How do Bitcoin Transactions really work?

[leex1528]

So I know we have the wallets that our hosted by several companies both online and locally on a device.  We have the blockchain where transactions go through.  Are they just basically hashed numbers from one location to another.  I mean what site is controlling the transactions and what if it were to go down permanently?

[DannyHamilton]

So I know we have the wallets that our hosted by several companies both online and locally on a device.

Yes.  A wallet is a computer program that maintains your list of private keys, scans the blockchain for transactions that supply you with value, and allow you to create and broadcast transactions onto the network.

We have the blockchain where transactions go through.

Go through?  That's a rather misleading over-simplification.

Transactions are broadcast to connected peers on the network.  Those peers verify that the transaction is valid, and then broadcast the transaction to their connected peers.  Those peers verify that the transaction is valid, and then broadcast the transaction to their connected peers. And so on until almost every peer on the network has seen and verified the transaction.

Eventually some miners (or mining pools), which are also peers on the network receive the transaction and add it to the block they are working on.  When one of those miners (or mining pools) complete the proof-of-work, they get to broadcast their completed block to all their connected peers to be added to the blockchain.

Are they just basically hashed numbers from one location to another.

No.  They are a list of previously unspent transaction outputs that are used to provide value as inputs to the transaction, and newly created transaction outputs that encumber some value with a requirement that must be met if that value is to be used as an input into another transaction.

I mean what site is controlling the transactions and what if it were to go down permanently?

There is no site controlling anything.  Therefore, there is no specific individual thing to "go down permanently".  It is just a network of connected peers all agreeing to abide by the same rules.

[leex1528]

They are broadcast and added to the blockchain.

So the address is just broadcast and added to the Blockchain that is ever growing?  Who hosts the blockchain, I mean it has to have some physical appearance somewhere, and who are the people that manage that? 

[DannyHamilton]

I've updated my previous post with more detail.  Take a look.

So the address is just broadcast and added to the Blockchain that is ever growing?

No.  Addresses are not broadcast. Transactions are broadcast.

For that matter, addresses don't even exist at the transaction or blockchain level of the technology.  Addresses are something that we humans use to make it easier to talk about the exchange of control over value.  The wallets convert those "addresses" into scripts (in other words "small computer programs") that encumber the value with some requirement that must be met before that value can be used to fund another transaction.  Typically this requirement is a signature from a specific private key.

Who hosts the blockchain,

Every full node peer on the network.  That's why it takes so long and uses so much disk space for full nodes (such as Bitcoin Core) to "synchronize" with the network.  They are downloading the entire blockchain and hosting it for all their connected peers.

I mean it has to have some physical appearance somewhere,

Yes.  Multiple physical appearances.  One copy on each and every full node peer on the network.

and who are the people that manage that?  

Anybody that wants to run a full node peer.

[leex1528]

I've updated my previous post with more detail.  Take a look.

So the address is just broadcast and added to the Blockchain that is ever growing?

No.  Addresses are not broadcast. Transactions are broadcast.

For that matter, addresses don't even exist at the transaction or blockchain level of the technology.  Addresses are something that we humans use to make it easier to talk about the exchange of control over value.  The wallets convert those "addresses" into scripts (in other words "small computer programs") that encumber the value with some requirement that must be met before that value can be used to fund another transaction.  Typically this requirement is a signature from a specific private key.

Who hosts the blockchain,

Every full node peer on the network.  That's why it takes so long and uses so much disk space for full nodes (such as Bitcoin Core) to "synchronize" with the network.  They are downloading the entire blockchain and hosting it for all their connected peers.

I mean it has to have some physical appearance somewhere,

Yes.  Multiple physical appearances.  One copy on each and every full node peer on the network.

and who are the people that manage that?  

Anybody that wants to run a full node peer.

Thanks Danny, I am currently trying to learn more about the backend of Bitcoin.  I sort of knew a little bit about it but I guess I never thought what actually is broadcasted from transaction to transaction.  Again, thanks for the answers I might have some more questions in a bit doing some more research.