Bitcoin Forum

How does Bitcoin work?

Bitcoin is a completely virtual currency. It does not require a bank to transact or save. Although it cannot be touched or touched, its use is similar to that of ordinary coins. Bitcoins are used to purchase products and services online. Many people keep depositing bitcoin in the hope of future price increases. Bitcoin transactions are done through peer-to-peer system. Bitcoins are stored in the user's wallet. Wallets can be both online and offline. Wallet is a kind of personal small database. This database can be stored on computer drives, smartphones, tablets or cloud storage. Various applications have also been created for use as wallets.

Each wallet has a specific address. This address is encrypted. Bitcoin transactions are made by transferring bitcoins from one address to another. Each transaction is recorded in an open ledger called Blockchain. One bitcoin is added to the network after each transaction is completed. This is called bitcoin mining. Blockchain and bitcoin mining are two important issues in the Bitcoin transaction system.

No they are not, transactions are stored on the blockchain. All transactions curretly unspent for which you can produce a valid unlocking script are yours to spend. A wallet keeps a collection of keys you need to unlock those unspent transcations, so no bitcoins themself are stored in a wallet.

You are almost describing a wallet like it is a bank account, where one acccount holder has one account number. This is not the case in bitcoin. See my previous comment about a wallet. One wallet is usually made up by a lot of "addresses". Addresses are not "encrypted", they are an encoded version of the public key (To not further complicate things I'm not talking about addresses which are the representation of the hash of an unlocking script.)

What??? Do you have any idea how many transactions there are in a block in general? This would also mean I could sent you 1 satoshi in a transaction and 1 btc would be genrated out of thin air for the miner :S Anyway, mining is done on a block basis, miners get the block award (currently 6.25 btc) plus all the transaction fees.

There is a lot more of wrong information in your post. It doesn't matter that you don't know these things at the moment but you made it look like you were answering the question of your topic in a way that contains a lot of bogus.

@OP I think that you should end your post here:


And let others answer your question. @TheArchaeologist good job with pointing 3 mistakes in 5 lines of text.


I love this one. Where you take it form?

The poit of this thread is also interresting. @OP do you think that during 11 years of bitcointalk existance no one explained what bitcoin is?

It is a cryptocurrency. Take note that fiat currency can transform into virtual currency with the help of an intermediary such as Paypal or any other cash app.

Err.. nope, they are stored on a public database called blockchain. Your bitcoin wallet only stores the key pair that the wallet generates which is then used to sign your transactions and published it to the bitcoin network.

You may want to review your understanding here -- https://en.bitcoin.it/wiki/Main_Page to avoid misconceptions  ;)

My bank allows me to transfer to other accounts instantly with zero fees. Many other banks offer you similar features.

Bitcoin is incomparable to centralized ways we currently have and one can assume that any new national digital currency will take Bitcoin over when it comes to aspects centralization can improve.

Might not be the wisest idea to keep promoting Bitcoin for fees and speed when national digital currencies show up in the market. Would be a little dead end for Bitcoin at the time and fewer people truly care about decentralized aspects of some cryptocurrencies than many think.

It's quite rare to have banks doing international bank transfers without fees in terms of the exchange rate and stuff. Bitcoin does offer a lot more advantage for it's fees and the exchange rate savings. It's pretty uncommon to see those transfers being done in 10-30 minutes either.

I agree that it's not the best for cryptos in general to be promoted this way but its really the main thing the general public cares about.

Bitcoin is used in digital currencies and transactions Digital currencies are in high demand, but Bitcoin is decentralized If centralized controlled by the government no one will be able to use Bitcoin as they wish. Under the control of the government he will set the price as he wishes Bitcoin decentralized prices are not stable so bitcoin investment is able to give us more profit.

I am unsure if PayPal is treated as a bank too, but there are ways you can do transfers with it without fees and instantly. It is pretty common for banks to allow free and instant transfers under specific conditions too, such as the destination account being registered at the same bank.

If by exchange rate savings you mean the rates you get when exchanging fiat to fiat through a bank versus when you buy or sell cryptocurrencies, it is a hit or miss. In order to get a good rate for cryptocurrencies, you generally have to use centralized platforms so this sends us back to what I said in my last reply: Bitcoin is incomparable to centralized ways we currently have.

Peer to peer options exist, but it looks like the market still does not meet enough demand for decentralized options to be viable.


Then I am interested to see what happens to cryptocurrencies when national currencies on blockchain technology that allow free and instant transfers start arriving on the markets.

Bitcoin is not only used for transferring money. There are something more about the use of this cryptocurrency in the market. We all know that bitcoin is the most popular and highest price cryptocurrency in the market as of now, there are people who are investing in this coins tom make this as their asset.

