Blockchain for Beginners. How the technology behind bitcoin works. Understand how Blockchain is changing the future of money, our economy and the whole ... Money, Digital Money, Digital Economy) by Hugo Oak

Author:Hugo Oak
Language: eng
Format: azw3, epub
Published: 2017-07-31T07:00:00+00:00

Sending or receiving Bitcoins requires two things: a Bitcoin address and a private key. The Bitcoin address, a sequential combination of letters and numbers, is random and often comes with your wallet. The private key, on the other hand, while also a sequence of numbers and letters, is private.

Your Bitcoin address is much like a translucent safe only accessible through the private key. To send Bitcoins to someone, you use the private key to sign a message with the input, the amount, and the output. When you send these coins, you are doing so from your wallet and into the Bitcoin network where miners will verify the transaction, place it the ledger, and because this transaction shall form part of the computational puzzle that leads to unlocking new block chains, solve it and in so doing, create new coins. This means that while transactions are often very fast, it may take a while for transactions to clear as miners go about verifying all transactions in a block (it should not take more than 10 minutes, which as stated earlier, is the time it takes to mine a block).

Let us take a brief moment to discuss how to store Bitcoins before we continue with the discussion above:

How to Store Bitcoins and Other Cryptocurrencies

When you have fiat currencies, you can store them in your wallet, at a bank, or even under the mattress if you so wish. When it comes to storing cryptocurrencies, while we have touched on Bitcoin wallets, which is what you use to store cryptocurrencies such as Bitcoin, we have not fully-fleshed this, which is not good because they are a few things you need to know about Bitcoin storage.

When you have Bitcoins, you store them in a wallet, which put simply, is an address on the blockchain. Each Bitcoin wallet has two keys: a private key, which we discussed earlier, and a public key. The public keys is the address those intending to send Bitcoins to you shall use while as indicated earlier, the private key is much like a password to the safe that has your funds. If you expose your private key, you may be the victim of a hack and lose all your money:

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