To sign up for our daily email newsletter, CLICK HERE
Bitcoin is the most preferred platform for investing your money and for transferring it. Initially, it had no value, but with time investment increased and the curiosity of how this functions also increased as every person thinks for the security of the transaction. So this article might help you to know the working of transaction of bitcoin. So let’s get to know about the transaction process of bitcoins.
Bitcoin Transaction mainly depends upon two processes;
- Blockchain processing
- Mining process
Blockchain Processing
Now when we see blockchain, it is made up of two words block and chain. When a transaction occurs, all the information about the user receiver and the transaction gets stored in the block. When the block gets filled completely, then the new block is used by taking the last transaction of the first block.
In the same way, the new blocks are formed. By tracking the last information of the previous block, the further moving blocks get linked with each other, and the chain is formed. And here is the whole process of the blockchain and its benefits mentioned; check on trading app to know more in detail. .
Blockchain is a decentralized ledger that is formed by data mining. The blocks are formed and get linked to each other, and hence the process of blockchain takes place. The record of all the blocks goes to all the users who are mining, which helps them to verify the transactions which are pending and move on to another block.
Data Mining
This is the process by which the transaction which is done by the user gets confirmed and verified, and the amount gets transferred to the other user. So we cannot give power to only one person as fraud can be done, but this process requires high computational support. So some people come with the thing that they can use their computer for this computational support and these people mainly work as a miner.
There are the lots of persons who are engaged to work as a miner and help the user with transactions.
All the data of bitcoins is secured or encrypted by the process of cryptography. When the miners start the work, they decrypt it, then the computer verifies it with the blockchain, then the problem gets solved and then the problem gets solved and confirmed, and the transaction occurs. This takes about 4 seconds to 10 minutes.
In 10 minutes, a new block is formed after the filling of the old block, which has the space of 1 megabyte. After completion of the block, the miners get rewarded with some amounts of the bitcoins. This reward is known as a block reward. This reward is received from the transaction charges which were charged when the transaction was happening. Some amount of the charges is being rewarded, and the other amount is used in the formation of a new bitcoin.
Mining pool
Sometimes more than one computer is being involved in the transaction and completes the block. Then after the successful completion of the block, the rewarded amount is being equally distributed among the miners. A mining pool is for the people that want to do something big in their lives.
The reward of the mining process gets decreased to about 50% after every four years. Initially, when the concept of bitcoin was just started, it was about 50 bitcoins, and now as is recorded in 2020, it is just 6.25 bits. Also, with time the computational problem gets difficult. As we can say, that increase in the number of miners leads to an increase in difficulty. Also, if there are lots of miners for one transaction, the mining problem will get equally challenging.
Conclusion
The best part of bitcoin is that the transaction identifier of the person is hidden and is not visible to anyone. So the person gets anonymous. On the official page of the transactions, there is the transaction amount along with their wallet id’s, but there is not their identity.
So this is the best emerging transaction process with minor possibilities of getting fraud of transaction. As everything, including working, is transparent, so this is the best method to work with or invest with. As it totally creates trust with the user. And trust is the only thing that users expect.
