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EC SD | Bitcoin uses a "distributed ledger" system, called a blockchain. The ledger contains a row of data for each movement of bitcoin from one "made up computer address" to another "made up computer address". Being distributed means that the entire contents of the ledger is replicated on thousands of computer servers around the world. The blockchain is a public record, so anyone may search and view its contents at any time.
A wallet is a bunch of these addresses, and generates as many new addresses as the holder of the wallet desires. If you want to know how much bitcoin is in a wallet, you search the blockchain for all of that wallet's addresses in the "Recipient" field and subtract all of that wallet's addresses in the "From" field. Basically you have to calculate the sum of all deposits less all withdrawals to determine the net bitcoin left in the wallet.
Bitcoin deposits into a wallet stay in the form received and have to be spent in that same form. So if you get a deposit of 0.0000231 bitcoin, you have to spend it in whole. If change is due, then a new deposit of the change leftover is made into your wallet. When you spend that 0.0000231 bitcoin, everyone sees on the blockchain the amount, when you had received it, who you received it from, and who you spent it to... This is why each wallet tries to hide the holder's identity by using these "made up" addresses.
Can bitcoin be used for commerce? Sure, but it is not convenient like the US monetary system. A lot of investments are being made to solve the issues of convenience and privacy and one of the trends now if to not but the transactions on the blockchain at all, but perform the transactions in a "dark pool" where only the hosting company of the pool can see the data.
After more than a decade, bitcoin is really not that useful for commerce, and it is barely being used for commerce at all beyond some novelty level of activity. What bitcoin is being used for, is a gigantic ponzi scheme gathering money from people all over the world, who want to get rich and are willing to risk being the last one holding the bag when no one wants to buy it anymore. | |
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