This bitcoin can really give you huge profit due to its volatility in the market. You should always monitor its price just by observing the market movement, by that you will not have a hard time manipulating your asset. I know that it is not that easy to hold bitcoin, but it depends on your self if you are disciplined enough and make a transaction depending on your decision making. Bitcoin is not that hard to manipulate, you just need patience to earn profit from it.

there is a big difference between "digital" and "virtual".
bitcoin is a "digital" currency or also known as "crypto" currency due to its usage of cryptography.
a virtual currency is virtual, like the currency that you use inside a game for instance.

there are lots of physical stores (aka offline) that also accept bitcoin payments.

no it is not.

you must not create topics like this when you have almost zero understanding of how bitcoin works!

https://en.wikipedia.org/wiki/Virtual_currency (https://en.wikipedia.org/wiki/Virtual_currency)

Legally speaking, a virtual currency is a currency not backed by a government, but still used as an actual currency by people. So technically in-game currency isn't a virtual currency in this sense because it's not used outside of a game. But on practice the terms "virtual currency" and "digital currency" are used interchangeably by everyone, including bloggers, government officials and academics, so I wouldn't be too bothered if someone calls Bitcoin a virtual currency.

OP, take a look here: http://learnmeabitcoin.com
I've completed my questions there.

Well, I will not say that I am that so knowledgeable in Cryptoworld...but, I disagree some of your lines about how Bitcoin works, because i did some research. It has a lot of great features that can help us in much easier ways. As I've read all those different opinions here in the thread, I must say that some people here below explained it so well. Perhaps, you got confused about how Bitcoin works, so I suggest, you must read a lot and research more about it.

There are many people who are using bitcoin for some online transactions, maybe online transaction is one of the main purposes of having cryptocurrency, I always see whenever we are talking about the purpose of cryptocurrency, there are many posts saying that this is good for online transaction, well there's no wrong with that because I am also doing that way, an online transaction using bitcoin is much faster and secured compared to fiat currency.

Cryptocurrency is also good for earning money, we have here trading and investing which are so profitable once we are good at it but it doesn't mean that experts for both things are always winning, it is still risky, some experts are just making less the probability of losing your money.

Bitcoin is not only used in that way, it is also typically used as an asset where you can make and earn profits depending on the market situation. Bitcoin can undergo exchanges with fees if you want to make it into a fiat currency. The only necessary thing for you to have a successful transaction with the use of bitcoin is with the proper use of BTC addresses. The good thing here in btc transactions is that some have the record or you have history of your past transactions so it is not a problem for you. In using bitcoin, you need to improve the security and safety of your wallet or account to prevent losses and prevent sending btc in a wrong addresses.

Facts.  This is where bitcoin and cryptocurrency really shine when it comes to money transfers.  I held a couple charity auctions here recently to help support wildlife rescue in Australia due to the fires.  I used paypal to transfer as it was really my only options and the exchange rate they charged was robbery.  They also had a disclaimer that it could take SEVERAL weeks to reach the charity.  What a scam.

If we see history in early days of life people uses house hold goods as a exchange to buy groceries. Later gold and silver coins introduced. Than paper currencies and when techonolgy prevail, plastic card introduced into
The market. All those above mentioned ways can be used to purchase anything. Similarly bitcoin is also a currency which can be used in everywhere to purchase anything but with annonimity, which is now a day a great deal. Because everyone wants to do business annonimously.

What's going on in this forum?One newbie posted a completely wrong forum thread about what Bitcoin is and now other newbies agree with his wrong theory and post their wrong theories.
The mistakes were already pointed out in this thread,so I won't bother pointing them again.
It is weird to me that actual Bitcoin newbies are acting like some sort of Bitcoin experts and trying to teach other people about what Bitcoin actually is.
"Each Bitcoin is basically a computer file","Every wallet has a specific address"...I'm like WTF? You newbies make me laugh.
Maybe this is the entire purpose of this forum thread.

Bitcoin is first decentralized cryptocurrency, successfully working on cryptomarket. Bitcoin is a easiest way to make online transaction worldwide without formalities.

You can read the article -

https://www.bbc.co.uk/newsround/25622442

it will sure help to solve your issues and query


and more details you can read articles-

https://www.mlmdevelopers.com/how-to-be-a-cryptocurrency-trader/

Maybe, the reason why he created this thread is for him to widen his understanding and to learn things that he want to know more about how bitcoin works. There's something more about bitcoin and his opinion about this bitcoin as a virtual currency is not enough for us to know the advantages and benefits of using this cryptocurrency.

We are really aiming for what this bitcoin can do to the global economy and how will this coin help each and every country to grow their economy. This bitcoin has a huge impact in the market and as people are making transactions using this, it will really help us promote the use of digital currency into our future transactions.

Each Bitcoin is basically a computer file which is stored in a 'digital wallet' app on a smartphone or computer. People can send Bitcoins (or part of one) to your digital wallet, and you can send Bitcoins to other people. Every single transaction is recorded in a public list called the blockchain.

