3. How Bitcoin Works

Bitcoin transactions involve sending and receiving Bitcoins between two parties. Here is an overview of the process:

Transaction initiation: A Bitcoin transaction is initiated when a sender creates a transaction record and broadcasts it to the Bitcoin network.

Transaction validation: The transaction is validated by Bitcoin nodes, which check that the sender has enough Bitcoins to send and that the transaction is properly formatted.

Transaction confirmation: Once the transaction is validated, it is included in a block by a miner. The miner adds the transaction to the block and solves a complex mathematical problem to prove that they have done the work required to add the block to the blockchain. The block is then broadcast to the network, and other nodes validate and confirm the transaction.

Transaction finalization: Once a transaction has been confirmed by multiple nodes, it is considered final and cannot be reversed.

Transaction fees: Transactions on the Bitcoin network usually involve a small transaction fee, which is paid to the miner who includes the transaction in a block. The fee incentivizes miners to prioritize transactions with higher fees and helps to prevent spam on the network.

Transaction privacy: Bitcoin transactions are pseudonymous, meaning that they are not directly linked to a person’s identity. However, transactions can be traced on the public blockchain, so it is important to use best practices for maintaining privacy and security when using Bitcoin.

Overall, Bitcoin transactions are processed by a decentralized network of nodes and miners, and once a transaction is confirmed and added to the blockchain, it is considered final.