How Do Bitcoin Transactions Work? - Coindesk
Bitcoin transactions are sent from and to electronic bitcoin wallets , and are digitally signed for security. Everyone on the network knows about a transaction, and the history of a transaction can be traced back to the point where the bitcoins were produced. Holding onto bitcoins is great if you’re a speculator waiting for the price to go up, but the whole point of this currency is to spend it, right? So, when spending bitcoins, how do transactions work? There are no bitcoins, only records of bitcoin transactions Here’s the funny thing about bitcoins: they don’t exist anywhere, even on a hard drive. We talk about someone having bitcoins, but when you look at a particular bitcoin address, there are no digital bitcoins held in it, in the same way that you might hold pounds or dollars in a bank account. You cannot point to a physical object, or even a digital file, and say “this is a bitcoin”. Instead, there are only records of transactions between different addresses, with balances that increase and decrease. Every transaction that ever took place is stored in a vast public ledger called the block chain. If you want to work out the balance of any bitcoin address, the information isn’t held at that address; you must reconstruct it by looking at the blockchain. If Alice sends some bitcoins to Bob, that transaction will have three pieces of information: An input. This is a record of which bitcoin address was used to send the bitcoins to Alice in the first place (she received them from her friend, Eve). An amount. This is the amount of bitcoins that Alice is sending to Bob. An output. This is Bob's bitcoin address. To send bitcoins, you need two things: a bitcoin address and a private key. A bitcoin address is generated randomly, and is simply a sequence of lett Continue reading >>
8 Answers - Where Is The Blockchain Ledger Of Bitcoin Transactions Stored And How Is It Being Backed Up? - Quora
Where is the blockchain ledger of bitcoin transactions stored and how is it being backed up? The answer to this question is what basically makes blockchains so popular/revolutionary. The ledger i.e. blockchain is stored on every computer (node) that partakes in the network. As such there is no central hub that manages everything; it is a decentralized network that cannot be taken down at any specific point; it cannot be 'muted'. To partake in the network you could just download the Core ( Open source P2P money ) or a Bitcoin wallet. Thus the beauty of this system is that it is backed up by every single participant in the network. That is the point of blockchains, really; they record events and engrave them into digital, unerodable rock. Blockchain is stored on all the computers running Bitcoin node. There are thousands of computers running full node. Each of these node record every new transaction in the blockchain. All of these nodes run as backup for the blockchain. You can also run a Bitcoin node and backup it in your computer: Go to Start -> Run (or press WinKey+R) and run this: Bitcoin's data folder will open. For most users, this is the following locations: C:\Documents and Settings\YourUserName\Application data\Bitcoin (XP)C:\Users\YourUserName\Appdata\Roaming\Bitcoin (Vista and 7) "AppData" and "Application data" are hidden by default. You can also store Bitcoin data files in any other drive or folder. By default Bitcoin will put its data here: You need to do a "ls -a" to see directories that start with a dot. If that's not it, you can do a search like this: find / -name wallet.dat -print 2>/dev/null By default Bitcoin will put its data here: Content Director For Cryptosomniac (Cryptocurrencies) #1 Cryptocurrency FaceBook Group: Log into Facebook | Facebook Continue reading >>
Pulling The Blockchain Apart. The Transaction Life-cycle.
Pulling the Blockchain apart. The transaction life-cycle. Click here to share this article on LinkedIn Unravelling what the blockchain is, how it works, and what its benefits are is pretty difficult. It took me many weeks to only get a rough idea of what is going on. Therefore I will share my journey and understanding, to help others to get a bit more knowledge on this subject. So that no snake oil will be sold to us when talking to a blockchain consultant. The idea behind Blockchain is a combination of various complex ideas and systems. While this combination provides significant value, the resulting complexity makes it difficult to grasp the idea in a short time. In the previous blog I stated that the blockchain is nothing more than a collection of transactions. Those transactions are sealed together in packages of X number of transactions. Those packages are called blocks that are linked in a specific order, hence the name blockchain. A blockchain is comparable to a daisy chain:) To understand the components, it is required to grasp the whole picture. Let's start by looking at the life cycle of a transaction on a blockchain. Below we have a few Blockchain (and Bitcoin) transactions visualised. Someone Requests a Transaction via something called a wallet. The transaction is sent (broadcast) to all participating computers in the specific blockchain network. Every computer in the network checks (validates) the transaction against some validation rules that are set by the creators of the specific blockchain network. Validated transactions are stored in a block and are sealed with a lock (hash). This block becomes part of the blockchain when other computers in the network validate if the lock on the block is correct. Now the transaction is part of the blockchain and cann Continue reading >>
Where Do Decentralized Applications Store Their Data?
