Bitcoin Trading - Photo by Austin Distel

How Does A Bitcoin Transaction Happen?

You may well have heard of Bitcoin, the biggest, most recognizable virtual Cryptocurrency in the world. But Bitcoin’s digital lifespan doesn’t mean it can’t be exchanged for real life goods. In fact, the efficiency, transparency, speed, and relative anonymity of Bitcoin is making it a favorite for online investors and consumers of fake IDs and other goods.

Transactions happen, like everything to do with Bitcoin, online, between the wallets where users store their coins. For more on wallets, check out our guide on What Is Bitcoin and How To Buy It here.

Because Bitcoins don’t literally exist in the real, tangible world, the only way to trace them is through electronically stored balances. The whole system is logged in the Blockchain, a transaction file that is potentially open to all users.

Crypto Transaction - Photo by Eftakher Alam
Sending Cryptocurrency from one wallet to another will require a Wallet Deposit Address.

A Bitcoin transfer requires three things:

  • An input address, the wallets from which the coins were sent
  • The amount of coins sent
  • The output address, the wallets to which the coins are being sent

The sender uses a secret password key to open their wallet and authorize the transaction, which is sent across the Bitcoin network, where it is verified and the other party in the deal will see the transaction recorded in their wallet.

The verification is similar to the clearing process for a bank payment. But Bitcoin’s decentralized network uses miners who run equations on their computers to verify the transactions – basically, solving the equation. It’s very rare that this will take more than 10 minutes. You may have heard of mining bitcoins before – this is what that is, verifying transactions.

Because the coins only exist as transactions, things can get a little complicated. For example, a sender can only send an amount that exists in a previous transaction in their wallet. When a wallet can’t find the exact amount to be sent it creates two amounts as the output: one is a previous transaction amount from the sender’s wallet, the other is the change from the receiving wallet.

Transaction - Photo by Austin Distel
You can make transactions in Cryptocurrency using a computer or a smartphone.

How Much Does It Cost?

This can all happen for free. But that’s up to the wallet you’re dealing with, who can often give a percentage of the incoming Bitcoins to the miners who carry out the transaction. There is a fee paid to miners who process fees by Bitcoin, but it’s reducing in value, and more and more miners are demanding payment from the parties in transactions to cover the gap.

Bitcoin transactions can happen with little or no digital paper trail. The transactions themselves are their own record. However, as the Cryptocurrency becomes more mainstream – you’ll see Bitcoin payments offered at many sites, from novelty fake ID producers to mainstream ecommerce sites like Overstock.com – some sites that facilitate transactions are starting to offer mainstream conveniences like receipts.

Bitcoin’s an exciting development, not just in the digital world, but in the world of international finance – a decentralized, peer-to-peer currency is revolutionary – and we’re proud to accept it for our fake IDs.