Learn How Bitcoin Transaction Works

Becoming Bitcoin investor requires you to learn on how the Bitcoin transaction actually works. What you may not expect is the transaction is actually more complex than most people think. It doesn’t simply improve sending certain Bitcoin amount in one go. It is more than that. The transaction has to go through certain steps to make sure the transaction send right amount of Bitcoin. To know the details, it is necessary to understand the form of Bitcoin first. Despite being called as Bitcoin, it is actually not a single record of coin.

What Bitcoin Looks Like

Indeed, the Bitcoin is registered as transaction. It comprised of three different things that include an amount, a transaction output and a transaction input. The amount refers to the Bitcoin amount that is sent to recipient. The transaction output refers to the address of the Bitcoin recipient. The address may be under the sender control as long as the Bitcoin is kept in his wallet. The transaction input on the other hand refers to the address of the Bitcoin sender.

Therefore, it is highly possible that the Bitcoin available in your wallet now was actually sent by other people. What this system of transaction does is very detailed and helpful. It even makes it possible to track the bitcoin transactions through when it was created at first. In other words, it is possible to find out who had it first. This system is also considered ideal thanks to its high transparency.

Change Addresses

However, there is also a certain problem related to the amount that is attached to the transaction. For example, Julie has a bitcoin address and she has only one bitcoin in the account. But she wants to send half a bitcoin to her friend. She cannot send half a bitcoin but she needs to send the entire bitcoin. As an exchange, the bitcoin network will create 0.5 bitcoin automatically and send it to another bitcoin address that is under Julie’s control. In this transaction, the transaction output doesn’t only refer to her friend’s address but also the third address under Julie’s control. From this transaction, we can learn that the bitcoin wallet may have lots of addresses.

The matter can be more complicated even further considering transaction fee that is involved in many bitcoin transactions. This means that the sender should add certain bitcoin amount to pay for the fee. If the sender doesn’t do this, it is most likely the transaction will fail.