Where do decentralized applications store their data? Now there is a boom in blockchain projects. Some blockchains are so powerful that they claim to be a platform for building applications on top of them. Applications automatically turn out to be decentralized, resistant to censorship and blocking. But is everything so good and simple? In this article, we will try to look at the blockchain as a platform for applications, taking off the rose-colored glasses. Blockchain (chain of blocks) is an immutable data structure consisting of a list of blocks where each next block contains a hash of the previous block. As a result of this hashing, the chain of blocks becomes unchanged: you can not change or delete a block from the middle of the chain without rebuilding all the blocks above, because the slightest change will require a rebuild (recalculating hashes) of all blocks above the changed one. If the calculation of the hash of each block is computationally or economically complex operation, then the data change in the middle of the chain becomes practically impossible at all. The combination of the new block hash calculation complexity, as well as the ease of checking the correctness of the hash, provides blockchain with a serious resistance to unsanctioned changes. This is what holds the safety of bitcoin and other blockchains. Thanks to this, blockchain projects can be publicly decentralized. That is, anyone can put the working node of the blockchain and generate new blocks. In most implementations of the blockchain for the generation of a block a reward is given - this process is called mining. And since it is difficult to mine, and your results can be easily verified, it is profitable to act only honestly. Otherwise, you will spend resources on mining, and other miners Continue reading >>
Blockchain - Wikipedia
For other uses, see Block chain (disambiguation) . Blockchain formation. The main chain (black) consists of the longest series of blocks from the genesis block (green) to the current block. Orphan blocks (purple) exist outside of the main chain. A blockchain    originally block chain   is a continuously growing list of records , called blocks, which are linked and secured using cryptography .   Each block typically contains a hash pointer as a link to a previous block,  a timestamp and transaction data.  By design, blockchains are inherently resistant to modification of the data. Harvard Business Review defines it as "an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way."  For use as a distributed ledger, a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for validating new blocks. Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks, which requires collusion of the network majority. Blockchains are secure by design and are an example of a distributed computing system with high Byzantine fault tolerance . Decentralized consensus has therefore been achieved with a blockchain.  This makes blockchains potentially suitable for the recording of events, medical records,   and other records management activities, such as identity management ,    transaction processing , documenting provenance , or food traceability .  The first blockchain was conceptualised in 2008 by an anonymous person or group known as Satoshi Nakamoto and implemented in 2009 as a core component of bitcoin where it serves as the public ledger for all transactions. Continue reading >>
Where Is The Blockchain Stored?
Following my previous article where I talked about what a blockchain is, taking the example of the Bitcoin blockchain, a natural question comes to mind: where is that blockchain (the big spreadsheet storing all the transactions ever made) stored? Well as you have probably heard, a blockchain is decentralized. Thus there cannot be a single place where the blockchain is stored (that would make it centralized). Blockchains are stored in a lot of peoples computers. These people are called nodes. They can be simple users or miners (more on that later) Ok, so each node has a copy of all transactions ever made. So what happens when a new transaction is written to the blockchain (added to the spreadsheet)? Well, all computers storing the blockchain have to update it! Alice sends 1 bitcoin to Bob. She creates a transaction and sends it to every computer that she knows are running the Blockchain (they are called nodes). Alices bitcoin wallet has a pre-filled list of other nodes so she does not have to worry about actually knowing other users. This process is transparent to her. Each node that receives the transaction now knows that Alice is sending 1 bitcoin to Bob. They all send the transaction to all the other nodes they know which will in turn do the same until the whole network knows about the transaction. Some of these nodes are miners and are tasked to verify the transaction. But that is for another time. The time it takes for the transaction to propagate to the whole network is around 15 seconds, which is pretty fast. This can be seen here (in transaction 90th percentile, which is the time it takes for a transaction to reach 90% of the nodes). This time can vary day-to-day. I like to think I suffer from attention disorder so not only I cant read long articles, but I cant Continue reading >>
