Bitcoin is a digital form of money that runs on a public network instead of a bank. You can send it to anyone, anywhere in the world, without asking permission from a company or government.
At the core of Bitcoin is a public ledger called the blockchain. Think of the blockchain as a shared spreadsheet that lists every transaction ever made. Thousands of computers around the world keep copies of this spreadsheet and agree on what it contains.
Bitcoin works with three basic parts:
- Addresses and wallets
You receive Bitcoin to a digital address, similar to an email address. A wallet is software or hardware that manages your addresses and the keys that control them. - Private keys and signing
Each address is controlled by a private key, which is a secret number. When you send Bitcoin, your wallet uses your private key to create a digital signature. This proves that you are allowed to spend those coins, without revealing your key. - Nodes and miners
Nodes are computers running Bitcoin software that check every transaction to be sure it follows the rules. Miners group valid transactions into blocks, compete using computing power (proof of work) and add blocks to the chain. As a reward, they earn new coins and transaction fees.
Because the network is decentralized, there is no single point of failure. The rules are enforced by software and economic incentives, not by a central authority.