Bitcoin

To understand how Bitcoin functions with such agility, you must have an understanding of how the Bitcoin transaction process works. Considering it is one of the great tech developments of our lifetime there are plenty of layers of complexity when breaking down the how and why of the Bitcoin system. In order for a successful transaction of electronic funds from one party to another, there are a number of steps and levels of verification that must be completed.

So what is a Bitcoin transaction and how does it work? Before learning how to do a Bitcoin transaction, it’s important to recognise that Bitcoins don’t exist in the traditional way that we understand currencies to be possessive. You can’t hold a 

, you can’t print a Bitcoin and you won’t see a Bitcoin denoted as a dollar sign in your bank account.

So if Bitcoins don’t “exist”, how can you legitimately and safely use them to engage in a peer-to-peer cashless transaction? The way to maintain transparency and regulation is through a public ledger called Blockchain, which is effectively an all-encompassing data file where you can view Bitcoin transactions. This records the history of all Bitcoin Blockchain transactions that have taken place from one Bitcoin address to another Bitcoin address.

Once you’ve wrapped your head around Bitcoins not existing as a typical form of money, we can begin to understand the steps involved with Bitcoin transactions. Firstly, you’ll need to set up a wallet to store your Bitcoins 

, you can easily create an account to begin the process. You’ll then need to purchase Bitcoin so you have currency to 

 — you’ll be able to manage everything within your wallet. Your Bitcoins — or Bitcoin addresses — are actually made up of special keys and you’ll need to enter these to signify a transfer. When a bitcoin is transferred to you it will have a public key and when you are transferring it uses a private key. In order for successful Bitcoin transactions to be completed, there must be an input, an amount and an output of the Bitcoin addresses.

Let’s take a look at a Bitcoin transaction explained through an example of how a transfer might play out between two parties:

Amy is a 29-year-old receptionist from Melbourne and has travelled to Bologna, Italy to take part in a summer cooking school. While there she makes friends with a couple from San Francisco — David and Greg. They decide to take a trip to San Marino for a couple of days, so Greg arranges train tickets and accommodation. Amy wants to repay Greg without having to incur international transfer fees from her Australian bank account to his American bank account, so they agree to use Bitcoin transactions to simplify the exchange of funds.

Amy will input the private key that encrypts the source of the Bitcoins that had been sent to her

Amy will then add the amount of Bitcoin she’d like to transfer to Greg

The funds will then be unlocked using Greg’s public address

They will both then be able to check the BTC transaction via Blockchain

If you’re wondering how to confirm a Bitcoin transaction you can check the status via the Blockchain. Once you have hit send on your transaction it will go into the “mempool” or memory pool in order to be confirmed by Bitcoin miners. A few factors will determine how quickly your Bitcoin transactions are completed, like the type of wallets being used and how congested the Bitcoin network is at that time. If you are transferring Bitcoins from wallets on the same platform it will be instantaneous; other times you can wait for up to 20 minutes while miners sort through a backlog. You can head to the 

 and check the status by typing in the transaction ID into the search field. It’s always important to check for any typos when entering details into your transaction, as this may cause it to be denied by miners.

Bitcoin uses Blockchain to help regulate the transaction process by letting miners across a number of computers verify the addresses and keys. This is essential in making sure the process remains without a central authority while still continuing to be a safe and secure practice for all parties engaging in Bitcoin transactions. Blockchain becomes a decentralised ledger, containing all of the data from Bitcoin operations around the world.

How does the Bitcoin transaction verification process work?

In order for you to receive a Bitcoin verification on your transaction, miners will need to confirm details to ensure there isn’t anything amiss going on. Miners are a group of computers spread across the Bitcoin network that receives encrypted data broadcast to them from users. Using high-level algorithms, the miners will go about testing the validity of your BTC before confirming the transaction.

Once you have entered in the necessary information and hit send on your Bitcoin transaction, it is an irreversible action on your end. However, the receiver may choose to reverse the payment. It’s for this reason you should take care with the users and organisations you choose to transfer money to.

Will I incur fees for the Blockchain transaction of my Bitcoin?

The way fees are calculated will vary depending on your wallet, but generally speaking, you will need to include this fee during the input step — otherwise, the transaction may be denied when it hits the miners in Blockchain. As you cannot ‘half’ a portion of your Bitcoin, anything left over will go to the miners and is considered ‘gifting’ your change as an act of goodwill. If there is a lofty amount of change leftover this can often be seen as an incentive for the miners to prioritise your transaction. If you do not include a fee in your transaction, you may find it will be denied by miners. Users must remember that despite Bitcoin being a revolutionary form of technology it is still emerging and developing which can often lend itself to errors — be prepared for there to be a couple of kinks along the way.

