How Bitcoin works: Blockchain, mining and transactions explained

Bitcoin (BTC) is a decentralized digital network created to enable peer-to-peer payments and value storage without the need for banks or intermediaries. Its native currency, the BTC coin, is the unit of exchange on the network. People often refer to the coin in everyday use simply as "Bitcoin." However, technically speaking, Bitcoin is the name of the underlying network, while BTC is its cryptocurrency, i.e., a cryptographically secured form of digital money. 

Launched in 2009 by the pseudonymous creator Satoshi Nakamoto, Bitcoin was the first practical implementation of blockchain technology. The network is designed to be censorship-resistant, transparent and secured by advanced cryptography. To enable its functionality, Bitcoin relies on mining, a process that protects the network, validates transactions and issues new BTC coins into circulation. Together, the blockchain itself, the mining process and the way transactions are verified form the fundamental pillars of Bitcoin’s operational model.

In this beginner's guide to Bitcoin, we’ll explain the Bitcoin blockchain in plain language and break down the essentials of how Bitcoin works — including how Bitcoin mining works and how transactions are added to the network’s immutable ledger of records — and we’ll highlight why decentralization is such an important design choice for the platform. After reading this article, you’ll be able to confidently answer the following questions: 

• What is Bitcoin?

• How does the mining procedure work?

• How are Bitcoin transactions verified and added to the blockchain?

Key Takeaways: