Bitcoin (BTC) is a cryptocurrency that was launched in 2009 by an anonymous person/s only known by the name Satoshi Nakamoto. Satoshi created only 21 million Bitcoins and that is the quantity that shall ever exist in the Bitcoin ledger.

Bitcoin is a peer-to-peer technology designed to operate without a centralized authority such as a bank. As an open-source digital currency, it is public and nobody controls it. Therefore, anyone, including you, can take part by purchasing the coin or mining.

Bitcoin works on a public ledger, also called Blockchain, where transactions are run and stored. The ledger consists of progressive blocks of information that are permanent, indestructible and verifiable. This means that once a transaction has been completed, it cannot be reversed whatsoever. To demonstrate how Bitcoin works, here is a closer look at a completed transaction. Note that both the sender of Bitcoins and recipient must be in the Bitcoin network on the best bitcoin sites.

When a person initiates a transaction to send a Bitcoin, he has to enter the recipient’s public address in his wallet. The Bitcoin system generates a complex puzzle that miners (nodes spread in the Bitcoin network) have to solve in order to have a chance to confirm the transaction and add a new block into the public ledger. It is a race that uses proof of work (POW) consensus algorithm. If you are first to get the puzzle right, you are rewarded with some Bitcoins.

Miners confirm whether you have ample Bitcoins to spend. Once the transaction is confirmed, the Bitcoins you sent will be deducted from your wallet and added to the recipient wallet.