Bitcoin is basically an online currency and just like the regular dollar or euro. The thing is that it is only available in digital form online on various platforms. People use bitcoins not only for the purchase of goods and services but sometimes also in the form of investments. The main difference between the bitcoin and the regular currency is that it is not used as a third party for the exchange purposes. Whenever you are using a credit card to make any of the purchase decision, the money of the customer directly go to the bank or the credit card organization before it reaches the merchant. So, whenever you use bitcoins, the coins in it are sent from the wallet to the merchant wallet without the need of going through any of the financial institution. For some of the parts, it makes the bitcoins transactions anonymous and untraceable. This is one of the benefits of the bitcoins and why people make transactions through this medium.
The Bitcoin transaction takes place through a process called mining. To explain it simply, you must go through the following –
The transaction is placed and the computer records all the types of transactions. Then the bitcoin miner verifies the block chain and claim whether it is correct or not. The transaction is verified and the coins are then sent to the merchant. In this, the computer is known as the block chain, and it records the details of the transactions
A computer, called a “block chain”, records the details of the transactions including the time and who owns how many coins. A “bitcoin miner” is any person with a computer that verifies that the details of the chain are correct and confirms the transactions. They’re usually paid a fee in bitcoins as well, thus increasing the supply. Creating a Bitcoin Wallet There are three ways to store bitcoins – using an online wallet, a paper wallet or a hardwire wallet.