A wallet creates a transaction by referencing unspent outputs, defining new recipients, and digitally signing the data with the sender’s private keys. No coins move yet.
Bitcoin works by combining cryptography, a public ledger, and a decentralized network that enforces monetary rules without relying on any central authority.
Transactions are verified by independent participants, recorded on a shared ledger, and finalized through consensus. No single party controls issuance, settlement, or access to the network.
A Bitcoin transaction follows a strict and predictable path. Each step is enforced by software rules and verified independently by the network. No single party controls the process.
A wallet creates a transaction by referencing unspent outputs, defining new recipients, and digitally signing the data with the sender’s private keys. No coins move yet.
The signed transaction is broadcast to nearby nodes. Each node checks validity before relaying it further. Invalid transactions are rejected immediately.
Valid transactions wait in a shared memory pool. Miners select transactions from this pool based on fee rates and network conditions.
A miner packages transactions into a block and competes to add it to the blockchain by solving a cryptographic puzzle. The first valid block is accepted by the network.
Each additional block built on top increases confidence. After several confirmations, reversing the transaction becomes computationally impractical.
Every step is verified independently by thousands of nodes. No trust is placed in any single participant. The result is a system where transactions are enforced by computation, not permission.
Bitcoin solves a problem most systems cannot. Thousands of independent computers agree on a single transaction history without trusting each other or a central coordinator. This agreement emerges from rules, incentives, and competition.
Miners expend real energy to propose blocks. This cost anchors the system in the physical world and makes rewriting history economically irrational.
Nodes follow the chain with the most accumulated work. Temporary forks resolve automatically without voting, coordination, or intervention.
The network retargets difficulty every 2016 blocks. This keeps block production stable regardless of how much computing power joins or leaves.
Bitcoin does not ask participants to trust miners, developers, or institutions. It asks them to verify rules and follow incentives. Consensus emerges from competition and mathematics, not authority.
Bitcoin’s monetary policy is not managed, debated, or voted on. It is enforced automatically by software that every participant can verify. These rules are executed continuously, without exception or discretion.
Bitcoin’s total supply is capped at 21 million units. This limit is enforced by every validating node. Any block that attempts to exceed this limit is rejected automatically by the network.
New Bitcoin is issued only through block rewards. The amount is known in advance and cannot be accelerated, delayed, or adjusted by any participant.
Approximately every four years, the block reward is cut in half by protocol rules. No meeting. No announcement. The change executes automatically.
Changing Bitcoin’s monetary rules would require near universal voluntary agreement across the network. Any incompatible change is ignored by existing nodes.
Bitcoin’s monetary policy does not depend on trust in people, institutions, or governments. It depends on verification. Every participant enforces the same rules independently. That is why Bitcoin’s supply remains credible.
Bitcoin security is not static. It strengthens as the network grows. Each new participant increases the cost of attack and deepens the incentives that protect the system.
As more miners join the network, the total computational power securing Bitcoin increases. Attacking the network requires matching this power, which becomes exponentially more expensive.
Miners earn rewards only by following the rules. Any attempt to cheat destroys the value of the very asset they are paid in.
Each confirmation increases the cost of reversal. After sufficient blocks, rewriting history would cost more than the value gained.
Thousands of nodes independently validate the rules. No geographic region or institution can unilaterally alter Bitcoin’s operation.
Bitcoin security compounds with time. Each block strengthens the past. Each participant raises the cost of attack. The longer Bitcoin operates, the harder it becomes to disrupt.
Bitcoin is not a product or a platform. It is a system defined by rules, incentives, and mathematics. Once those mechanics are understood, the system no longer depends on trust, reputation, or centralized decision making.
Start with cash. End with Bitcoin.