Bitcoin operates on a technology called blockchain, which is a decentralized digital ledger that records all transactions across a network of computers. When a transaction is made, it is grouped with other transactions into a “block” and added to a chain of previous transactions, forming a continuous and unalterable record. This process is secured by cryptographic algorithms, ensuring that it cannot be changed once a block is added. Miners, who are participants in the network, use powerful computers to solve complex mathematical problems that validate these transactions. In return for their efforts, miners are rewarded with newly created bitcoins, which incentivizes them to maintain the network’s integrity.
Each Bitcoin transaction is verified by the network through a process called mining, which involves solving cryptographic puzzles. This ensures the transaction is legitimate and prevents double-spending, where the same Bitcoin could be used more than once. Bitcoin wallets, which store users’ private keys, are used to sign transactions, proving that the transaction comes from the wallet’s owner. Once verified, the transaction is added to the blockchain, making it publicly visible and immutable. This decentralized system eliminates the need for intermediaries like banks, allowing for peer-to-peer transactions that are secure, transparent, and resistant to censorship.
