How does Bitcoin Work

Bitcoin logo with Blue background with other cryptocurrencies

A Bitcoin, in essence, is a fragment of data that exists in an ever-growing digital record keeping system called a ‘blockchain‘. Each person who owns a ‘wallet’ is in charge of their own little slice of this record keeping system.

Understanding the basics of blockchain technology will be of great help you if you don’t already know the basics – good thing we made a super simple overview article on it! 😉

green ones and zeros on a black background

Bitcoin’s blockchain is stored as data between hundreds of thousands of different computers around the world, resulting in a decentralised payment network away from the control of any one authority.

Decentralised network over a world map at night time

When Bitcoin is sent from A to B, the blockchain is simply transferring ownership of the data that represents a Bitcoin from owner A to owner B.

Bitcoin’s are best represented as entries into a blockchain that’s access permission can be transferred to others.

Peer to Peer transactions graphic

Since there is no central authority at the heart of Bitcoin, there needs to be a way where the network can authenticate and add new payment entries into the system in an organised and efficient manner – without the need for one network leader.

This is the role of a Bitcoin Miner, and you can find a simple rundown by clicking here.

Bitcoin Miners mining bitcoin in a mine shaft infographic

The possibilities of decentralised digital payment systems are profound, and the only thing you need to partake in this new economy is your own cryptocurrency wallet.

Bitcoins to NZD or NZD to Bitcoin image

If you are new to cryptocurrency and you are looking to get involved in the action, We’ve got your back. 😎

Click here to buy Bitcoin and 57+ other cryptocurrencies instantly at the best rates in New Zealand