The Bitcoin network doesn’t directly store a balance for each of its users. Instead, Bitcoin uses a record of all transactions that have ever taken place, allowing each node to discover valid payments to any Bitcoin address. A wallet will display a user’s current balance after collecting information about payments made to and from all wallet addresses.
When you send a payment to someone else on the Bitcoin network, you are creating a transaction. A transaction is a digitally signed unalterable message that transfers ownership of bitcoins to another address. A transaction is instantaneously communicated with other Bitcoin network nodes, which verify its authenticity and temporarily store it as a pending transaction for further processing.
A transaction doesn’t transfer discrete units or “coins”. Instead, it describes a monetary amount that should be transferred to other addresses. Bitcoin values can be combined in transactions from multiple previous payments, and can be divided again among multiple payee addresses. A whole bitcoin is not the smallest increment that can be sent by users either – a bitcoin amount can be specified down to eight decimal places.
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