As Payment Theblockchainbrief Fractions Bitcoins: How Blockchain Enables Fast and Secure Transactions

Blockchain technology has made it possible to break down Bitcoins into smaller fractions, known as satoshis, which can be used for everyday transactions.

This allows for faster and more secure transactions, as the need for intermediaries is eliminated.

Each satoshi is equivalent to 0.00000001 Bitcoins, making it a more practical unit for small purchases.

With blockchain, you can send and receive satoshis directly from one person to another, without the need for a third-party service.

Cryptocurrency is a type of digital currency native to blockchains, not supported by any central organisation. It operates as a means of exchange over a decentralised computer network.

Owning cryptocurrency, such as bitcoins, really means owning a bitcoin address with a balance recorded on the blockchain. This is the case for many cryptocurrencies, including BTC and ETH.

Cryptocurrencies use DLT infrastructure to enable secure, decentralised and transparent transactions. This infrastructure is essential for the smooth operation of cryptocurrencies.

Miners provide security to the network, and it's expensive to be a miner, which acts as a disincentive for bad actors and spam. The more coins staked by miners, the better their chances of being randomly chosen as the block validator.

Blockchains using PoS, such as Ethereum 2.0 (ETH2), Cardano, Solana, and Tezos, allow miners to pledge a 'stake' of coins for the chance to be chosen as the block validator.

Blockchain is the technology underpinning all cryptocurrencies, including Bitcoin. It's a virtual spreadsheet where all buying and selling of crypto is recorded.

A blockchain is a type of Distributed Ledger Technology (DLT), which includes different technologies and architectures, such as blockchains, directed acyclic graphs, and others.

Blockchain uses cryptographic hashing and consensus mechanisms to create a linear, tamper-proof chain of blocks. This makes it a secure way to record transactions.

In a blockchain, every cryptocurrency transaction is individually recorded onto the blockchain by a huge network of volunteers verifying its authenticity using computer programs.

The incentive to validate transactions is the reward in the cryptocurrency itself, which is a potentially lucrative process called mining.

Cryptocurrencies like Bitcoin and Ethereum have unique denominations, unlike fiat currencies which typically have only one subunit.

The smallest unit of Bitcoin is called a satoshi, and it's the smallest unit of account in the Bitcoin network.

Unlike fiat currencies, cryptocurrencies are as divisible as there are decimal places built into their protocols, with some having six, seven, eight, or even eighteen decimal places.

This means that cryptocurrencies can be divided into very small units, making them useful for small transactions and everyday purchases.

The unit of gas fees on Ethereum is called a gwei, and it's used to measure the cost of executing a transaction on the Ethereum network.

When you're buying and selling cryptocurrencies, you'll need to use a crypto exchange, which is like a digital brokerage where you can transfer traditional money into cryptocurrencies. A crypto exchange is the platform where investors can buy, sell and trade cryptocurrencies, and most transactions are accompanied by fees.

A crypto wallet is where you hold your cryptocurrency, and it stores virtual assets much like a traditional wallet holds cash. There are two types: hot wallets, which are connected to the internet for quick transfers, and cold wallets, which are physical devices that store crypto offline for safer and longer-term storage.

Custodial wallets are managed by a third party, often a crypto trading exchange, and it's the third party that ultimately owns the crypto since the user doesn't have the private key.

A crypto exchange is the digital platform where investors can buy, sell and trade cryptocurrencies.

Most transactions on a crypto exchange are accompanied by fees.

These fees can vary depending on the exchange and the type of transaction being made.

Similar to traditional investing, a crypto exchange acts as a brokerage where people can transfer traditional money, like pounds or dollars, from their banks into cryptocurrencies like Bitcoin or Ethereum.

A crypto wallet is a digital storage space for your cryptocurrencies, similar to a traditional wallet for cash. It's essential to understand the different types of wallets to keep your assets safe.

There are two main types of wallets: hot and cold. Hot wallets are connected to the internet, making them easily accessible for quick transfers, but also potentially vulnerable to hacking. Cold wallets, on the other hand, are physical devices that store your crypto offline, providing a higher level of security.

If you're new to crypto, you might be wondering what to do with your wallet. Well, it's not as complicated as it sounds. You can store your crypto in a custodial wallet, which is managed by a third party, or a non-custodial wallet, where you have full control over your private key.

Here's a quick rundown of the differences between custodial and non-custodial wallets:

Now that you know the basics of crypto wallets, you might be wondering how to use them in real-life transactions. For example, you can use Cash App for Lightning and Bitcoin Network transactions, making it easy to send and receive crypto with others.

