When we speak about a bitcoin transaction we mean a digital document which gives an opportunity to send the bitcoins from one owner to the others. It also keeps all the information about the bitcoins which were not spent, the amount of bitcoins being sent, their ID, and the addresses of the users involved in the bitcoin operations. These addresses are usually checked by a special network, and when they are valid, the transaction becomes a part of an online structure. In a form of a block, this transaction connects to the other blocks making a structure called blockchain.


To make it clear let`s have a look at the pictures below. The names are used just to make the example better to understand, but you should be aware of the fact that all the bitcoin transactions are anonymous so if you use them no one will be able to find the information about you. Taking part in the bitcoin transactions you have to know only the addresses of the sending and receiving bitcoin owner.


How to Use the Bitcoin Transactions

We will start considering the transactions with the simplest situation – the transferring of 1 bitcoin from Alex to Natalie:


Here we may add some more details to extend the situation. Alex could get his bitcoin from Andreas, another participant of transactions. In this case, we need two more special terms. The amount of digital money received from someone in transactions we call the Input. The second one is the Output – the payment which we send to some participant of the transaction. The first one keeps the information about the sending participants and their bitcoins, and the Output stores the information about the receivers.

The bitcoin transaction with new additional information will look like this:


However, a bitcoin transaction can include more than one Input and one Output. There is a list of transaction Inputs and Outputs, each of them has a unique number for the entries. The list starts with number zero (0).

You should consider attentively how the Inputs and Outputs changed in the first transaction between two men. In cryptocurrency operations, we cannot divide the amount of digital coins. So Andreas has 3 bitcoins, and firstly he has to send 3 bitcoins to Alex, after that he gets 2 of them back. It is impossible to transfer just one bitcoin in this transaction.



Security in Transaction Operations

When Alex gets the bitcoin from Andreas, he has to identify himself before the next operations with Natalie. To do this Alex needs to use his private key to solve the script which he received from the latest sender.

After that, he can continue transferring bitcoins to Natalie. Now he has to make an Output script which Natalie will solve to confirm the amount of money she gets. Also, you should know that in such transactions there are special rules, like the lock time and so on, which you obligatory have to follow.

The last thing about cryptocurrency transactions is the identification. Every participant of a bitcoin transaction has own ID number.



So, after the creating of the transaction, it is sent to the special network to be checked. This network looks for all the information about this transaction. To be verified the transaction needs to have the complete information about all the operations, the bitcoin balance, there cannot be any problems with double spending and the identification of the signature.

If all the information successfully checked the transaction will be able to continue sending and receiving cryptocurrency in the blockchain. That is all you should know about the operations taking part between the transaction blocks.


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