Learn more about Bitcoin transactions with BTC Markets

It’s an exciting time to be dipping your toe into the world of Bitcoin. At 

 we understand the complex nature of cryptocurrencies, so if you’re interested in learning more about Bitcoin transactions and how you can become a pro with your wallet, we have plenty of 

 to help you get up to speed. We are constantly updating our website with news from the world of crypto so make sure you check in to be the first in the know.

If you’re new to Bitcoin, don’t worry — we have plenty of resources that will give you all of the facts you need to know before. Head to our 

At BTC Markets we are on hand to assist wherever you are in your journey — whether that is getting an introduction to cryptocurrency; wanting to start investing and 

 trying to troubleshoot an issue with Blockchain or perhaps you need advice on utilising Bitcoin as a part of your 

 with someone from our team today to let us know how we can help further.

You can also learn more by downloading the 

How Do Bitcoin Transactions Work?

Since its inception, one of the big drawcards of Bitcoin has been its theoretical ability to avoid regulation. Launched in 2009 — while the world was experiencing a financial crisis that had emerged from a blend of big bank greed and government ineptitude — Bitcoin seemed to be something of a magic bullet to the problems associated with more traditional currencies and government-backed finance.

Of course, this was all speculative territory — at the time, Bitcoin was an interesting tech curiosity, but not something that had proven itself in the marketplace. But that would change fairly quickly; once the first commercial transaction with Bitcoin took place in 2010, it immediately garnered attention outside of its original tech fandom.

Questions about the legality of Bitcoin began to emerge almost immediately. Getting consumers and retailers educated around a currency that didn’t “exist” in the traditional sense was an extensive process. Its much-touted anonymity also meant that it was viewed with suspicion by many, even as others embraced it — and its initial popularity on black markets like Silk Road didn’t assuage these concerns, either. “Is Bitcoin illegal?” was a question on many people’s lips at the time.

However, as Bitcoin grew in popularity — and more cryptocurrencies began to emerge and be seen as a viable mainstream investment — Bitcoin legal issues naturally began to be taken more seriously. While early enthusiasts were probably a bit over-enthusiastic in promoting it as the currency of the future, governments, banking institutions and private businesses all began to recognise the need for engaging with Bitcoin, whether or not they liked it.

Legislation almost inevitably runs behind technology, and Bitcoin has been no exception. The first laws specifically making Bitcoin legal in Australia weren’t created until 2017 — 8 years after the technology launched — though people were undoubtedly buying Bitcoins anonymously in Australia in the years prior.

The current legislation is also primarily concerned with two key factors — taxation and the legality of what’s “purchased” with Bitcoins. Is Bitcoin legal? Yes. Is it a currency? Not really in Australia. It’s treated more akin to a stock or an asset. Accordingly, if you decide to sell your Bitcoins and make a profit, you may be required to pay Capital Gains Tax at the end of the next financial year. As might be expected, it’s also not legal to use it to trade for items that are already illegal — though this already applies to cash or other forms of barter transaction, anyway.

The question of “Should Bitcoin be regulated?” has been a thorny issue among the crypto community; some hardline purists posit that regulation is a betrayal of the core principles behind the original 

. Others are more pragmatic, accepting it as a cost of doing business and building more mainstream acceptance, if not necessarily being enthused about the involvement of a central authority like the government.

But though it’s probably fair to say that Libertarian-minded voices tend to shout the loudest in the crypto community, there are definitely investors who would like to see more regulation. Investor protections need to be considered, as do the possibilities of hacks or theft. Is Bitcoin safe and legal? Yes, to a point — and there are many who would like to see that risk further reduced. Though there are undoubtedly criticisms to be levelled at government-backed currencies, having the backing of a bank or government does provide a certain amount of consumer protection — particularly when it comes to electronic transactions.

Speak to the Bitcoin experts at BTC Markets

Got questions about Bitcoin regulation in Australia? The team at 

 on the latest trends and developments with the cryptocurrency marketplace. We also have a great set of 

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We’re also your ideal point of contact if you’re interested in 

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The short answer is no, not in Australia. Cryptocurrency regulations in Australia are relatively progressive and look likely to stay that way for the foreseeable future. However, just as with any other form of commerce, it’s not legal to use them to purchase items or substances that would otherwise be illegal anyway. So if you’ve been wondering, “Are Bitcoins legal?” now you know for sure.