Your words are Appreciated.Additionally it is not just an way to transfer money but also  an  way to  earn money with patience.An asset of a person to spend and make  sure of his/her own future.And the thing is necessary here, it is called patience.A little bit patience and some good works can be turn into a life changing matter.

maybe if you explain, you can get a lot of perceptions from the op question, but actually there are a lot of literatures that talk about Bitcoin, you just have to look for it and can get a more detailed explanation.

https://bitcoin.org/en/how-it-works

My credit card doesn't charge fees for international payments, but of course it charges the receiver, and makes a small turn on the exchange rate, but this seems to be slightly lower than a normal bank exchange charge.

BTCBTCyou must not create topics like this when you have almost zero understanding of how bitcoin works!

In my country, Bitcoin only works as a digital asset, still cannot be used as a digital currency since it violates the laws. So, I think Bitcoin may work vary among the countries in the world. In some countries, Bitcoin can work as a payment tool and everyone can buy the kinds of stuff with Bitcoin. However, Bitcoin is a crypto coin that is already used by many people around the world for various purposes. We all can take advantage of Bitcoin because it has value, at least as an asset.

Bitcoin is a decentralised digital currency. This means money that can not be held in the hands and it's not under the control of the government. Beyund these specific features. I for one believe Bitcoin is an investment platform rather like an asset rather than a currency to be used to trade. Can it be used as a currency? very well it can. I also believe there's more to Bitcoin than we have seen.

Each Bitcoin is basically a computer file which is stored in a 'digital wallet' app on a smartphone or computer. People can send Bitcoins (or part of one) to your digital wallet, and you can send Bitcoins to other people. ... You can buy Bitcoins using 'real' money. You can sell things and let people pay you with Bitcoins.Yes you are right and you can buy Bitcoins using 'real' money and you can sell things and let people pay you with Bitcoins. It is a digital currency and not controlled by any government or central government it is . 🙏

Bitcoin is running on the Internet based on blockchain technology. It is not a single central server that stores data but a decentralized accounting method. All nodes distributed around the world will participate in transactions on the entire blockchain and must Keep in sync to verify the transaction correctly. Bitcoin is controlled by all Bitcoin users around the world, and only when all users reach a fully unanimous consensus can Bitcoin work normally.

how does bitcoin work,??how bitcoin works via (blockchain) is a public transaction record on which the Bitcoin network rests. All confirmed transactions are stored in the blockchain. Thus, Bitcoin wallets can calculate the remaining spendable money and new transactions can be verified to ensure that they are indeed owned by the user. The integrity and chronological order of the block-chain is implemented using cryptography.

In addition to transferring, of course Bitcoin is increasingly recognized by many people for all its advantages to date.
In my place, there are more people who understand how Bitcoin works so that its benefits has been proven to be very profitable and can encourage the financial side in various ways that can be done, such as investing & and sell it to local currency.
I believe that blockchain technology will be stronger and more crowded in it for many Bitcoin transactions that will continue in the future, because more and more people will have Bitcoin wallets and activities related to Bitcoin such as trading, mining, certain projects, etc.

Bitcoin is based on the  blockchain.
Many people equate the meaning of blockchain with bitcoin. If bitcoin is just one of the uses of blockchain, and blockchain as a whole is a public information distribution office that anyone connected to can be informed that I think this is one of its greatest miracles and I call it the miracle of transparency.

How does bitcoin work?

For me, bitcoin is a digital curency that can be stored in a digital wallet. Bitcoin is transferable by sing some application in your smart phone. You can accept payment with bitcoin or even buy some products using bitcoin.

BTC makes our life more easy in terms of currency.

The practice of digitally adding transaction records to the blockchain, which is a publicly distributed database that holds the history of every bitcoin transaction, is known as bitcoin mining.
Mining is a data-keeping activity that requires a lot of processing power. To guarantee the payment network is trustworthy and secure, each Bitcoin miner across the globe contributes to a decentralized peer-to-peer network.

Bitcoin mining machines perform complicated mathematical problems in order to safely contribute to the blockchain record. When a solution is discovered, the most recent block of verified transactions is added to the blockchain as the next link.

The miner that solves the challenge is rewarded with a block of Bitcoin as an incentive to mine and contribute to the network.

Reference: https://xtrading.com/financial-questions/what-is-bitcoin-mining-and-how-does-it-work/

This answer is very accurate and accompanied by very strong references, so I totally agree with you.

and what I know as a beginner, bitcoin is a digital currency that can be stored in a digital wallet. You can accept payments with bitcoins or even buy some products using bitcoins, but this depends on the country and not all countries have legalized it.

Bitcoin is the only best coin that has earned the title of King of coins in the Cryptocurrency markets.