How a Bitcoin Transaction Works

How a Bitcoin Transaction Works?

A Look at the Journey of Bitcoin Transaction:

Lead: In this article, we take a deep dive into the understanding of Bitcoin transaction and what makes it secure.

What is Bitcoin transaction?

If I need to send some of my Bitcoin to you, I publish the same on the network, and the nodes scan the whole Bitcoin system to validate two things:

1) I have the Bitcoin that I need to send, and

2) I haven’t already sent it to another person. Once that information is affirmed, my exchange gets incorporated into a “block” which gets connected to the previous block – henceforth the expression “blockchain.” Transactions can’t be fixed or messed with, because it would mean re-doing every one of the blocks that came after.

 How a Bitcoin Transaction Works?

In a more Technical Way:

My Bitcoin wallet doesn’t hold my Bitcoin. What it does is hold my Bitcoin address, which keeps a record of the greater part of my exchanges, and like this of my balance. This address is a long string of 34 letters and numbers and is otherwise called my “open key.” I wouldn’t fret that the entire world can see this string. Each address/open key has a comparing “private key” of 64 letters and numbers. This is private, and it’s pivotal that I protect it. The two keys are connected; however, it is highly unlikely that you can make sense of my private key from my open key.

That is critical, in light of the fact that any exchange I issue from my Bitcoin address should be “signatured” with my private key. To do that, I put both my private key and the exchange details (what number of Bitcoins I need to send, and to whom) into the Bitcoin software on my PC or cell phone.

With this data, the program releases a digital signature, which gets conveyed to the network for validation.

This exchange can be validated – that is, it can be affirmed that I possess the Bitcoin that I am exchanging to you, and that I haven’t effectively sent it to another person – by inputting the signature and my public key (which everybody knows) into the Bitcoin program. This is one of the smart parts of Bitcoin: if the signature were made with the private key that corresponds to that public key, the program would validate the exchange, without realising what the private key is.

The network at that point affirms that I haven’t beforehand spent the Bitcoin by going through my address history, which it can do because it knows my address (= my public key), and on the grounds that all exchanges are open on the Bitcoin record.

Let’s go to some more depth:

Once my exchange has been validated, it gets included into a “block,” alongside a pack of different bitcoin transaction.

A short reroute to examine what a “hash” is because it’s critical for further understanding: a hash is delivered by a “hash function,” which is a mind-boggling math equation that diminishes any measure of content or information to a 64-character string. It’s not random – each time you put in that specific data set through the hash function, you’ll get the same 64-character string. Yet, if you change as little as a comma, you’ll get a totally extraordinary 64-character string.

This entire article could be reduced to a hash, and unless I change, expel or add anything to the content, a similar hash can be delivered over and over. This is an exceptionally viable approach to tell if something has been changed, and is the manner by which the blockchain can affirm that exchange has not been messed with.

Back to our blocks: each block incorporates, as a component of its information the hash of the previous block. That is the thing that influences it to be a part of a chain, henceforth the expression “blockchain”. So, on the off chance that one little part of the previous block was messed with, the present block’s hash would need to change (recollect that one modest change in the contribution of the hash function changes the yield).

So on the off chance that you need to change something in the previous block, you additionally need to change something (the hash) in the present block, on the grounds that the one that is right now included is never again right. That is difficult to do, particularly since when you’ve achieved most of the way, there’s likely another block over the present one. You’d then additionally need to change that one.

That is the thing that makes Bitcoin for all intents and purposes carefully designed, in-short virtually tamper-proof. I say virtually because it’s not impossible.