A Bitcoin, is in essence, a chain of digital signatures. To send Bitcoins to another person, the owner of the coin is actually digitally signing a hash or a long string of numbers, that include the details of the previous transaction and the public key. Think of your public key or public address as a email address. The person being paid then verifies the signatures to authenticate the chain of ownership.
Common questions surrounding bitcoin include: “How does a person receive payment?” or “How does a user or a merchant make sure a coin wasn’t ‘double spent’ or used in another transaction before?”
In traditional financial systems, a trusted third-party is used to hold and verify transactions. That third party is usually a bank or a money transmitter who later takes a sizable fee from the transaction. Bitcoin was meant to be decentralized and to not put trust in a third-party organization. Bitcoin was meant to put trust in computers, cryptography and mathematics. To replace a third-party organization like a bank or a government, Satoshi implemented a transparent, timestamp server, which is the backbone of the blockchain.
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