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Suppose there is a cryptocurrency with a chain of 5 blocks. When users trading with this cryptocurrency, then:-

how the buy and sell will be going to happen i.e. Which block will make the transaction happen and is there an automated process for it?

How many transactions each block can do? Is there some rule for it?

I'm very new to blockchain, please help me out on this. If you need more clarification on the question then please comment it out. Thanks

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    Does this answer your question? I am new to Bitcoin, how can I get started?
    – chytrik
    May 8, 2021 at 9:47
  • Thanks chytrik for your comment. But unfortunately it's not the answer. To clarify the question further, suppose you purchase a one Bitcoin on any platform(in Exchange of money) . So when to buy that what are the process happens internally ?
    – Thunder
    May 8, 2021 at 10:58

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how the buy and sell will be going to happen

The canonical process for buying Bitcoin with a different currency is

  1. The buyer uses their Bitcoin wallet to create a receiving address.
  2. The buyer communicates this address to the seller. For example the buyer's wallet creates a QR-code (2d barcode) from the address and the seller scans the barcode.
  3. The seller uses their wallet to create a draft Bitcoin transaction that sends an amount of Bitcoin using unspent coins from their wallet to the Bitcoin-address provided by the buyer. This involves a cryptographic signature made by the seller that proves they have the right to spend those coins. It also locks the output amount with a Bitcoin script that similarly requires the use of recipient's private-key to spend.
  4. The seller's wallet transmits the draft transaction to a few nearby Bitcoin nodes (e.g. other wallets, etc)
  5. Other nodes pass the draft transaction to other nodes.
  6. Eventually the draft transaction reaches miners who each add it to their pool of draft transactions.
  7. Eventually one of the miners, adds that draft transaction to a block template, usually along with a lot of other unrelated draft transactions from their pool. The miner starts mining the block.
  8. eventually a miner succeeds in mining a block that includes the draft transaction.
  9. The miner transmits the new block to nearby nodes
  10. Other nodes see the block is valid (matches Bitcoin's rules) and pass it on
  11. Eventually the buyer's wallet sees the new block, adds it to their copy of the blockchain and adds the value to the wallet's "balance".
  12. Over time, other unrelated blocks are added to the blockchain. each of these subsequent blocks counts as one confirmation of the transaction. Six confirmations is generally taken as certain. Some people choose to accept fewer confirmations as certain.

i.e. Which block will make the transaction happen

Any subsequent valid block which contains the transaction.

and is there an automated process for it?

The first three steps described above normally involve some human interaction (but can be automated using software APIs). The remaining steps are fully automatic.

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  • Thankyou for your detailed answer. Does a new block gets added everytime when anyone makes a transaction? I mean there a lot of transaction going on in any Cryptocurrency platform(trading). And mining is really time consuming task as miners have to find a new hash everytime for proof of work so how they add block everytime?
    – Thunder
    May 8, 2021 at 15:33
  • @Thunder, there are typically a large number of transactions in a block. Sometimes there are none (other than the miner's one "coinbase" transaction which is how the miner gets paid).
    – RedGrittyBrick
    May 8, 2021 at 15:35
  • Thanks for your comment. For the sake of simplicity, assume I go to binance.com( A Cryptocurrency platform) and purchase a bitcoin in exchange of USD. So you meant to say my transaction will be put on pending until the miner( who will be making my transaction) add the block in the blockchain. If so, then how I get bitcoins instantly in those platforms? And miner can take a year also to get the hash for proof of work, does it mean ny transaction will be hold for a year?
    – Thunder
    May 8, 2021 at 15:40
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    @Thunder: businesses like Binance internally trade IOUs, they don't actually trade Bitcoins using the bitcoin network unless you want to trade the IOU for real money (e.g. for real Bitcoin). They just disguise the IOU and pretend it's real money. An account is not a wallet (even if some businesses pretend it is). An account holds an IOU. Hence the saying: Not your keys, not your Bitcoin.
    – RedGrittyBrick
    May 8, 2021 at 15:42
  • Thanks buddy. You just fixed my confusion of which I was striving to find the solution. Can you tell me some good resources for Cryptocurrency working? Having code as well about how to create own platform
    – Thunder
    May 8, 2021 at 15:47

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