How Does Bitcoin Work?
In case you’re wondering how Bitcoin works, here’s a high level overview to wet your appetite. At its core, Bitcoin has 4 main parts: Addresses, the Block Chain, Transactions, and Miners.
What are addresses?
What is the Block Chain?
What are transactions?
A Bitcoin transaction is like any other financial transaction (like credit card purchases or Paypal money transfers): it records the movement of funds from one account to another. Specifically a Bitcoin transaction updates the Block Chain to record the movement of bitcoin from one bitcoin address to another.
What are miners?
Miners are the “auditors” or “referees” of the Block Chain – they make sure all Bitcoin transactions are valid and that no one is tampering with the Block Chain. Specifically miners are Bitcoin users who have chosen to run special software which does the auditing automatically – in return for their efforts Miners are given bitcoin.