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I am new to bitcoin. I have some fundamental questions.

  1. If bitcoin does not have any centralized entity controlling it, who provides the infrastructure for the trades to happen? Does this has something to do with mining?

  2. Another issue comes to mind is, in case if full anonymity of bitcoin transactions, how can someone create trust between merchant and customer. For example, if I order something online using BTC and don't receive the goods, how can I make sure I will get justice in terms of refund etc.

marked as duplicate by Murch, Salvador Dali, Stéphane Gimenez, cdecker, Dr.Haribo Nov 28 '13 at 22:12

This question has been asked before and already has an answer. If those answers do not fully address your question, please ask a new question.

  • 1
    Hey, welcome to Bitcoin.SE. SE works much better if there is only one question or very closely related questions in one post. Please check out How to Ask, if you haven't seen it yet. Also, please try to research your questions first. Part of your question has answers already: See What exactly is mining?, Who controls the Bitcoin software?. – Murch Nov 26 '13 at 0:34
  • Two different questions in the same post. – Stéphane Gimenez Nov 26 '13 at 8:40

1.) Yes, when mining each block validates all of the transactions that have occurred since the last block. This is also where transaction fees go, if you choose to include one the device that mines the next block will earn it in addition to the set reward for that block.
2.) There is not full anonymity between Bitcoin transactions, there is pseudo-anonymity which means that transactions can really be traced and a person can be tied to coins that they own if/when they are spent because the address that contains the coins becomes an input for the next transaction. The anonymity is pseudo because one person can control any number of addresses which only makes analysis harder but not impossible. When it comes to trusting a merchant I would say that you should use the same rules as you would when you enter your credit card information into a website. Ensure that sensitive personal information (shipping addresses, phone numbers, etc) is encrypted using SSL, that there is a valid contact for customer support etc, perhaps perform a whois on the site and see if the owner has public contact information. Most of all look for reviews and references of other customers experiences. This may be harder to do with some Bitcoin start ups but the Bitcoin talk forums often has information on businesses that are involved in the community.

Due diligence is the key to avoiding scams in the Bitcoin world.

  • Actually, In case of credit card, I can dispute the transaction and then the merchant has to prove the legitimacy of the transactions. Also, there is a bank/credit card company involved to get through the process etc. What is the process in case of bitcoin in this kind of scenarios. – Punit Soni Nov 25 '13 at 23:45
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    It would be up to the merchant to provide a refund or make the transaction right. Customers could also protect themselves using a third party escrow to ensure both parties are satisfied with the transaction before funds are finalized. – Mark S. Nov 25 '13 at 23:50

If bitcoin does not have any centralized entity controlling it, who provides the infrastructure for the trades to happen? Does this has something to do with mining?

Whoever wants to do something provides the infrastructure to do it. If you want to perform a transaction, you have to provide enough infrastructure to perform a transaction or use someone else's infrastructure. Miners provide the infrastructure to confirm transactions in exchange for the block rewards and transaction fees.

Another issue comes to mind is, in case if full anonymity of bitcoin transactions, how can someone create trust between merchant and customer. For example, if I order something online using BTC and don't receive the goods, how can I make sure I will get justice in terms of refund etc.

The same way you do with other currencies -- you pay through a provider that provides this service or you only make payments to people you trust. There are any number of Bitcoin escrow services.

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