Investment oldman Sachs . . . Management How Do Miners Process Individual Transactions? Division Illustrative Schematic of a Bitcoin Transaction . : Step 2: Miners Verify the Transfer Request and add Step 3: Block Containing Bob and Alice’s Step 1: Bob wants to\pay Alice 0.5 BTC it to the next block Transaction is Added to the Blockchain & Vv Bob Alice e e Bob owns 1BTC Vv —_> —_—_> Bob wants to pay Previous transaction New transaction Alice 0.5BTC y in which Bob was J paid 1 BTC Dees Bop ve J eS ae M _ _ Bob has 1BTC Se eens | Bob owns 1BTC 1) Before sending any bitcoins, Bob must hold bitcoins Vv to Alice wo : : Bob wants to pay Bob wants to pay n Eis Wallet fem a previous Transaclish (or by geal IS j Blige SSE0C 1) Miner B happens to be the first to solve this block solving a block to earn the mining reward). Does Bob have [am Does Bob have [iM and adds it to the blockchain. Miner B collects 12.5- 0.5BTC?? - 0.5BTC?? , bitcoin reward 2) Bob creates a new transaction in which he pays 0.5 Pes! P Yes! , BUG fet ints t BTC) te.fAlices 2) If Bob’s transaction is included the block, Alice : ranster : ranster H H H 3) Bob broadcasts this transaction to the network for to Alice to Alice meaner owner of O28 BTG, whieh will register validation and inclusion in the blockchain. , = Consensus transaction validation creates a book of record for all transactions that have ever occurred. — Transactions may only occur if they are supported by evidence from previous transactions. — To send bitcoins, an owner’s wallet uses its private key to prove ownership of the referenced bitcoins. » Transaction processing typically take 10-20 minutes, but can take up to 18 hours if the network is congested. Source: Investment Strategy Group. 7 HOUSE_OVERSIGHT_025670