Bitcoin market is one the most thriving markets in the world. However when you head to exchange bitcoins there are a few things you must keep in mind. Here is a quick purview of the same.
What does it entail?
Keep in mind one simple thing – there are no bitcoins in terms of certain items, only the records of bitcoin transactions. Yes, records between various addresses with certain balances which may increase or decrease. The history of all the transactions is stored in a block chain. So, any balance of any bitcoin address is basically the reconstruction of the history from block chains.
Each transaction has the following:
- An input. This is a record of which bitcoin address was used to send the bitcoins at the first place
- An amount. This is the amount of bitcoins that one person is sending to the other
- An output. This is recipients bitcoin address/ wallet
How does the transaction work?
- Obtain the bitcoin address and private key of the person you wish to send bitcoins to. The bitcoin address is generated randomly- is a sequence of letters and numbers and is not a secret. The private key is another sequence of letters and numbers, but is a secret and is the signature on the message with the source transactions of the coins, amount and output (Address of recipient)
- The bitcoins are sent from the senders bitcoin wallet into the bitcoin network
- Bitcoin miners verify the transaction
- They put it into a transaction block and solve it
Each block may take approximately 10 minutes to mine, thus in some cases the sender and the recipient may need to wait and some merchants may wait till the block is confirmed.
Bitcoins sent by different people have different transaction records and are not combined and when you are the receiver and are adding up the same, it may or may not add up to the amount you wish to send or exchange for goods and services. Transactions cannot be split and only the whole amounts may be used and change will be returned after completion of the exchange.
This exchange may or may not require transaction fees and may or may not provide a receipt but then the records of transaction speak for themselves. Bitcoin transactions are divisible (1 satoshi is one hundred millionth of a bitcoin) and small transactions can be made.
But then again as mentioned above, you cannot break down the value while sending and have to wait for change.
The above would have helped you prepare exchange bitcoins across your network.