Note
In the last two posts I talked what a blockchain is:
https://steemit.com/blockchain/@gordon-cryptoman/basics-of-the-blockchain-and-cryptocurrencies-part-i
And how a blockchain is built:
https://steemit.com/cryptocurrency/@gordon-cryptoman/basics-of-the-blockchain-and-cryptocurrencies-part-ii
This time I will be talking about wallets and how transactions work in the blockchain.
What is a wallet?
As you may know, a bitcoin's wallet (or any other cryptocurrency's wallet) is not physical, you can't print physical bitcoins, so what is a bitcoin wallet exactly?
A bitcoin wallet is just a way for you to access your bitcoins. Every wallet has a secret keyword that you have and that lets you access your funds in the blockchain, this means that you can only access your funds if you have you secret, also known as: private key. So basically your wallet does not really have your funds itself, it just has a way for you to access them, like a bank's debit card.
Each wallet has its private key, that only the owner and others he chooses can know, and a public key. A public key is a certain derivation of the public key that makes it so that you can know that the public key refers to that wallet without being able to obtain the wallet's private key itself. This public key is then further derived and shortened to obfuscate itself, and this is your wallet's address. Having your address, anyone can send you bitcoin from their wallets.
But then what are bitcoin paper wallets?
These are a special kind of bitcoin wallet. Basically they have a printed private key, and an address made with a special, preferably offline software. They are more secure in a way since they are not stored in a computer and were always offline. There are several easy ways to retrieve a paper wallet's funds, but it is not recommended that you get a percentage out and keep the rest there as this just makes it a normal (unencrypted) wallet, since you put the private key in a computer to retrieve the funds.
Transactions
To make a bitcoin transaction you have to:
- Have your own wallet
- Have the receiver's address
- Have enough bitcoin to send, and to pay the transaction fee.
After having all these you just need to create a transaction(this is done by the software you are using to run your wallet) and send it to the bitcoin's (or any other cryptocurrency's) network. The transaction will be disseminated through all the miners that will then add it to their version of the current block. The miner chosen by the consensus algorithm(refer to part II of the series) will then attach his block to the network and your transaction will be then complete.
And that's it, as usual if you have any doubt or if I made any mistake or typo just cal me out in the comments.
Very useful information in there man! I look forward to seeing more! The biggest emphasis is that new users should be looking at hardware wallets like Nano S for complete control of their keys - feel free to check out my blog and connect if you think we have similar topics @dan21050
New users are usually not in the mood to spend money in hardware wallets, unfortunately.
It's a shame really as I know plenty who have lost coins on exchanges etc. It was the best advice I could have received when starting out