How Does Bitcoin Work? Complete Guide
📋 In Brief (TL;DR)
- Bitcoin works through the blockchain, a decentralized digital ledger shared among thousands of computers
- Each transaction is verified by miners who solve complex calculations (Proof of Work)
- Once validated, a transaction is irreversible and permanently recorded in a block
- No central authority: the network operates peer-to-peer, without banks or intermediaries
You’ve heard about Bitcoin, but you’re wondering how this digital currency actually works? This guide explains, step by step, the mechanisms that allow Bitcoin to exist and secure billions of euros in transactions every day.
What Is the Operating Principle of Bitcoin?
Bitcoin is a peer-to-peer electronic payment system that allows sending money directly from one person to another, without going through a bank. This is the definition given by Satoshi Nakamoto, the anonymous creator of Bitcoin, in his white paper published in 2008.
In practice, Bitcoin rests on three fundamental pillars:
- The blockchain: a public ledger that records all transactions
- Cryptography: mathematical techniques that secure exchanges
- The decentralized network: thousands of computers that verify and validate transactions
What Is the Bitcoin Blockchain?
The blockchain is a digital ledger that chronologically records all Bitcoin transactions since 2009. Imagine a large accounting book, shared simultaneously among thousands of computers worldwide, that no one can falsify.
Each “block” in the blockchain contains:
- Approximately 2,000 to 3,000 transactions
- A timestamp (precise date and time)
- A cryptographic fingerprint (hash) of the previous block
- A unique number called “nonce”
It’s this connection between blocks that makes the blockchain nearly impossible to breach: modifying a past transaction would require recalculating all subsequent blocks, which would demand computing power greater than that of the entire network.
How Does a Bitcoin Transaction Work?
A Bitcoin transaction takes place in 4 steps: creation, broadcast, validation, and confirmation. The process typically takes between 10 minutes and 1 hour.
Step 1: Transaction Creation
When you send bitcoins, your wallet creates a message containing: the sender’s address, the recipient’s address, the amount, and your digital signature.
Step 2: Network Broadcast
Your transaction is sent to all nodes on the Bitcoin network. It enters the “mempool,” a queue of transactions awaiting validation.
Step 3: Validation by Miners
Miners select transactions and group them into a block. They must then solve a complex calculation to validate this block.
Step 4: Confirmation
Once the block is validated, your transaction is confirmed. As time passes, it receives more “confirmations” (new blocks added), and becomes increasingly irreversible.
How Does Bitcoin Mining Work?
Mining is the process by which miners validate transactions and create new bitcoins. It’s the heart of the system that guarantees the security and decentralization of the network.
Miners run specialized computers (ASICs) that attempt to solve a mathematical problem: finding a number (nonce) that, combined with the block data, produces a hash starting with a certain number of zeros.
As a reward for their work, the first miner to find the solution receives:
- The block reward: currently 3.125 BTC (after the 2024 halving)
- Transaction fees: paid by users to prioritize their transactions
What Is Proof of Work?
Proof of Work (PoW) is the consensus mechanism that allows the Bitcoin network to agree on the state of the blockchain without a central authority. It’s what makes Bitcoin resistant to censorship and attacks.
The principle is simple: to add a block, a miner must prove they have expended energy (“work”) by solving a difficult calculation. This proof is easy for all other participants to verify.
Why this system works:
- Attack cost: falsifying the blockchain would cost billions in electricity
- Economic incentive: honest miners earn more than by cheating
- Decentralization: anyone can become a miner and participate
Why Is Bitcoin Secure?
Bitcoin is secured by the combination of cryptography, decentralization, and economic incentives. Since 2009, the network has never been hacked.
Three layers of security protect your bitcoins:
- The private key: a unique digital signature that only you possess
- The distributed network: thousands of nodes verify each transaction
- Immutability: a confirmed transaction can no longer be modified
The only way to “hack” Bitcoin would be to control more than 50% of the global computing power (51% attack), which would cost several billion dollars per day today. To secure your own bitcoins, the essential thing is to protect your private key.
How Many Bitcoins Exist and How Are They Created?
There will never be more than 21 million bitcoins. This limit is written into Bitcoin’s code and cannot be changed. It’s one of the elements that makes Bitcoin a scarce asset, comparable to gold.
In January 2026, approximately 19.8 million bitcoins are already in circulation. New bitcoins are created through mining, at a rate that halves every 4 years during the halving.
📚 Glossary
- Wallet: Application or device that stores your private keys and allows you to send and receive bitcoins.
- Miner: Network participant who validates transactions and secures the blockchain by solving complex calculations.
- Hash: Unique digital fingerprint generated by a cryptographic function. The slightest change in data produces a completely different hash.
- Node: Computer that stores a complete copy of the blockchain and verifies transactions.
- Mempool: Queue of transactions waiting to be validated by miners.
- Halving: Division by two of the mining reward, approximately every 4 years.
❓ Frequently Asked Questions
How long does a Bitcoin transaction take?
A Bitcoin transaction takes an average of 10 minutes to receive its first confirmation (1 block). For large amounts, it’s recommended to wait for 6 confirmations (about 1 hour) for maximum security.
Can you cancel a Bitcoin transaction?
No, a confirmed Bitcoin transaction is irreversible. This is a fundamental characteristic of the system. Before confirmation, it’s theoretically possible to cancel via a “Replace-By-Fee” transaction, but it’s complex.
Does Bitcoin consume a lot of energy?
Yes, Bitcoin mining consumes about 150 TWh per year. However, more than 50% of this energy comes from renewable sources. To understand this debate in detail, read our article on Bitcoin and the environment.
Who controls Bitcoin?
Nobody and everybody. Bitcoin is open-source software maintained by volunteer developers. Major changes require community consensus. No entity can unilaterally modify the rules.
How do I buy my first bitcoins?
The simplest method is to use a regulated platform (PSAN in France). Check out our complete guide to buying your first bitcoins.
📚 Sources
- Bitcoin: A Peer-to-Peer Electronic Cash System – Satoshi Nakamoto’s White Paper (2008)
- Bitcoin Developer Documentation – Official technical documentation
- Blockchain.com Explorer – Bitcoin blockchain explorer
How to cite:
Fibo Crypto. (2026). How Does Bitcoin Work? Complete Guide. Retrieved from https://fibo-crypto.fr/en/blog/how-does-bitcoin-work-complete-guide
