How Does Bitcoin Work?

Bitcoin works through a decentralized network of computers (called nodes) that follow the same open-source protocol. These nodes keep a shared ledger called the blockchain, which records every transaction ever made. Instead of trusting a bank to update balances, users rely on this distributed network to verify that transactions are valid and follow Bitcoin’s rules.

When someone sends Bitcoin, their wallet signs a transaction using a private key, proving ownership of the funds. This transaction is broadcast to the network, where miners collect it along with others into a block. Miners compete to solve a mathematical puzzle that secures the block; the winner adds it to the blockchain and receives newly minted bitcoin as a reward.

Because thousands of nodes verify and store the blockchain, no single party can tamper with it. The network’s consensus mechanism ensures everyone agrees on who owns what, without a central authority. This decentralized design is what gives Bitcoin its security, reliability, and trustless nature.