How Bitcoin Works

Introduction

While you don’t need to know how Bitcoin works to use it, you may want to know why it works before you do.

Bitcoin is an Internet peer-to-peer currency system, that has no central bank or authority. Bitcoin has its own unit of currency, the bitcoin, that has no set value in relation to government-issued currencies – it is valued independently on the merits of its usefulness and scarcity.

Bitcoin is also a computer network of users and organizations that communicate and store information about Bitcoin address balances with each other over the Internet, primarily by running the original Bitcoin software on their computer.

The design of Bitcoin includes novel methods to transmit payments, to create and distribute new bitcoins at a known and limited rate, and to cryptographically protect a shared record of all past Bitcoin transactions.

In-Depth Topics

Bitcoin Addresses
The Wallet
The Bitcoin peer-to-peer network
Transactions
Blockchain
Mining
Transaction Fees