NFTs and Crypto
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NFTs and Crypto

How to Buy, Sell and Transact with Bitcoin

Bitcoin’s technology is over a decade old, and many bitcoin exchanges have made this process simple or easier for you by handling the more technical part so you can enjoy buying and selling your bitcoin. So, do you understand what happens in a Bitcoin transaction? Let’s start with the basics.

How Bitcoin Works?

There are three main bitcoin theories that are very important in understanding the Principles of Bitcoin;

1. Demand and Supply

2. Cryptography

3. Decentralized networks

Demand and Supply

When something is limited, its value increases. The more people want it, the more its price increases. This is the theory of demand and supply, and bitcoin uses this theory as well.

Bitcoin’s supply is limited, it is produced at a fixed rate which decreases over time, through its halving that occurs every four years until we have 21 million bitcoins in supply. Once we have 21 million bitcoins in supply, no more bitcoins can be created.

The good news is, we still have a long way to go before it reaches 21 million!


The concept of cryptography was used a lot in the past to convert radio messages into unreadable codes. You will need to convert these codes back to the original message for you to be able to read it. For you do that, you’ll need a key.

Bitcoin uses cryptography theory in the same way, but instead of converting radio messages, bitcoin uses this concept to convert transaction data. Bitcoin does this through blockchain technology.

Decentralized Networks

Bitcoin uses decentralized network concepts too. For you to understand how bitcoin works, it’s important for you to know that data is everywhere in a decentralized network.

So, now that you know how bitcoin works, and you are ready to make your first transaction, let’s move on to how bitcoin transactions actually work.

How Do Bitcoin Transactions Happen?

Transactions on bitcoin are programmatically confirmed by miners, these transactions are designed to be publicly searchable and immutable once embedded in the blockchain. Bitcoin transactions contain three key variables: the amount being transacted, an input which is the address from which the bitcoin is sent from, and the output which is the address where the bitcoin is sent to.

Bitcoin transactions sent to the network are first verified by available bitcoin nodes. The network needs to verify that you own the bitcoin that is being transferred. Once this transaction is verified, your transaction is confirmed.

This confirmed transaction is now included in a “block” to be added to the blockchain. There’s a unique identifier called transaction hash where every transaction on the blockchain is tied to. You can track any transaction by typing its transaction hash in the search bar on the blockchain explorer.

You can’t undo or tamper with bitcoin transactions, that will mean re-doing all the blocks that came after. It takes a lot of time to process a single transaction among the many on the blockchain because the bitcoin blockchain is large and the process is not instantaneous.

Time is taken to confirm a transaction varies and is based on the blockchain and the size of your transaction.



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Sreejan Guha Niyogi

Sreejan Guha Niyogi

Digital Marketer | Blockchain & NFTs Addict | Research Writer| I cover market structure, trading, and bitcoin.