Congratulations! Now you have a Bitcoin wallet, but what now? How are you going to conduct a transaction using your open source bitcoin wallet? Well, if you don’t know, we can help you out.
You see, bitcoin transactions are not like regular Google Pay or Paypal transactions. There are a lot of technicalities involved, and it takes time. But, it ensures absolute transparency and security. So, what is the correct way to conduct a bitcoin transaction? Let’s read ahead and find out!
How to conduct a Bitcoin transaction?
Well, if we look from the outside, you can download the wallet, get bitcoins in your account and send it to the recipient. Simple! Right!
But, no! There are various things that happen in the background.
How does a Bitcoin transaction actually work?
First of all, the public and private keys are the prime elements of a bitcoin transaction. The public key is a sequence of numbers and letters that you can share with other people who want to send you a bitcoin.
The private key is another sequence of letters and numbers that is used to validate the transaction that you are trying to make.
As we are aware of the key elements of a bitcoin transaction, here is an example of it!
A wants to send B one bitcoin. When A sends one bitcoin to B, there are three things that are part of it, an input, an output, and the amount (1 BTC in this case)
- Input: It will contain the information about the bitcoins received by A previously. Let’s say; that A received one bitcoin from X and two bitcoin from Y. Hence, there will be two inputs.
- Amount: This will be one bitcoin.
- Output: now, there will be two outputs here. One, the address on which the amount will go, B’s address. The second will be the address at which A will get his change of 2 bitcoin.
When A sends the bitcoin to B, it also adds the private key to help in validation. The program in your device creates a digital signature and sends this transaction to the network.
In the network that has a public ledger of all the transactions, A’s previous record is checked to ensure that he owns the bitcoin he is transferring. Once confirmed, the transaction is added to a block in the blockchain. The block has many other transactions like A.
On the network, miners tend to verify A’s keys and charge a fee for processing the transaction. Typically, transactions with a higher fee (i.e., higher transactions) get prioritized and processed first. However, it takes a few minutes to some days to get the transaction processed.
What is the fee for a Bitcoin transaction?
Well, while using your open source bitcoin wallet, the fee for bitcoin transactions varies based on the transaction size. More the size, more blocks will be required, and thus, more fees will be levied. The fee for a bitcoin transaction may go from a few cents to over $100.
From your end, you just have to tap on that Receive and Send button in the open source bitcoin wallet. But, a lot is going on behind the scenes, and that is how a legitimate bitcoin transaction is conducted.