How Does Bitcoin Work?
Explaining how it works can be a little confusing, but here is a simple explanation.
Let’s say someone has just signed up with a crypto wallet.
This new user can get started without understanding all the technical details.
As a new user, they can install a crypto wallet on their computer or smartphone. Once they have installed it, their wallet will create a Bitcoin address, which can be disclosed to their friends, that way they will be able to make payments or vice versa. It is pretty similar to an e-mail address.
A user can use more than one address, it is advised that a new address is utilized for every transaction.
Balances & Blockchain
The blockchain is where all confirmed transactions are placed like a bank balance. It is a shared public ledger. All of of the blockchain transactions relies upon their blockchain confirmations.
With the blockchain, Bitcoin wallets calculate all their spendable balances and new transactions are verified with it too. Cryptography enforces the integrity and chronological order of the blockchain.
Bitcoin Transactions & Private Keys
Transactions are transfers of value between electronic wallets, which are to become included in the block chain. Private keys or seeds are a secret piece of data that is used to sign transactions. Private keys provide proof mathematically that the operation comes from the actual owner of the wallet.
Private keys will also prevent any alterations of the trade to happen once issued or finished. The network usually confirms all transactions within 10 minutes. This process is called mining.
Processing & Mining
Bitcoin Mining is a system that confirms the waiting transactions using high speed algorithms and includes them in the blockchain. It uses the chronological order in the blockchain, protects the transaction through the network, and allows computers to agree on the state of the system.
Every transaction packed in a block that fits rules that are verified by the system to be confirmed. Enforcing these rules prevents previous blocks from being modified. Mining prevents any individual from adding new blocks in the blockchain and cannot control what the blocks included in it.