How Bitcoin Transactions Work
It’s worth mentioning here that Bitcoins do not “exist” per se. That’s right! Those BTC in your wallet do not explicitly exist the way cash, coins, or even stocks do. There are no physical bitcoins anywhere—not on a hard-drive, or a spreadsheet, or a bank account, and not even a server somewhere. Think of the blockchain as a record of the transactions between various bitcoin addresses. These transaction records are updated by the Bitcoin network and shared across each of its nodes as balances increase and decrease. You can even use one of our Bitcoin.com tools if you want to see the history as well as current balance of any given bitcoin address. Mark wants to send some bitcoin to Jessica. Essentially, a bitcoin transaction is comprised of three parts: An input: This is a record of the bitcoin address from which Mark initially received the bitcoin he wants to send to Jessica. An amount: This is the specific amount of BTC Mark wants to send Jessica. An output: This is Jessica’s public key; also known as her ‘bitcoin address’ Sending bitcoin requires having access to the public and private keys associated with that amount of bitcoin. When we talk about someone “having bitcoins” what we actually mean is that person has access to a key-pair comprised of: a public key to which some amount bitcoin was previously sent the corresponding unique private key which authorizes the BTC previously sent to the above pub-key to be sent elsewhere Public keys, also called a bitcoin addresses, are random sequences of letters and numbers that function similarly to an email address or a social-media site username. They are public so you are safe sharing it with others. In fact, you must give your bitcoin address to others whenever you want them to send you B Continue reading >>
What Does A Block Chain Record In A Bitcoin Exchange Transaction?
What does a block chain record in a bitcoin exchange transaction? By Sean Ross | June 30, 2015 8:21 AM EDT The bitcoin blockchain is essentially an enormous, shared, encrypted list of which addresses hold what bitcoin balances. Every new block represents the latest update to account balances after some further mining takes place or a transaction occurs where bitcoin is exchanged. When a transaction is submitted to the bitcoin network, the information is passed on through all bitcoin clients at the same time through the blockchain. The blockchain network is designed to make double-spending very difficult, though breaches have occurred in the past. In this way, it functions much like a public ledger, accounting for economic transactions and providing some verification that all bitcoin users are equipped with the same information. Blockchains consist of a series of individual blocks, each in chronological order and linked by accounts. Each block's record shows at least one transaction, though many valid transactions can be represented in a single block. Other kinds of information in a block include a timestamp and the "hash" of the previous block. There are no hashes for genesis blocks because these blocks have no predecessor. A block also includes the block's own hash and a "difficulty statement." Difficulty refers to the amount of bitcoin that can be created with bitcoin mining equipment; it is directly correlated with the present demand for bitcoins . One of the alleged benefits, or risks, of bitcoin is its unique anonymity. Those transacting in bitcoins are supposed to be tied to a specific bitcoin address rather than a personal name or email. Yet, anonymity is somewhat compromised because of the blockchain information ledger. Since every transaction is publicly logge Continue reading >>
What Is Bitcoin Memory Pool?
Torsten Hartmann January 7, 2018 597 no comments Mempool (a compound of two words, Memory and Pool) is a very important part of the Bitcoin Network (the network of computers and devices which are connected to the internet and are running the Bitcoin Core software). As its name suggests, it is a pool of memorized, held data. The data that is being stored on the Mempool are unconfirmed transactions that are currently stuck on the Bitcoin Network. Every piece of Mempool is stored on a special electronic device and its contents can be accessed and observed in real time. To explain how the Mempool works, we will first need to take a look at what happens during one Bitcoin transaction. Lets say you decide to send someone your Bitcoins. You will