How does a Bitcoin (BTC) ?
The Bitcoin is a virtual currency which has no real representation. That is to say that you can’t have coins on you to use an atm. These bitcoins can only be found on the Internet and, in the same way that gold at a certain time, serve as currency in various transactions. It is expected that 21 million bitcoins are available when the deployment of the currency will be complete, that is to say, in 2140. However, no entity or State can create its own bitcoins.
What are the transactions ?
Before knowing how to use bitcoins, it is important to understand what are public keys and private keys. Each user has one of each. The private key is unique and only its owner knows it. It allows a user to encrypt the message it sends when a transaction is made. To read this message, it must be a public key. So only the owners of bitcoins can read the messages that indicate the transactions.
These messages appear in the blockchain, a sort of registry that shows all the transactions made with bitcoins. Before being recorded, a transaction is verified by the chain of blocks. That fact that the blockchain cannot be falsified.
In addition, the transactions are even more secure thanks to the numbering of the bitcoins. Each bitcoin has a number making it unique. What makes a person is not able to sell the same bitcoin multiple times, and that he can not sell a bitcoin that it does not. These numbers are of course displayed in the transactions that appear on the blockchain. All of these measures can be used to make Bitcoin a means of payment totally secure and transparent.
How to use bitcoins ?
So, if you want to sell bitcoins, you must submit a bid by announcing the number of bitcoins and the price that you want. If you find a buyer, you will send him a message that will be encrypted with your private key. Once the transaction is validated, it appears in the blockchain, and all users can be informed of the transaction.
On the contrary, if you want to buy bitcoins, you must reply to an offer which corresponds to the amount you want to invest. Once the transaction is concluded, the seller sends you an encrypted message that you can read using your public key. After the acceptance of the transaction, the buyer receives his bitcoins so the money is sent to the seller. This operation is done automatically.
Finally, each transaction is verified by miners. These miners are rewarded with new bitcoins come into circulation.
What you must remember
- The Bitcoin is a virtual currency that can’t be found on the Internet.
- It is important to differentiate the public keys and private keys.
- Many security measures can be used to make Bitcoin a means of payment is highly secure.
- The transactions are all listed in the blockchain, which allows transactions to be secure and transparent.
Read the White Paper Bitcoin translated in French by thefinancespa
- Read the White Paper in French on the bitcoin