Sending of bitcoin, you need to publish your intention and the nodes scan the entire bitcoin network to validate that you 1) have the bitcoin that you want to send, and 2) haven’t already sent it to someone else. Once that information is confirmed, your transaction gets included in a “block” which gets attached to the previous block – hence the term “blockchain.” Transactions can’t be undone or tampered with, because it would mean re-doing all the blocks that came after.
The bitcoin wallet(coinbase, Ledger) doesn’t actually hold your bitcoins. What it does is hold your bitcoin address, which keeps a record of all of your transactions, and therefore of your balance. This address – a long string of 34 letters and numbers – is also known as your “public key.” Never mind that the whole world can see this sequence. Each address/public key has a corresponding “private key” of 64 letters and numbers. This is private, and it’s crucial that you keep it secret and safe. The two keys are related, but there’s no way that you can figure out anyone’s private key from their public key.
That’s important, because any transaction you issue from your bitcoin address needs to be “signed” with your private key. To do that, you put both your private key and the transaction details (how many bitcoins you want to send, and to whom) into the bitcoin software on your computer or smartphone.
With this information, the program spits out a digital signature, which gets sent out to the network for validation.
This transaction can be validated – that is, it can be confirmed that you own the bitcoin that you are transferring to someone, and that you haven’t already sent it to someone else – by plugging the signature and your public key (which everyone knows) into the bitcoin program. This is one of the genius parts of bitcoin: if the signature was made with the private key that corresponds to that public key, the program will validate the transaction, without knowing what the private key is. Very clever.
The network then confirms that you haven’t previously spent the bitcoin by running through my address history, which it can do because it knows your address (= your public key), and because all transactions are public on the bitcoin ledger.
Once your transaction has been validated, it gets included into a “block,” along with a bunch of other transactions.
We need to discuss what a “hash” is, because it’s important for the next paragraph: a hash is produced by a “hash function,” which is a complex math equation that reduces any amount of text or data to 64-character string. It’s not random – every time you put in that particular data set through the hash function, you’ll get the same 64-character string. But if you change so much as a comma, you’ll get a completely different 64-character string. This whole article could be reduced to a hash, and unless I change, remove or add anything to the text, the same hash can be produced again and again. This is a very effective way to tell if something has been changed, and is how the blockchain can confirm that a transaction has not been tampered with.
Back to our blocks: each block includes, as part of its data, a hash of the previous block. That’s what makes it part of a chain, hence the term “blockchain.” So, if one small part of the previous block was tampered with, the current block’s hash would have to change (remember that one tiny change in the input of the hash function changes the output). So if you want to change something in the previous block, you also have to change something (= the hash) in the current block, because the one that is currently included is no longer correct. That’s very hard to do, especially since by the time you’ve reached half way, there’s probably another block on top of the current one. You’d then also have to change that one. And so on.
This is what makes Bitcoin virtually tamper-proof. They say virtually because it’s not impossible, just very very, very, very difficult and therefore unlikely.
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