Understanding Bitcoin (3 of 5)

What’s Behind a Transaction?

We have introduced some fundamental concepts about Bitcoin in previous articles (part 1 and part 2). Now we move to some practical parts.

When I say I have some bitcoin, what actually do I have?

When I say I have a certain amount of bitcoin, a more accurate way to say is that I have some unused bitcoin transaction records that belong to me and are kept in a ledger. If the ledger says I have one bitcoin unused, then I have one bitcoin, and inside my wallet I have something to use this unused bitcoin. That is what I have.

Transaction

Now let’s imagine an example. Alice and Bob has their own wallets. Alice sees 3 bitcoin in her wallet, while Bob sees 1 in his. That means each of their wallets sees an unused record (or records) in the ledger which belong to that wallet. Assuming the simplest situation: there is one record of 3 bitcoin for Alice’s wallet, and one record of 1 bitcoin for Bob’s wallet.

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