This is a question that often causes confusion. Here’s a quick explanation!
How does Bitcoin work?
How does Bitcoin work? The basics for a new user for Bitcoin
As a new Bitcoin user, you can get started without understanding the details. Once you have installed Bitcoin wallet on your mobile phone, it will generate your first Bitcoin and you can create more whenever you want. You can disclose your addresses to your friends so that they can pay you or vice versa.
Balances – block chain
The block chain is a public ledger on which the entire Bitcoin network relies on. All confirmed transactions are included in the block chain. This way, Bitcoin wallets can calculate balance and new transactions can be verified that are actually owned by the spender.
Transactions – private keys
A transaction is a transfer of value between Bitcoin wallets that gets included in the block-chain. The Bitcoin wallets keep a secret piece of data called a private key, which is used to sign amounts, providing proof that they have come from the owner of the bitcoin wallet.
Processing – mining
Mining is a distributed system that is used to confirm transactions by including them in the block chain. It enforces chronological order in the block chain, protects the neutralization of the bitcoin chain block network, and allows computers to agree on the state of the confirmation, transactions must be packed in a block that fits very strict cryptographic rules that will be verified by network.
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This is only a very short summary of the system. If you want to get into the details, you can read the system’s design, read the developer documentation, and explore the Bitcoin definition.
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