How to Bitcoin #2 – How is Bitcoin Processed

NEW ZEALAND – Guest Writer –The second in the series of “How to Bitcoin” articles introducing you to Bitcoin and what you can do with the cryptocurrency.  Some hints and tips are provided, including some links to websites in order to guide you in your endeavour to understand Bitcoin, the “Internet of Money”.


How is Bitcoin Processed?


BTC is processed by computing power where a network of user-computers becomes a financial public ledger that will process the use of BTC. This is a network of computers and is no longer reliant on one computer to process a transaction but instead many computers to process. As the network comprises of many people from all over the world, no one organisation or person can control or shut down the network. Click on the image for more info.



This makes BTC decentralised, however, sometimes you are required to provide identification to websites that trade with BTC.  This is because the country of origin where that website is registered may have to comply with local laws to prevent money laundering. They must show responsibility to Know Your Customer (KYC) and identify people who can transfer funds out of the country or hide funds. If the local authority approaches them then they can hand over details of interest. Not all websites do this, as it is not required for them. It is this providing of identification that decentralises Bitcoin and hands back financial authority to the government.




Using cryptography to secure and process BTC, special computers are used that process these tasks (mostly ASIC miners) and are connected to the Internet. It takes time for these miners to process a transaction, in theory, 10 minutes for BTC but practically it will take more time-varying up to hours depending on the fee you wish to pay – Click for more info on transaction fees.




It will take many of these miners to confirm the transaction is correct and valid. This helps secure the network and prevent ‘double spending’. The process once valid is termed ‘confirmation times’ where typically BTC is spendable after one confirmation. The funds, however, will show in your virtual wallet in a matter of seconds. The miners are rewarded with new BTC and fees so it can be financially viable.


Bitcoin transactions are public and can be tracked on the Blockchain Explorer –



To check on a particular transaction, there is a search tool available.  Remember, once on the Blockchain, always on the Blockchain.




The BTC network becomes congested due to an increased number of transactions, low transaction fees and, as suggested by some, the block size of 1M which confirm blocks every 10 minutes as per the prescribed schedule developed by Satoshi Nakamoto, Bitcoin’s anonymous inventor.  Check unconfirmed transactions by viewing this website – Unconfirmed Transactions



More in the “How to Bitcoin” series:-



How Bitcoin is Processed


Watch out for these…


Storing Bitcoin

How can we make money?

Electronically Processing BTC- Mining



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