Bitcoin is a digital currency born on the Internet. There are no physical bitcoins, and none of it can ever leave the blockchain it’s coded into, but you can send it and spend it. So how does Bitcoin actually work?
How Bitcoin Works
Bitcoin makes transacting value as easy as sending an email or text. It is Internet money that can only be transacted within the Bitcoin network.
At the core level of transacting, you type in somebody’s public address, type in the amount of bitcoins, or satoshis, and click send. The transaction will usually take a few minutes, and it will definitely go to the address you sent it to. In fact, it cannot not go to that address.
At a basic level, Bitcoin is a ledger with account numbers and balances. If Bob sends Alice two bitcoins, his balance goes down by two and Alice’s will go up by two.
There’s no government issued money, gold, or anything backing these numbers that represent Bitcoin’s ledger. It’s just people’s belief that the numbers on the ledger are worth something and in the system that prevents unfair changes.