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How Bitcoin Works


Bitcoin is attractive to many people, and if you're interested in it, you should understand the basics of how it works.

This guide offers essential information you don't want to miss.

The Basics

To understand how Bitcoin works, the first thing to keep in mind is what Bitcoin actually is. It's a digital asset, which is protected by a technology called the blockchain.



Unlike regular currencies, Bitcoin is decentralized, meaning that it doesn't rely on banks or the government to function. 

Bitcoin started in 2008, and although there are hundreds of cryptocurrencies now, it's still the largest and the most popular option.



People who are involved in the trading market can buy or sell Bitcoin through peer-to-peer exchanges, crypto purchases, etc. Instead of buying and selling, others mine or trade using online platforms like

The Blockchain

As it was mentioned before, the blockchain is the protocol that protects Bitcoin. This concept refers to information blocks on a single chain, which are in chronological order. 

Since this technology protects the data, there is no need for intermediaries and there's a world of new possibilities where third parties are no longer relevant.

Consequently, some experts believe that the most impactful aspect of Bitcoin is blockchain technology.


Bitcoin offers individuals additional advantages when it comes to transactions. Blockchain technology is decentralized, so there are no intermediaries, and transaction fees are usually very low.

Therefore, each time someone has to do a Bitcoin transaction, they might have to pay a very low fee, and this applies to everyone, including people doing international transactions.

At the same time, the blockchain is immensely secure, so people can do transactions without worrying about fraud. 


Storing Bitcoin is yet another aspect to consider when someone is interested in cryptocurrencies. 

When you own Bitcoin, you need keys and wallets to store it, access it, and make transactions. Keys allow you to receive and send money, whereas wallets let you safely store it.

Essentially, you have two different keys when owning Bitcoin, and you can have two types of wallets as well.

The public key is similar to a username that you give others when you want to receive Bitcoin, and the private key is like your access password. Each time you want to make a transaction, you need to use the private key, which is what makes it so secure – no one has this key but you.

Additionally, there are two types of wallets: hot and cold ones. The difference is simple – hot wallets are connected to the internet, and cold ones are not. Thus, the first type is more vulnerable to snoopers and hackers.


In the world of Bitcoin, people often choose different paths. Miners, for example, have a specific job – they process every single transaction and secure the network.

To do this, Bitcoin miners have to solve immensely complicated puzzles, which is very time-consuming. Consequently, they often use software to make the job easier.

Miners earn specific amounts of Bitcoin for each transaction they process, and that's the attractive aspect of this activity.


Unlike miners, traders buy Bitcoin and other cryptocurrencies. To earn the assets they want, they must sell tokens according to their predictions on the market.

Traders use different strategies to earn Bitcoin and other cryptos, and they often have to know a lot about the market to understand what they should do.


Bitcoin started in 2008 and it works due to a technology called the blockchain. Since it's decentralized, it has many benefits. People interested in Bitcoin are often miners or traders.


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