We the participants
of the network
are the network.

There is no company, no headquarters, no one to ask for permission. Bitcoin is software and math, kept honest by the thousands of ordinary people who choose to run it. Below is a working map of how that actually happens, from a private key to a settled block.

See how it works ↓
FIG. 1 · SYSTEM SCHEMATIC ● LIVE
HOW BITCOIN WORKS
A peer-to-peer electronic cash system. Data flows left to right: keys sign transactions, the network relays them, miners commit them to the chain.
BTC / USD—
SUPPLY CAP21,000,000 BTC
BLOCK INTERVAL~10 MIN
BLOCK SUBSIDY3.125 BTC
✓ Wire labels ✓ Glossary
Tap a stage or any underlined term for details · Run transaction plays the flow, or Step moves one stage at a time.
01 · KEYSIDENTITY
PRIVATE KEY · 256-bit secret
k = 0x8f2a…c41d
↓ secp256k1 (one-way)
PUBLIC KEY
K = k · G
↓ SHA-256 then RIPEMD-160
ADDRESS
bc1q7x…e93k
A wallet guards your keys and backs them up as a seed phrase. The private key signs; lose the seed and the coins are gone for good.
SIGNS
▶
02 · TRANSACTIONUTXO MODEL
INPUTS · spend UTXOs
utxo #a4f2 · 0.80 ₿
+ signature
utxo #77c1 · 0.25 ₿
+ signature
→
OUTPUTS · new UTXOs
→ bc1qme… 1.00 ₿
locking script
→ change 0.0498 ₿
fee = Σ inputs − Σ outputs = 0.0002 ₿ → claimed by the miner
There are no account balances, only unspent outputs (UTXOs). A transaction consumes whole UTXOs and creates new ones.
BROADCAST
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03 · MEMPOOLWAITING ROOM
UNCONFIRMED TXS, SORTED BY FEE RATE · SAT/vB
tx #f81a42 sat/vB
tx #03bd18 sat/vB
tx #c2997 sat/vB
tx #5e401 sat/vB
The rows above illustrate the idea: unconfirmed txs sorted by fee rate, higher picked sooner. A block holds roughly 2,000 to 3,000 txs, so fees are a live auction for space.
SELECT BY FEE
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04 · MININGPROOF-OF-WORK
THE PUZZLE
SHA-256( SHA-256( header + nonce ) ) < target
nonce = 0✗ 9e41f2…
nonce = 1✗ 71cc08…
… × 10²²✗ …
nonce = 2,083,236,893✓ 0000…a3f1
Guessing is the only strategy: hard to solve, instant to verify. Difficulty retargets every 2,016 blocks to hold ~10 min. The winner earns the subsidy (3.125 ₿, halving every 210,000 blocks) plus all fees.
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GOSSIP: VALIDATE + RELAY
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SOLVED BLOCK
05 · P2P NETWORKNO CENTER
~21,000 reachable nodes
EVERY NODE, INDEPENDENTLY:
checks signatures & scripts
rejects double-spends of UTXOs
verifies each block's proof-of-work
relays valid data to ~8 to 125 peers
Rules are enforced by everyone, not decreed by anyone. An invalid block is simply ignored, no matter who mined it.
06 · BLOCKCHAINSETTLEMENT LAYER
BLOCK 958,401hash 0000…8c2e2,914 txs
←
BLOCK 958,402 · HEADER (80 bytes) prev_hash  0000…8c2e ← links to parent merkle_root 7d1f…a980 ← fingerprint of all txs time · bits (target) · nonce
←
BLOCK 958,403being mined…ETA ~10 min
TAMPER-EVIDENCE
Change any tx and its merkle root changes, so the block hash changes, so every later prev_hash link breaks. Rewriting history means redoing all that proof-of-work faster than the honest network.
CONSENSUS & FINALITY
If two blocks tie, nodes follow the chain with the most cumulative work; the loser is orphaned. Each block on top makes reversal exponentially harder. 6 confirmations ≈ settled.
GLOSSARY UTXO unspent transaction output, the coins themselves nonce the number miners vary to change the hash target the hash must fall below it; lower is harder merkle root one hash committing to every tx in a block sha256d · secp256k1 · bitcoin.org/bitcoin.pdf (2008)
TX · 1.00 ₿
01
FIG. 2 · COMMON MISCONCEPTIONS

Four things people get wrong

The diagram shows how Bitcoin works. These are the ideas about it that most often turn out to be backwards. Open each one for what is actually true.

Now do it for real
This page is the map. The beginner course is the guided walk through it, one step at a time, from setting up a wallet to making your first transaction.
Start the beginner course ▸
Hover highlights parts · click for a definition · Run plays the flow, Step walks it one stage at a time
operated by Bsecure ↗