do so by completing a transaction. In order for this transaction to happen, you will first need to instruct your wallet to make said transaction by detailing the ammount of Bitcoin you wish to send and the location (another wallet) you wish to send your Bitcoin to. Confirming that you want to make your transaction will make your wallet do the following things, in order they are listed in: it will sign the transaction with your private keys it will pick one of your unspent transaction outputs required to construct the transaction it will broadcast the transaction onto the Bitcoin Network and prepare it to become fully verified And this is where Bitcoin Mempool comes into play. Your transaction is not going to be completed the moment your wallet broadcasts it. Instead, it will be stored in the Mempool. It is called the Mempool because the nodes on which it is stored do so in their RAM memory. A node is an electronic device that is a part of the Bitcoin Network. Every node is running the Bitcoin Core software and holds a complete copy of Continue reading >>
Data Directory - Bitcoin Wiki
The data directory is the location where Bitcoin's data files are stored, including the wallet data file. Go to Start -> Run (or press WinKey+R) and run this: Bitcoin's data folder will open. For most users, this is the following locations: C:\Documents and Settings\YourUserName\Application data\Bitcoin (XP)C:\Users\YourUserName\Appdata\Roaming\Bitcoin (Vista and 7) "AppData" and "Application data" are hidden by default. You can also store Bitcoin data files in any other drive or folder. If you have already downloaded the data then you will have to move the data to the new folder.If you want to store them in D:\BitcoinData then click on "Properties" of a shortcut to bitcoin-qt.exe andadd -datadir=D:\BitcoinData at the end as an example: "C:\Program Files (x86)\Bitcoin\bitcoin-qt.exe" -datadir=d:\BitcoinData Start Bitcoin, now you will see all the files are created in the new data directory. By default Bitcoin will put its data here: You need to do a "ls -a" to see directories that start with a dot. If that's not it, you can do a search like this: find / -name wallet.dat -print 2>/dev/null By default Bitcoin will put its data here: Bitcoin's verbose log file. Automatically trimmed from time to time. Storage for keys, transactions, metadata, and options. Please be sure to make backups of this file. It contains the keys necessary for spending your bitcoins. Storage for ip addresses to make a reconnect easier Storage for peer information to make a reconnect easier. This file uses a bitcoin-specific file format, unrelated to any database system  . fee_estimates.dat [Versions v0.10.0 and later] Statistics used to estimate fees and priorities. Saved just before program shutdown, and read in at startup. The data, index and log files are used by Oracle Berkeley DB , the embe Continue reading >>
Blockchain - Where Are The User's Bitcoins Actually Stored? - Bitcoin Stack Exchange
Where are the user's bitcoins actually stored? Where does that information reside that tells others and me how much bitcoins I have? I assume it can't be on my PC because I could easily hack the file that contains that data and get myself more bitcoins, right? It seems like what's called for here is a basic explanation of two of Bitcoin's big concepts: the wallet and the blockchain: A "wallet" is a collection of ECDSA keypairs. For those not familiar with cryptography, a keypair consists of a "public key" and a "private key" which can be used to encrypt or sign bits of data. The public key, as the name suggests, is known to everyone and can be used to encrypt messages in such a way that the holder of the private key alone may decrypt them. The private key may also be used to sign messages in such a way that anyone holding the public key may verify that the message truly came from you. Every Bitcoin address consists of such a keypair - the "address" you send people is the public half and the private half resides in your wallet.dat file. The "blockchain" is a constantly growing database of transaction information which is sent out to all nodes in the Bitcoin network. When you perform a transaction, that transaction is distributed to the network and assuming the transaction is valid, will be included in the next "block." This is where the coins themselves are stored. When you initiate a transaction, all previous transactions to or from that address are scanned and a balance is calculated. If your transaction exceeds this available balance, it will be rejected by the network and will not be included in a block. It's also important to note that the blockchain technically doesn't store "coins" it stores transaction information. The coins themselves are not discrete things wh Continue reading >>
Bitcoin Tutorial 2 : How Bitcoin Transactions Are Stored?
