Good evening everyone!
Bitcoin transactions, sounds familiar right? This article can answer the question, what happens to a bitcoin from the moment you hit the send button in your wallet until received in the other end.
The Path to Send and Receive has 3 parts
Signing - when you hit the send button in your wallet, you're actually saying "hey wallet i want to send bitcoin to this address". In response, your wallet will create transaction message containing details about the sender, recipient and the amount being sent. After this the wallet will create a digital signature mathematically mixing with your private key. A digital signature proves that you own that private key. Also digital signature are changed every transaction. Signing will end with combining the transaction message along with your digital signature creating a text file.
Broadcasting - your wallets send the text file into the other computer also known as nodes, who holds the copy of blockchain. Each nodes verifies the transaction is legit, checking if you have the right amount and digital signature in the text file for the transaction. When your text file is verified it will be distributed to other nodes repeating the process. When a node recieved a file it keeps it into a holding area called mempool. The mempool is the space for valid but unconfirmed transactions. Broadcasting ends in the text file getting into the mempool.
Confirmation - miners get the text file in the mempool and group them together to create a block of transactions. There is a limit of transactions that can be inserted into a block. So, miners usually picks a text file with a higher miners fee. Miners now compete for their block to be put into the blockchain. When a block is successfully put into a blockchain, all the transactions in that block is confirmed.
Nice to know
You can use block explorer to see if a transaction si confirmed or unconfirmed.
Never ever receive a bitcoin payment that is unconfirmed. It can be cancelled anytime
The higher the mining fee, the faster your transaction will be successful
Mempool is short term for Memory Pool