As with Bitcoin itself, different countries have taken a wide variety of responses to cryptocurrency in general. Although it’s legal in Australia, it’s unlikely that we will see a unified world position on cryptocurrency anytime soon. However, government attitudes are likely to shift over the coming years as cryptocurrency continues to expand its mainstream presence.

It varies around the world. Tech usually runs at least a few years ahead of legislation, which means that while there are laws in many countries governing cryptocurrencies, there isn’t necessarily specific legislation for all of the varieties that currently exist. Combine this with the fact that some cryptocurrencies have been created as novelties rather than a tradeable commodity or outright flopped once they hit the marketplace, and it’s easy to see how some just fly beneath the radar. However, numerous governments have created laws around Bitcoin specifically, in no small part due to its prominence in the media.

Theoretically, yes. A number of governments around the world already have. However, it’s unlikely to become illegal in Australia. Since 2017, Bitcoin laws in Australia have been relatively lenient. They’re primarily concerned with issues around capital gains tax when they’re converted into cash or preventing Bitcoin from being used to purchase illegal materials.

What is Bitcoin’s legal status by country?

This is a complex question — made more so by the fact that the situation is constantly evolving. The only country currently accepting Bitcoin as legal tender at the time of writing is El Salvador. However, a number of countries have accepted its status as an asset rather than a full-blown currency in and of itself. The approach tends to be fairly laissez-faire. How that asset is utilised is largely up to the holder — if private companies and individuals wish to accept it as payment, that’s not really a problem, as it essentially acts as a form of barter. However, it can have capital gains tax implications when it’s converted to cash for profit — Australia is one country where this is the case.

Nonetheless, there are a number of countries where Bitcoin is illegal. China, Russia, Vietnam, Bolivia, Columbia and Ecuador have all taken varying stances against its use. The cases against it vary; in some cases, it can be seen as authoritarianism and government overreach. In other circumstances, it could be argued that it’s more to do with consumer protection. Russia, for example, does not regulate Bitcoin per se but its use for goods and services is banned.

China is the most interesting case from an investor’s perspective; though it’s a major hub for mining, cryptocurrency transactions are explicitly prohibited. There have also been numerous attempted crackdowns on the level of mining in the country, so it will be interesting to see how attitudes shift over the coming years.

Is Bitcoin Legal In Australia?

Chainlink

Litecoin

Algorand

Customers can automate the purchasing of these digital assets in their accounts on a daily, weekly, or monthly basis, and can choose the date and time these transactions occur. This allows customers to build their investment portfolios over time on a consistent basis. In addition to 

, recurring transactions are already available with 

The minimum purchase amount for a recurring transaction is AUD $10, and the maximum amount is AUD $1,000. If a transaction cannot be made due to insufficient funds or another reason, customers will be notified by email.

Litecoin (LTC), Chainlink (LINK), & Algorand (ALGO) now available as recurring transactions

BTC Markets has been awarded the ISO 27001 certificate for 

 by British Standards Institution (BSI). 

BSI, the world-leading Standards Body, conducted a rigorous audit into our information security management systems and policies, pursuant to its handling of financial, customer, and other confidential data.

The ISO 27001 certificate is highly sought-after by banks and other institutions within the financial services sector. It signifies that BTC Markets has a robust information security management system that meets the highest of industry standards at a global level.

We were awarded the ISO 27001 certificate on the basis of our excellent risk management, operational flexibility and adaptability, data protection, customer and stakeholder trust, and legal compliance in one of the world’s fastest, most rapidly evolving industries.

Over 300,000 Australians choose Australia’s most trusted cryptocurrency exchange to trade over $14.1 billion. As a result, Information Security Management Systems is a crucial focus of our company. The awarding of the ISO 27001 certification is testament to our ongoing commitment and investment in cybersecurity protocols.

BTC Markets awarded ISO 27001 security certification by BSI

Caroline Bowler is CEO of BTC Markets, the largest Australian digital asset exchange. 

Over her career, Caroline has worked with a variety of financial institutions. These include investment banks, hedge funds, financial technology companies, and financial advisors. This has extended to blockchain and digital asset companies since 2015. 

Caroline is also a board member with Blockchain Australia, representing digital currency exchanges.

Caroline Bowler

.css-10i63lj:hover{-webkit-text-decoration:underline;text-decoration:underline;}.css-187z2gv:hover{-webkit-text-decoration:underline;text-decoration:underline;}How Do Bitcoin Transactions Work?

Is Bitcoin Legal In Australia?

Litecoin (LTC), Chainlink (LINK), & Algorand (ALGO) now available as recurring transactions

BTC Markets awarded ISO 27001 security certification by BSI

How Do Bitcoin Transactions Work?