Bitcoin For Dummies
At its simplest, a bitcoin transaction works by you providing someone else a designated amount of the BTC you own. Te order for a bitcoin transaction to be deemed “valid,” there has to be at least one input, albeit numerous inputs are possible spil well. An input is a reference to an output from a previous transaction.
Note that every input associated with a bitcoin transaction has to be an unspent output of a previous transaction. Furthermore, every input te a bitcoin transaction vereiste be digitally signed, which occurs through the private key associated with the bitcoin address initiating the transfer of BTC.
If numerous inputs are associated with one bitcoin transaction, this means that the amount being sent is coming from numerous bitcoin wallet addresses. Any bitcoin user can generate an almost infinite amount of wallet addresses, each of which can hold any amount of BTC.
Here’s an example: If you send Two BTC to fortunate old “Joe” again, 1 BTC comes from wallet address #Two, 0.33 BTC comes from wallet address #7, and the remainder comes from wallet address #8. Te this example, wallet addresses #1, #Trio, #Four, #Five, and #6 have no actual bitcoin balance and can therefore not be used spil an input because there is no unspent output associated with thesis addresses.
However, a bitcoin transaction can have not just numerous inputs, but numerous outputs spil well. Spil you might expect, numerous outputs indicate a bitcoin transaction has bot sent out to be split overheen numerous addresses. For example: Your Five BTC balance will be sent to the now BTC-wealthy Joe (Two BTC) and Marie (1 BTC), and the remaining Two BTC is sent to a different bitcoin wallet under your control. On the blockchain, this one transaction will have three different outputs, one going to Joe, one to Marie, and the third to your other bitcoin wallet address.
Sending a bitcoin payment can be denominated ter a multitude of satoshi, the smallest increment of bitcoin transactions (8 decimal points after the period). Because bitcoin is so divisible compared to traditional fiat currency, the value of 1 satoshi can vary greatly. Whereas 1 satoshi is worth next to nothing today, it could be worth a handful of cents — or even dollars — ter the future, spil bitcoin adoption becomes a mainstream trend.
Bitcoin and metselspecie payments are not so different te terms of transactions. The amount of bitcoin associated with all of the transaction inputs combined can be greater than the amount of money being spent, which creates “change.” With traditional fiat currency, switch is issued to the customer ter either bills or coins. With bitcoin, switch is issued te the form of digital ownership of BTC associated with your wallet address. Should the amount of inputs be greater than the amount associated with the transaction outputs, an extra output to the originating address will be created for the “change” amount.
There are several ways to send a bitcoin transaction to another bitcoin user. Very first of all, you can ask the recipient’s bitcoin address and send the money through the bitcoin software on your laptop or mobile device. For mobile users, there is an lighter alternative ter the form of scanning a QR code, generated by the recipient. Every type of bitcoin software permits users to create QR codes, which can include the wallet address to send funds to, spil well spil the total amount to be paid.
An example: Your bitcoin wallet address has received a total of Five bitcoin overheen the course of a certain period of time, and you are sending Two BTC to Joe. The bitcoin transaction will have one input (the unspent outputs of the bitcoin transaction through which you received those Five BTC) and create two different outputs when you send money to Joe. The very first output will be the transaction to Joe, for the total amount of Two BTC. The 2nd output will be the “change” transaction, which “returns” the unspent Trio BTC to your wallet address.