How does Bitcoin work?
Bitcoin works by recording transactions in batches called blocks, which are linked together into a chain. A network of computers agrees on the order of these blocks, and that shared agreement is what makes the record trustworthy.
The moving parts
Three things work together: addresses (where coins are recorded), keys (the secret that authorizes spending), and the network (the computers that check and store every transaction). When you send Bitcoin, your wallet uses your key to sign the instruction, broadcasts it, and the network verifies it before adding it to the ledger.
Blocks and the chain
- Transactions waiting to be processed sit in a shared queue.
- Periodically, they are gathered into a block.
- Each block is cryptographically linked to the one before it, forming a chain that is extremely hard to alter after the fact.
- Once your transaction is in a block and more blocks follow, it is considered settled.
Who keeps it honest
Bitcoin uses a process called proof of work, where computers expend real effort to add the next block. This makes rewriting history prohibitively expensive, which is what lets strangers trust the same ledger without a central authority.
Knowing the basic mechanics helps you understand why transactions take time to confirm, why fees exist, and why a confirmed transaction can't simply be reversed.
Imagine a notary stamping pages into a permanent book, one page at a time, where each new page references the previous one. Tearing out or editing an old page would break every page after it — so nobody can quietly do it.
- A transaction is not final the instant you send it; it needs confirmations.
- Because the ledger is permanent, mistakes such as a wrong address generally cannot be undone.
- Network congestion can make transactions slower and more expensive at busy times.
Practice in the Wallet Simulator
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Last reviewed 2026-06-25. This topic can change over time; always confirm current specifics from primary sources.