How Are Bitcoin Transactions Processed?


Bitcoin does not have any physical appearance or existence. Consider it as a digitally signed transaction record. Bitcoin does not store in your digital wallet just like coins, cash, or stocks do. The transactions that are made between various Bitcoin addresses are considered Blockchain.

The Bitcoin network updates the transaction records and then shares the same record to each node of the transaction, and the balance increases or decreases. You can also know About Bitcoin Era for Bitcoin transactions.

Bitcoin Transaction’s Sample

In order to understand the concept more clearly, here is a sample for you. A transaction of Bitcoin includes three parts.


The first step or part of a Bitcoin transaction is an input. This is basically the Bitcoin address record. From this, anyone sends Bitcoin to another person or another address.


This is the particular amount of Bitcoin you want to send to others.


Lastly, the output is the public key of the receiver or the address to which you will send Bitcoin.

How Are Bitcoin Transactions Processed?

In case you want to send Bitcoin to anyone, you need a public key along with a private key. When we say that someone has Bitcoin in his or her wallet, it implies that the person has a pair of keys that comprises of:

  • A public key, to which any amount of Bitcoin was sent previously.
  • A corresponding private key, which is unique and authorizes that a certain amount of Bitcoin was sent previously to the public key that is the same as mentioned above.

These public keys are also referred to as “Bitcoin addresses,” which are formed by combining some random sequence of letters and numbers. It is similar to your social media username or email address.

You need to share this public key with others whenever they want to send you Bitcoin. The private key is another one, and it is also formed the same way the public key forms. Just like you keep your passwords secret, you need to handle private keys the same way.

For any transactions, you need to use your private key and sign a message and all the transaction details with it. After this, this particular message is sent to the Blockchain. This transaction was then broadcasted to the Bitcoin networks.

Now they will verify whether your keys are able to access the input or not. This process of confirmation is called mining. Miners are rewarded in Bitcoin for each block solved. This process needs extensive labor and computer work.

It Takes Long To Complete The Transaction

All the Bitcoin transactions must be verified by the Miners. Transactions are collected in the blocks. Sometimes the transactions overflow from one block. At that point, the transaction is put on hold till the time the next block is assembled. It takes 10 minutes.

As per the current Bitcoin protocol, the limit of the blocks is 1MB. Due to this, it takes a longer time to complete the transaction.

What Are The Fees Of Bitcoin Transactions?

Various factors are there behind the Bitcoin transaction fees. There are several users who give the user the transaction fee decision. A portion of the transaction that is not owed to the recipient or any change that is returned is included as a fee.

These transaction fees go to the miners. The miners used them in order to increase the speed. The transaction fee that you will give will also help the miner to prioritize your transaction.


The whole Bitcoin transaction that you are making is in the hand of miners. They confirm whether the transaction is authentic or not and progress it further. Miners also have the power to create new Bitcoins.

Though the Bitcoin transaction is free, a minimal fee is charged in order to make the transaction faster. On the basis of the transaction fee that you will pay, the miners will prioritize your transaction.

Jeff Campbell

Jeff Campbell is a father, martial artist, budget-master, Disney-addict, musician, and recovering foodie having spent over 2 decades as a leader for Whole Foods Market. Click to learn more about me

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