How Does a Bitcoin (BTC) Transaction Work? Andreas Antonopoulos' Q&A Gives Full Walk-through
There are lots of misconceptions around bitcoin on the way it is mined, if its private keys can be destroyed in terms of a store-of-value and many more. To shed more light to Bitcoin and how the transaction process occurs from the start to finish, the author of the book “Mastering Bitcoin” Andreas Antonopoulos gave a succinct explanation about all these on his official Twitter page.
Antonopoulos went on to say that the moment when someone sends Bitcoins from his/her wallet to another wallet on the BTC blockchain, then the wallet creates a transaction block that gathers the BTC tokens from that wallet and therefore allocating the addresses. When that is achieved, the individual’s wallet sends the necessary details of the number of nodes on the blockchain network.
He said: “The transaction is then transmitted to other nodes, which can be mining nodes, e-commerce payment gateways, and many such options. Each of those nodes will receive the transaction from your node and each of those, in turn, will validate every single transaction. When the nodes receive the transactions, they don’t’ know whether it was created by you or was forwarded and hence each of these transactions need to be validated individually.”
The Author of the popular Bitcoin book stated that if the wallet validates all the nodes and everything is accurate then blockchain undergoes a phenomenon known as ‘flood propagation’ in which every other information will be sent to all the blockchain nodes.
“Once the transaction reaches the mining pool, it maintains a pool of unconfirmed transactions, like a bucket where all this unconfirmed data is stored. This is the pool known as the mempool. Also, know that there isn’t THE mempool rather there is ‘A’ mempool. Information in separate mempools can be in a 99 percent overlap but there will never be a case where it will completely similar,” he stated.
Antonopoulos also added that these mempools offers vital information on transactions for the miner to include a new block and perform the Proof-of-work on it make it complete. He also added saying that once all nodes confirm its validity, then the user’s wallet will know that was a confirmation on the transaction.
“Once the PoW is solved, the mining node will propagate the node back the same way as it received. The nodes validate the block on the way back and once all the nodes confirm its validity, then the user’s wallet will know that there is a confirmation on the transaction. That is the entire life cycle of a transaction.”
Talking on if it is a problem that Bitcoin private keys can be destroyed in terms of store of value store.
He said “No, I don’t think it is a problem. The loss of keys and bitcoin from circulation will simply act to reduce the inflation rate on the currency by removing currency from circulation at the same time the currency is being added through mining.” He also added that “Bitcoin on its own is deflationary which also increase the value of the remaining bitcoin held by some people else.”
Live Bitcoin (BTC) Price:
1 BTC/USD =$8,774.4230 change ~ 9.78%