You can use Cash App for Lightning and Bitcoin Network transactions, allowing you to request, send, receive, and withdraw bitcoin with others on Cash App or outside of it.

Using the Lightning Network is a faster and cheaper way to send and receive bitcoin transactions, with little to no fees involved and transactions being almost instant. The Bitcoin Network, on the other hand, takes more processing time and may have some fees involved.

All transactions through the blockchain could take several hours to process, but Lightning transactions are almost instant. Here's a breakdown of the steps involved in a blockchain payment journey:

Cash App automatically uses Lightning for all transactions from QR codes, unless you reach your Lightning Limits for sending or receiving, or specify that you would like to send or receive using the Bitcoin Network.

Bitcoin uses a system of denominations that closely resemble the metric system, but with a unique smallest unit called a satoshi. The satoshi has no metric equivalent and is the smallest unit of bitcoin.

The value of bitcoin is divisible down to eight decimal places, which helps ensure that it remains an effective medium of exchange. This means that even if the value of one bitcoin reaches $1,000,000, it can still be broken down into smaller units.

Some of the most widely-used cryptocurrency denominations have their own names, like the satoshi for bitcoin and the gwei for Ethereum gas fees. The satoshi is the smallest unit of bitcoin, and its value is 0.00000001 BTC.

You can use Cash App for Lightning and transactions on the Bitcoin Network (blockchain), which allows you to request, send, receive, and withdraw bitcoin with others.

Here are some common bitcoin denominations:

To make a blockchain payment, a node receives the request and verifies the transaction by communicating with other nodes to confirm that they also see the request.

The verified transactions are then added to a waiting area called a mempool, where miners select transactions to be included in a block.

Miners dedicate computational power to solving a cryptographic equation, and the first one to solve it wins the right to "mine" their block of transactions and add it to the blockchain.

The rest of the network nodes add this new block to their copies of the blockchain, verifying among each other that they each have the same new block added.

Every cryptocurrency transaction is individually recorded onto the blockchain by a huge network of volunteers verifying its authenticity by using computer programmes.

The first person to validate transactions is rewarded in Bitcoin, which is a potentially lucrative process known as mining.

A transaction is typically approved after a validated block has been certified by three nodes, and the transaction is completed and recorded on the blockchain.

To initiate a blockchain payment, the customer selects a crypto payment option at the checkout and selects the digital currency they want to pay with.

The customer then sends funds to the merchant's public address, also paying the blockchain's processing fee, which is submitted to the blockchain and checked by nodes to ensure the customer has enough coins to make the payment.

The transaction request is submitted to a block, awaiting miners to validate it, and the process is complete once the transaction is recorded on the blockchain.

When making payments or sending money, you have two options: Lightning Network transactions and Bitcoin Network transactions. The main difference between the two is the speed and cost of the transaction.

Lightning Network transactions are faster and cheaper, with little to no fees involved. They're ideal for sending smaller amounts of bitcoin.

One key thing to note is that Lightning transactions are not recorded on the blockchain, which means they're almost instant. On the other hand, Bitcoin Network transactions can take several hours to process.

If you're using Cash App, you might be wondering if it automatically uses Lightning for all your transactions. The answer is yes, unless you reach your Lightning Limits for sending or receiving, or you specify that you want to use the Bitcoin Network.

Here are the scenarios where Cash App might use the Bitcoin Network instead of Lightning:

You can use Cash App for Lightning and transactions on the Bitcoin Network (blockchain). This means you can request, send, receive, and withdraw bitcoin with others on Cash App or outside of Cash App.

Cash App automatically uses Lightning for all transactions from QR codes, unless you reach your Lightning Limits for sending or receiving. Payments will then be sent via the Bitcoin Network.

To take advantage of Lightning Network transactions, simply use the QR code feature on Cash App. The transaction will be processed through Lightning, making it faster and more efficient.

If you need to send or receive a large amount of bitcoin, you may exceed your Lightning Limits. In this case, the transaction will be sent via the Bitcoin Network.

Here are some key differences between Lightning and Bitcoin Network transactions:

Keep in mind that using the Lightning Network can be a more cost-effective option for smaller transactions. However, if you need to send or receive a large amount of bitcoin, the Bitcoin Network may be a better choice.

Understanding trading pairs is crucial for buying certain cryptocurrencies. For instance, if you want to purchase a specific altcoin, you'll need to find a trading pair that includes it, such as Bitcoin (BTC) to altcoin (ALT).

Buying and selling cryptocurrencies through trading pairs can be more complex than buying and selling traditional currencies. Yes, understanding trading pairs is necessary primarily for buying certain cryptocurrencies and for engaging in advanced arbitrage trading strategies.