a bitcoin philosophy since the currency is digitalized and used primarily online.
The transactions made between the bitcoin network of users are stored on a blockchain. It functions not only as a vault but also as a kind of disk space, keeping the records of all the transactions made in the network. The deal is happening between different IP addresses, not between the users itself. The records show the data related to the addresses, which means that no actual file can be downloaded as a proof of a transaction.
The transaction consists of three parts. One, the input information. That’s the information about the source of bitcoins that are about to be shared. For example, Mike received bitcoins from George; input data are showing George’s address as the source of bitcoins in use.
The other part of the transaction is the amount. It’s expressed in numbers and related the actual balance deducted from the sender’s account. Finally, the output information reveals to whom the amount is going to. Again, it’s expressed in the form of address.