Overview
Bitcoin has no central bank or database administrator, yet payments still need to be authorized, checked, ordered, and recorded. Wallets, nodes, miners, and validating software each have different roles; no single participant is the whole Bitcoin system.
Think of It Like Sending an Email
A Bitcoin Transaction
Imagine Alice wants to send a fictional 50,000 sats to Bob. This is a high-level map; the Transactions lesson covers fees, mempools, and confirmations in more detail.
- Alice enters Bob's receiving destination and amount.
- Her wallet constructs and signs a transaction.
- Nodes independently verify and relay it.
- Valid unconfirmed transactions may wait in node mempools.
- A miner may select it for a candidate block using proof of work.
- Nodes verify the proposed block.
- If valid, it joins accepted blockchain history and Bob's wallet can detect the payment.
- 1Wallet creates and signs
- 2Transaction broadcasts
- 3Nodes validate and relay
- 4Mempool holds valid transactions
- 5Miner proposes a block
- 6Nodes validate the block
- 7Blockchain history gains confirmations
This is a simplified map: participants receive and validate information at different times, while shared rules coordinate the accepted history.
Interactive Learning
Bitcoin Transaction Simulator
Follow every step of a Bitcoin transaction from Alice's wallet to Bob.
What's happening?
Alice chooses Bob's receiving destination and a fictional amount of 50,000 sats in her wallet.
Alice Creates a Transaction
Alice chooses Bob's receiving destination and a fictional amount of 50,000 sats in her wallet.
What Are Confirmations?
Once a transaction is included in a valid block, it receives its first confirmation. Later valid blocks add confirmations, increasing confidence that the accepted history will continue without offering an absolute promise of irreversibility.
Why Wait?
Where each idea is explained next
This overview is intentionally a map. The following lessons examine each component in more detail.
Common misconceptions
Bitcoin is not run by one central server. Independent participants operate different parts of the network.
Miners do not approve transactions alone. Nodes validate both transactions and proposed blocks.
A wallet does not store bitcoin as a file. It manages keys used to authorize blockchain records.
Broadcast does not mean confirmed. Confirmation begins with inclusion in a valid block.
Nodes and miners are different roles. A node can validate without mining.
Key Takeaways
Wallets create and sign transactions.
Nodes independently validate and relay information.
Valid unconfirmed transactions may wait in mempools.
Miners propose blocks through proof of work.
Nodes validate proposed blocks.
Blocks form shared confirmed history.
Confirmations increase confidence over time.
Later lessons explain each component in depth.
Quick Quiz
Question 1 of 5
What is a wallet's main role?
How Bitcoin Works FAQ
Who runs Bitcoin?
Bitcoin is operated through many independent participants; no single central operator runs the whole system.
Does a wallet store bitcoin?
A wallet manages keys and helps create transactions. Bitcoin is represented by records on the blockchain, not stored as a file.
What is the difference between a node and a miner?
Nodes verify and relay transactions and blocks. Miners propose candidate blocks using proof of work, which nodes still verify.
What happens after I press Send?
Your wallet creates and signs a transaction, broadcasts it to nodes, and valid transactions may wait in mempools until a miner includes one in a block.
Is a broadcast transaction already confirmed?
No. Confirmation begins when a transaction is included in a valid block.
Why does Bitcoin need confirmations?
Later valid blocks add to the accepted history, increasing confidence that a transaction remains in that history.
Next: The Bitcoin Blockchain
The next lesson focuses on the Bitcoin blockchain—the shared record that organizes confirmed transactions into connected blocks.
Continue Learning
Explore the next ideas connected to this topic.
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