Understanding the Flow for funds transfer

[Adarsh]

I have been reading on the bit coin and the block chain technology. I am keen to understand more about it, would really appreciate your help on it. Below are the few points if you could share some light on:

1. In case of funds transfer, lets say if I am sitting in country A and I want to transfer some funds to Someone in Country B, How does the flow take place?

2. How are the accounting entries passed ?

3. How are the blocks created and it is based on what factors ?

 

[TrevinHofmann]

1. Bitcoin is geographically agnostic. The block chain has no concept of your location. Your bitcoins are not "in" Country A. They are stored as outputs in the block chain. Your keys to redeem those outputs are stored in your wallet. To send them to a person in Country B, that person would create a Bitcoin address and send you this address. You would use your wallet to sign a transaction that pays to this address, and they would receive the funds.

2. Could you rephrase this question? I don't think I understand.

3. A block is essentially a group of transactions. To produce a valid block, miners first group unconfirmed transactions and then assign their specialized hardware to "mine" the block. The block is added to the block chain when found, and it adds to the global block chain ledger of transactions.

 

[Adarsh]

Thanks for your reply.
As far as first question is concerned, as per my understanding anyone can view the address. There might be a possibility that anyone else might try to use that address to get the funds. From security point of view and also lets say if I am Initiating a transaction to transfer funds to person B how does the payment is received only to person B and not anyone else. Is the verification done based on the private Key???

And in the case of Question 2, If I was to initiate a transaction through my bank , there would be accounting entries passed so in this case how are the accounting entries shown ??

 

[TrevinHofmann]

Bitcoin uses public key cryptography. A private key is generated and stored by your wallet. This private key is later used to "sign" a new transaction that uses funds sent to your address in a previous transaction. A public key is derived from the private key. It is shared when you redeem funds, and it can be used by anyone to validate the signature by the private key. An address that starts with a 1 is derived from the public key, and it is shared with everyone when a payment is made to it.

Nobody can redeem funds with only the address or public key. They need your private key (which your wallet keeps secret) in order to sign a transaction that uses those funds.

All transactions are stored in the block chain. Anyone running a full Bitcoin node independently verifies every transaction. Some services exist (block chain explorers) that provide a more readable view of the block chain. Here are a few:

http://blockr.io

https://www.biteasy.com

https://insight.bitpay.com