How a transaction gets into Cardano’s blockchain

When Alice sends 1000 ADA coins to Bob she uses her wallet. Bob will receive the coins in a few seconds. In the article, we will go through the whole process and explain what happens behind the scene in this scenario.

ADA coins belong to their owners

Cardano network is able to separate the ownership of ADA coins and the process that transfers the ownership from the security point of view. It must be ensured that only users can manipulate with their coins and nobody else including the network. Who is the network? Cardano is a peer-to-peer (P2P) network (client-client network). It means that it consists of many independent clients. There is nothing like a server or a centrum. Every transaction is broadcasted into the network and propagated by clients. Clients of pool operators are responsible for the insertion of transactions into a new block. The schedule of pools that will get the right to produce blocks is not known in advance. The network propagates transactions to all pools. A pool that becomes the slot leader can insert all received transactions into a new block. The new block is then broadcasted to the network in a similar way as transactions are broadcasted.

Everyone can install the client and participate in transferring transactions. Everyone can establish a Cardano pool. Many entities get in touch with transactions and it is easy to join this group. There must be a mechanism that prevents entities to modify transactions. Nobody, including pool operators, is able to do so. The reason is that users protect their possession of coins by cryptography. Only the owner of a private key is able to create and sign a transaction for a corresponding address. When a transaction is created then nobody is able to modify it since it is not possible to sign it without the possession of the private key. The private key is not compromised when it is used for signing a transaction. The same private key can be used more times in a row in order to spend coins from the address.

When Alice sends ADA coins to Bob then she signs a transaction. You can imagine the transaction like a message that says that 1000 ADA coins should be put into Bob’s address. The message must be signed by the private key. It is proof that Alice, as the owner of the public address…