Technology
How does Bitcoin work?
Bitcoin works as the first decentralized cryptocurrency, a network where people send digital coins without banks. Transactions are bundled into a blockchain and confirmed by 'miners' who compete to solve hard math puzzles, securing the system and earning new coins.
See it in motion.
Watch a 2-minute animated lesson that shows exactly how Bitcoin works.
Step by step
- 1It's the first and best-known cryptocurrency, launched in 2009.
- 2Transactions are recorded on a public blockchain.
- 3'Miners' confirm transactions by solving hard computations.
- 4Mining secures the network and releases new bitcoins.
- 5Its total supply is capped at 21 million coins.
Frequently asked questions
- How does Bitcoin mining work?
- Miners compete to solve a hard math puzzle; the winner adds the next block of transactions and earns newly created bitcoins plus fees.
- Why is there a limited number of bitcoins?
- Its rules cap the supply at 21 million to make it scarce, unlike traditional money that central banks can print more of.
- Is Bitcoin anonymous?
- Not fully — transactions are public on the blockchain under addresses, so it's pseudonymous and can sometimes be traced to people.