There Are No Bitcoins, Only Records of the TransactionsBitcoins are funny little things because they don’t actually exist anywhere. That includes on a hard drive. Someone can say that they have bitcoins, but if you were to look at their bitcoin address, you will see that there are no digital bitcoins held in it. Essentially, one cannot point to a physical object, and that includes a digital file, and say “this is a bitcoin”. Instead, the bitcoin network stores records of transactions between different addresses, with balances that rise and fall. Nothing goes undetected in the network; every transaction that takes place will be stored in a ledger called the blockchain. If an individual is looking to work out the balance of any bitcoin address, they will have to reconstruct it by looking at the blockchain.
What Does a Bitcoin Transaction Look Like?If for example, Jane wanted to send some bitcoins to Tim, that transaction would include three pieces of information:
- An input. The input is a record of which bitcoin address was used to deliver the bitcoins to Jane in the first place.
- An amount. The transaction would also include the number of bitcoins Jane is sending to Tim.
- An output. This will be Tim’s bitcoin address