I claim to transfer 1 billion bitcoin to your account !!No one can deny because bitcoin is a virtual currency,precisely there ought to be some approach to store and follow Bitcoin Transactions and Balance and on the off chance that I have transfered 1 billion bitcoin then there is evidence as Block Chain. Block chain is a way to store Bitcoin Transactions and encryption with hashing is a way to transact. People are sending bitcoins to each other over the bitcoin network all the time, but unless someone keeps a record of all these transactions, no-one would be able to keep track of who had paid what.The bitcoin network deals with this by collecting all of the Bitcoin transactions made during a set period into a list, called a block. Its the miners job to confirm those transactions, and write block into a general ledger ( block chain ). This general ledger is a long list of blocks, known as the block chain. It can be used to explore any transaction made between any bitcoin addresses, at any point on the network. Whenever a new block of transactions is created, it is added to the block chain, creating an increasingly lengthy list of all the transactions that ever took place on the bitcoin network. A constantly updated copy of the block is given to everyone who participates, so that they know what is going on. When a block of transactions is created, miners put it to block chain-general ledger through a process. They take the information in the block, and apply a mathematical formula to it, turning it into something else. That something else is a far shorter, seemingly random sequence of letters and numbers known as a hash. This hash is stored along with the block, at the end of the block chain at that point in time. Hashes have some interesting properties. Its easy to pro Continue reading >>
Where Are Transactions Stored Before Confirmed
Where are transactions stored before confirmed I was reading about the bitcoin process online, and I found out that transactions only get inside the blockchain after they get confirmations, they are then attached to a block and start they life inside the chain. But where are they stored before confirmations? there's a central point or there's a "second chain" inside the first one, without confirmations? How miners reach such transactions if they aren't distributed yet. Quote from: John3D on November 17, 2016, 08:08:29 PM I was reading about the bitcoin process online, and I found out that transactions only get inside the blockchain after they get confirmations, they are then attached to a block and start they life inside the chain. But where are they stored before confirmations? there's a central point or there's a "second chain" inside the first one, without confirmations? How miners reach such transactions if they aren't distributed yet. Unconfirmed transactions are stored in the memory of full nodes. If the full node is turned off (or rebooted) they are lost. Miners usually have at least one full node running in order to gather unconfirmed transactions and send blocks once founds. This is a graph of the memory usage on my node, as you can see I restarted it a few days ago when I updated to a new version. Quote from: shorena on November 17, 2016, 08:13:33 PM Unconfirmed transactions are stored in the memory of full nodes. If the full node is turned off (or rebooted) they are lost. Miners usually have at least one full node running in order to gather unconfirmed transactions and send blocks once founds. So the transactions are already distributed between nodes? If your node goes down , the "node next door" already have that transaction? or the transactions are stored Continue reading >>
Bitcoin Miners Vs Bitcoinnodes
Miners and nodes work in lockstep to make Bitcoinwork. Since Bitcoin is decentralised, no central authority is in control. The entire system is governed by a set of rules that apply equally to everyone. Since it is based on cryptography, these rules involve doing a lot of math to keep the system going. The system is kept going by two kinds of entities miners and nodes. Before we better understand what the two do, heres a quick recap of some basic Bitcoin terms to help you understand it all better. Blockchain Bitcoins ledger. The Blockchain is a public record and can be stored by anyone. The Blockchain stores all transaction data. Mining the process by which Bitcoin transactions are validated using special processors. The people who do this are called miners. Node A server or storage device which stores the entire Blockchain and runs a Bitcoin client software that peruses all transaction data and the Blockchain to check if they conform to Bitcoin protocol. Bitcoin wallet A software application in which you can view your Bitcoin holdings, and send or receive Bitcoins. Bitcoin wallet address Your wallet address is equivalent to your bank account number. Bitcoins are stored against this address/ID. Each wallet address is associated with two unique keys, called public and private keys. Public key The public key is used to send Bitcoins to you and can be seen by anyone. The private key is your password and you need it to spend your Bitcoins. After you send Bitcoins using a Bitcoin wallet, this transaction information is relayed throughout the network passes from node to node (from a server to server) until it is transmitted to all the nodes. The miners then pick up this transaction information from nodes and perform a special process called mining on it, typically by using s Continue reading >>
Protect Your Privacy
Bitcoin is often perceived as an anonymous payment network. But in reality, Bitcoin is probably the most transparent payment network in the world. At the same time, Bitcoin can provide acceptable levels of privacy when used correctly. Always remember that it is your responsibility to adopt good practices in order to protect your privacy. Bitcoin works with an unprecedented level of transparency that most people are not used to dealing with. All Bitcoin transactions are public, traceable, and permanently stored in the Bitcoin network. Bitcoin addresses are the only information used to define where bitcoins are allocated and where they are sent. These addresses are created privately by each user's wallets. However, once addresses are used, they become tainted by the history of all transactions they are involved with. Anyone can see the balance and all transactions of any address. Since users usually have to reveal their identity in order to receive services or goods, Bitcoin addresses cannot remain fully anonymous. As the block chain is permanent, it's important to note that something not traceable currently may become trivial to trace in the future. For these reasons, Bitcoin addresses should only be used once and users must be careful not to disclose their addresses. To protect your privacy, you should use a new Bitcoin address each time you receive a new payment. Additionally, you can use multiple wallets for different purposes. Doing so allows you to isolate each of your transactions in such a way that it is not possible to associate them all together. People who send you money cannot see what other Bitcoin addresses you own and what you do with them. This is probably the most important advice you should keep in mind. Unless your intention is to receive public donati Continue reading >>