12 Days of Bitcoin: How Bitcoin Transactions Work

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Dec. 11 (Bloomberg) -- Bloomberg’s Matt Miller explains how bitcoin works on Bloomberg Television's "Market Makers."

Yesterday he shop with it and today he is putting on his professors tweed jacket with elbow patches.

-- he bought a bitcoin yesterday and he shop with it.

I was learning about it in the reddit community.

Then they asked me, how does it work, how can i get a bitcoin?

It starts with obviously changing your dollars or your euros, your yen, whatever you have got into bitcoins.

I put a regular wallet with dollars and then a digital wallet.

It looks more like a clutch, doesn't it.

I would love to see you with that.

Let me explain wallets.

You have to get a wallet before you can do any transaction.

Pour the consumer, it works like a regular wallet.

You spend out of it.

For a merchant, producer, service provider, it works like a cash register.

In order to make a transaction happened, each wallet has a private key and a public key.

If you are selling something or if you are accepting bitcoin, you show someone your public key.

You can take a picture of that key with your wallet if you are a buyer and it generates a numeric code that is random.

When those two things come together, the private key and the merchants public key, it makes a transaction.

Those all go into a page on a ledger.

There are hundreds and thousands of data mining operations there that are competing to try and verify and secure those blocks.

What they do is they wrapped a kind of digital armor a big block.

The transactions are all irreversible.

It is an interesting procedure.

What happens?

There is a fixed number of bitcoins.

There are many that seem so critical to this transaction process.

There are more and more minors to try to get to get to the 25. this is almost $25,000. exactly.

Every four years, it will be half.

By 2040, it will only be worth one bitcoin.

The incentive is reduced but the value will go up.

We have to leave it there but it is day three.

Are you a buyer or a seller?

We are going to have a meeting with bitcoin people and maybe i will buy another one.

I think it a really interesting community.

Some say that it is a commodity, not a currency.

Thank you very much.

Matt miller, day three.

Let's point out, -- is going

This text has been automatically generated. It may not be 100% accurate.


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