Crypto · 2 MIN READ
Bitcoin & blockchain: start with the basics
A practical introduction to the network, the ledger and what a Bitcoin transaction actually does.
Bitcoin is a digital payment network with no single organisation maintaining its transaction record. Its native asset, bitcoin, can be transferred between addresses. Understanding the network starts with three ideas: a shared record, digital signatures and rules for confirming transactions.
A shared transaction record
The blockchain is a public history of transactions grouped into blocks. Network participants can check that a transaction follows the rules, rather than relying on one company’s private database. The record is public, but an address alone does not reliably tell you who owns it. Public visibility should not be confused with complete anonymity.
What a wallet actually does
A wallet helps manage the keys needed to authorise transfers. A private key is used to sign a transaction; the network checks that signature. The coins do not live inside a physical device in the way cash sits in a pocket. The device controls access to the relevant keys.
Confirmation takes a process
Bitcoin uses mining to add valid transaction blocks. A submitted transaction can wait before inclusion, and a first confirmation is not the same as a guarantee against every possible risk. Fees and confirmation conditions can change with network activity.
Knowing how a transfer works is separate from knowing what the asset is worth. A functioning payment network does not remove price volatility or the risk of losing access to a wallet.
Further reading
Bitcoin.org — How Bitcoin works
Bitcoin.org — Protect your privacy
