Viw Magazine

Money

  • Written by Thomas Carey




First of all, digital currency refers to a currency that is traded as electronic data that does not have banknotes or coins. When it comes to data, you might wonder if you can send Bitcoin as if you were sending an email, but it's not that simple.

On the other hand, in most modern online transactions such as credit card payment and bank transfer, the two parties do not send directly, but most of them trade with a certain credit agency in between.

For example, if you send 1,000 yen from Alice to Bob in a general online transaction, Alice deposits 1,000 yen in advance with a financial institution and borrows 1,000 yen from the financial institution, and it is a mechanism to send money to Bob.

The image is slightly different for bank transfer and credit card payment, but the basic is like this. And there are fees for bank transfer and credit card payment.

Furthermore, if the transaction is an overseas remittance, the fees will increase and it will take longer.

Of course, in these general transactions, instead of incurring the fee, there is a credit agency in between, so if there is a problem such as unauthorized use, it is a mechanism to get the transaction canceled etc. .

Bitcoin transactions

On the other hand, in direct transactions realized with Bitcoin, it is possible to send money without the intervention of a credit agency.

For example, if you send 1 bit coin from Alice to Bob, there is no institution in between and you can send money directly to Bob. As the transaction flow, first, the transaction information "Alice sends 1 bit coin to Bob" is broadcast (broadcast) to the P2P network.

A P2P network is a network in which multiple computers are connected in a flat state with no vertical relationship, and anyone can join the network.

That is, a network that is not controlled by anyone, but controlled by any person participating in that network around the world.

We make transaction history through calculation competition called "mining" in that network, and share it throughout the network. I will explain this story in detail later.

Bitcoin is not without fees, you have to pay it as a fee to the miner. This fee varies daily as it is affected by network congestion. It's been stable these days and seems to be able to trade with an average fee of about 50 yen. However, when the network is congested, it is possible that a transaction cannot be completed without paying a multiple of this fee.

Also, remittance takes about 10 minutes to 1 hour.  However, in the case of Bitcoin, the transaction is not finalized once it is taken into the network, and the security of the transaction increases as time passes after it is taken in.

Therefore, for higher value transactions, we may wait as long as possible before finalizing. In that sense, it takes a minimum of 10 minutes to finalize a transaction, and after that, depending on the importance of the transaction, it will be possible to secure a certain degree of safety by waiting one hour.

The big difference between Bitcoin transactions and credit card payments is that even if fraudulent use is discovered, it cannot be recovered because it does not go through a credit agency. For example, if you accidentally send a bitcoin or it is stolen, you cannot get it back. Since this point is one side of the other with the advantage of bitcoin that "one who sent it once cannot rewrite it", it cannot be separated. Visit bitcoinaussiesystems.com to know more.

Bitcoin transaction flow

As before, let's say "Alice sends Bob 1 bitcoin." As a flow, transactions are completed by sharing transaction information on the network. Therefore, it is necessary to create transaction information first. This transaction information is called a transaction.

In this case, Alice sends Bitcoin to Bob, so Alice creates the transaction. The generated transaction is sent to the Bitcoin P2P network via Alice's node participating in the P2P network.

The P2P network itself is spread around the world, with 10031 nodes participating in Bitcoin and 13153 nodes participating in Ethereum. 

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