How does Bitcoin work?

[sajedul islam]

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.

[TheArchaeologist]

Bitcoins are stored in the user's wallet

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.

Each wallet has a specific address. This address is encrypted.

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.)

One bitcoin is added to the network after each transaction is completed.

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.

[Tytanowy Janusz]

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

How does Bitcoin work?

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

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.

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?

[Maus0728]

Bitcoin is a completely virtual currency.

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.

Bitcoins are stored in the user's wallet.

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  

[alexander00915]

Bitcoin is also used for transferring money. Bitcoin transaction fees are smaller than fees for transactions made by banks. Moreover, Bitcoin is operating 24/7, it doesn’t care where and to whom you send money.

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.

[ranochigo]

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.

[Negotiation]

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.

[alexander00915]

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 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.

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.

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.

[CarnagexD]

Bitcoin is also used for transferring money. Bitcoin transaction fees are smaller than fees for transactions made by banks. Moreover, Bitcoin is operating 24/7, it doesn’t care where and to whom you send money.

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.

[pooya87]

Bitcoin is a completely virtual currency.

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.

Bitcoins are used to purchase products and services online.

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

This address is encrypted.

no it is not.

One bitcoin is added to the network after each transaction is completed. This is called bitcoin mining.

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

[hatshepsut93]

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.

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.

[BlackHatCoiner]

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

[Heart18]

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.

[KrisAlex18]

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.

[AniviaBtc]

Bitcoin is also used for transferring money. Bitcoin transaction fees are smaller than fees for transactions made by banks. Moreover, Bitcoin is operating 24/7, it doesn’t care where and to whom you send 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.

[ChiBitCTy]

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.

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.

[irfan_pak10]

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.

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.

[davis196]

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.

Yes that's correct, It is basically a software. Bitcoin is a digital currency, a decentralized system which records transactions in a distributed ledger called a blockchain.

Bitcoin, often described as a cryptocurrency, a virtual currency or a digital currency - is a type of money that is completely virtual.
It's like an online version of cash. You can use it to buy products and services, but not many shops accept Bitcoin yet and some countries have banned it altogether.
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.
This makes it possible to trace the history of Bitcoins to stop people from spending coins they do not own, making copies or undo-ing transactions.

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.

[businesssoftware]

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/

[Latviand]

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.

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.