This has zero to do with investing and more with the technical side of bitcoin
I have a few questions how bitcoins work and I have read a few sources about it but after googling for a while I still have questions.
First off, what I know:
-> How asymmetrical encryption works (see: RSA, although here the "public key" is derived from the "private key")
-> How Message Authentication Codes (MAC) works - and therefore digital signatures and hashing functions in general
-> A wallet is "just" a private key. We can derive a public key and from that the bitcoin address
-> The blockchain has a header and the data itself. There is two entries in the header: 1. The hash of the previous chain 2. The hash of the data of the block
-> Every transaction has to be signed. That's what we use Message Authentication Codes for: Let M be the message of the transaction and sk the private key of the user (assume the hash function is already determined by the system). Such a signature would then be generated by using the hash function, with M being the data and sk being the key. This means that without private key transactions dont apply
My Questions:
-> What does a transaction look like simplified? Let's say A transfers X Bitcoins to B. What is used to identify A and B? The public key (alternatively address)
-> While the blockchain stores like every transaction ever, how does one actually know his balance? Is the balance stored somewhere? I mean if it is, I think the bitcoin address/public key would be a good idea
-> Where are the "bitcoins" actually stored? I mean bitcoins are awarded to the first person who creates a block but are they really just entries of people transferring "units of bitcoin"?
Like - does bitcoin not actually exist except for "A is awarded 6.25 BtC for creating a block" and "B transfers C n bitcoin"? (I'll just assume a transaction looks like this, see question 1) - and where are those bitcoins kept - if they exist at all?
So if 3.1 is correct, is bitcoin really just the signed transfers?
-> Is the BtC-Protocol responsible from "preventing" you from spending more bitcoin than is tied to the private key you have access to?
-> What if a user "tried" to broadcast a transaction that is not signed (like not at all or without the appropriate private key)
EDIT: I did not know about UXTO and the UXTO Set because none of my sources mention it. My questions are answered if you read up about that
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