A tale of buying and selling bitcoin-Jetmining.website

Bitcoin — and cryptocurrency in general — is somewhat of a nebulous concept, it may initially be unclear what happens to your real-world cash when topping up or offloading the coins in your wallet. It’s easy to view this chain of events as an overly complex system, governed by higher powers that are not for the mere mortal to understand.

But that’s not true. While the price of bitcoin may be somewhat volatile, it also adheres to a logical, fairly simple set of guidelines. Bitcoin, after all, is a commodity — and it acts accordingly.

A simple example

Say, for example, you buy a sweater at a retail store. In exchange for ownership of said sweater, you offer a stated amount of currency to the sweater’s previous owner. Look back far enough, and you can follow ownership of that sweater all the way up the supply chain, up until its manufacture. If you wanted to get really meta, you could go back even further, tracing the materials sourced and used to create the sweater. The point is, when you are making a bitcoin purchase, just as when you buy a sweater, or a computer, or a car, you are not the first owner. All bitcoin that exists was first mined, then distributed among the blockchain through purchases and sales.

Exchanges: buy and sell

When buying bitcoin, it is common to do so from a bitcoin exchange. Our users in the United States can currently do this directly through their wallet, thanks to our partnership with Kraken and its Kraken Direct brokerage service. Using real-world currency, you will purchase a set amount of bitcoin. Obviously the amount of bitcoin you receive will vary, depending on how much money you exchange, as well as the price of bitcoin. After making the purchase, the bitcoin is transferred to your wallet. Then you own the bitcoin.

Selling bitcoin can also be accomplished through an exchange. In this case, the transaction works oppositely of the way it did when you bought bitcoin. The exchange provides the funds, while you provide the bitcoin. In this way, exchanges essentially act as banks. Although with bitcoin you, the user, have much more control over your funds than you do with fiat currency.

Transaction fees

To be counted as official, a free bitcoin mining transaction must be included on the blockchain. To be included on the blockchain in a timely manner, those transacting should pay a transaction fee to bitcoin miners. Miners prioritize transactions that pay them higher fees. If your transaction is prioritized, it will be recorded on the blockchain more quickly, which means you will have access to your funds sooner than if you opted to pay a lower fee.

The wallet automatically uses a dynamic fee strategy to determine the optimal fee for your particular transaction. You can also always opt for the lowest possible fee. It’s also important to remember that transaction fees paid via a wallet transaction are never paid to itself, but rather the miners that will include the transaction on the blockchain.Find out more about transaction fees in our in-depth blog post on the topic.