Transactions are irreversible and cannot be withdrawn or altered in any way. When this is confirmed, the transaction gets integrated into a block by the miners, and then this block gets attached to the blockchain. These nodes verify that you are in possession of the BTC you wish to send and that these specific coins haven’t been already sent to someone else. The first step of a transaction is publishing your intention to the nodes in the network. The current block reward is 12.5 BTC, this reward halves every 210,000 Blocks (roughly four years), this mechanism is implemented to counter inflation and to prevent that too many BTC are mined in a shorter than ideal timeframe.Īt the time of writing 80% of the total supply of BTC are in circulation, and the last block reward will occur in the year 2140.Įvery person with a bitcoin wallet (software that contains your private key and signs transactions) can send payments to another person with a wallet.Įvery bitcoin address consists of a public key, which is visible for the public and specifies your address to receive BTC, and a private key, which you use to claim ownership of that particular address and the balance in it and to send transactions (digital signature). This mechanism is called Proof-of-Work (PoW). The first who finds this number has the right to generate one block and get the reward in BTC. This competition is realized through providing a scarce resource (computing power, also referred to as Hashpower) to find a random number (called Nonce). To avoid centralization, Satoshi Nakamoto decided that instead of determining who has the right to attach one block, it is sorted out through competition.Įveryone who wants to insert transactions into a block and append that block to the ledger has to compete against others who also wish to do so. To find out insider news, before-the-public, I advise you to bookmark What is bitcoin mining and how does it work?Įvery bitcoin transaction must be validated and build into a block before it is appended to the blockchain.
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