If the answer is no, do not worry! This article will teach you what you need to know about the most talked cryptocurrency at the moment and what guarantees safety and speed in its operations.
So if you believe in the potential of this technology and want to dive deep to understand more on this subject, follow this post till the end to learn more.
In this article, you will see:
- What was Bitcoin’s first transaction?
- How does this transaction work?
- What are the elements of a transaction?
- What to do when the transaction is delayed?
1. what was Bitcoin’s first transaction?
Let’s start with a brief reminder about the emergence of this technology. It was created by the mysterious Satoshi Nakamoto, whose identity to this day is the subject of endless debates. It is not known whether the name represents a programmer alone, or a group of them.
However, there is a record that Satoshi made the first Bitcoin transaction on January 12, 2009. This transaction was made to Hal Finney, an activist and computer scientist, who, unfortunately, is no longer with us. 10 BTCs were traded and the process was done following the principles that guides this technology: freedom, innovation and decentralization.
After all, this cryptocurrency was designed to function without the intermediation of centralizing organs, granting total autonomy and decision-making power to those involved. Furthermore, this technology is quite similar to the P2P network paradigm (a standard that a central server does not need to transfer data over the Internet).
These transactions reflect the original meaning of the internet, being free to users, totally dependent on their control, as well as intuitive, safe and practical. Next, we’ll look at how this process actually works.
2. How does this transaction work?
It all starts with someone who wants to transfer an amount to another person, just like ordinary banking. Those involved have a portfolio and a public set of characters called an address. In addition, each one also has a private key, which is required to sign the Bitcoin transaction. This key is secret (as stated in the name itself) and is associated with the address, which is also called the public key.
The sender initiates the request with using both theirs and the receiver’s information. From there, the request is opened to be validated and inserted in the block of transactions, Blockchain of the main network. This validation consists of the verification of two points: if the one who is sending actually has the amount negotiated and if it has not already sent it before.
The miners and the possibility of the transaction
At this point, the famous miners enter. Their job is to provide computing power to calculate the unique hash of that particular transaction who receive bitcoins in return. With this code – a unique set of characters for each specific group of data – that request can be appended to another block. The new member will receive the hash of the previous one.
The hash function and the security guarantee
Let’s say that information is changed in some block. The hash function is sensitive to any minor changes so it generates another totally different code. However, with the others connected, newer blocks still have the previous hash version corresponding to the compromised information. It would be necessary to change that too.
However, this new block will soon be associated with another, which will also need to be changed. In other words, it is a virtually endless process. And because of this complexity, operations can not be undone.
To understand this better, imagine a set of people with part of a small file that contains sensitive data. This document is distributed all the time with new members who join the group. If you want to discover the whole combination, a person must have access to everyone who has a part of it.
3. What are the elements of a transaction?
The main elements of a Bitcoin transaction are: entry, exit and quantity. It may seem intuitive, but there are some interesting points that need a detailed explanation. See below:
- Entry: this refers to the information of those who wish to transfer a certain amount. It is the address and name of the issuing user;
- Output: consists of the destination data, i.e, name and address of who will receive the bitcoins;
- Quantity: this term refers to the amount traded.
The information is sent by Bitcoin software on a mobile, a smartphone or even on a PC and is available for verification by a miner and then confirmed as part of a block. Verification means that the values have been transferred. The process takes about ten minutes.
4. What to do when the transaction is delayed?
However, there are cases where the transfer takes longer than normal, and this can create concern for users. Since the idea of the operation is precisely to be fast and practical, you have to know how to deal with this, right?
What happens is: transactions need to be validated by miners in exchange for a share in bitcoins – the so-called transaction rate – some processes end up being prioritized because they involve a higher gain for those responsible for calculating the hash.
That is, what happens is a matter of competition. Several operations are being processed at the same time, and those that offer a greater profit to the miner get prioritised.
So what to do? It is now possible to change the rate, even after sending the information, and offer a higher value. The logic is similar to that of an auction: you have to pay more to beat competitors. The caveat is that some portfolios do not support this option.
However, the ideal is to have a portfolio that has the functionality of calculating the rate dynamically, the exact and necessary value for an operation to be included already in the next block. Some even allow you to choose the desired priority level. If delays bother you, the trick is to try other software, with better resources dedicated to it.
The technology involved in the Bitcoin transaction is quite complex precisely because it offers several important steps to generate security and reliability. Even so, it may be more practical and faster than it would be if it involved a major centralizer, and it would be advantageous to prioritize user consent.