How does Bitcoin work?

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  • How does Bitcoin work?

Bitcoin is underpinned by blockchain technology. The blockchain is a decentralised, electronic database, also called a distributed ledger—the ledger stores all the transaction details within the Bitcoin Network. The network consists of over a million computers called nodes. A node is a computer connected to other computers which follows rules and shares information. A ‘full node’ hosts and synchronises a copy of the entire Bitcoin blockchain.

Each node mathematically verifies each transaction which is then stored in a block. When a block becomes full of transactions, it gets appended to the Blockchain, an infinitely long history of all the previous transactions. You can think of blockchain as similar to a giant shared bank statement or transparent audit trail of all transactions since the Bitcoin Network began that everyone can access in real-time.