Still confused about how the “crypto thing” works? Don’t worry we got you covered!
What do I need?
Okay, so for any cryptocurrency transactions, you will need the following essentials:
- Access to the Internet
- A preferred exchange platform (use DigiFinex, duh!)
- Your cryptocurrency of choice (let’s just go with Bitcoin first)
- A wallet (a device on your computer or phone where you store, sell, and receive cryptocurrencies)
- A public key & a private key
- A bit of caution and common sense
Got all that? You’re good to go!
Suppose you want to buy 2 slices of pizzas from John for 10 bitcoins (BTC). You whip out your wallet (metaphorically) and send 10 bitcoins and a bit of transaction fees (think of it like tips) to John’s wallet.
The transaction details get encrypted into a hash or a transaction ID (TXID) that looks like this:
The hash will be sent to a pool (called “mining pool”), where all the unconfirmed transactions kind of swim around and hang out, waiting to be selected by miners.
The miners will select transactions and form them into a temporary block called the “candidate block”. They will then try to mine the block by calculating the block hash.
The first to do so will broadcast their candidate block to the entire blockchain as the next legitimate block. The candidate blocks of other miners will be invalid and transactions will be returned to the pool. This process will then repeat itself.
If your transaction is selected and confirmed as part of the block, then John will be able to check for the transaction via his wallet (or here) by entering his private key (note: do NOT let anyone else know your private keys, not your parents, not your friends, not your partner, not even your pet).
As John confirms that he has received the payment, he will deliver the pizza to you like any other online orders.
The miners will receive newly minted bitcoins of 12.5BTC (halved from 50BTC in 2009) as the reward, together with all the bits of transaction fees sent by each transaction of the block (so yes higher transaction fees means higher possibility for your transaction to be picked up by miners first).