How Bitcoin Works

Create and sign

A wallet selects spendable transaction outputs, names new destinations and signs the spend with the required keys. The signature authorizes the transaction without revealing the private key. <strong>Broadcast and validate.</strong> Peers relay valid transactions. Each node checks signatures, amounts, scripts and whether inputs were already spent. Valid unconfirmed transactions commonly wait in a node's mempool.

<strong>Mine and confirm.</strong> A miner assembles candidate transactions and repeatedly hashes a block header. When a valid proof is found, the block propagates and nodes independently verify it before extending their accepted chain. <strong>Build confidence over time.</strong> A confirmation means the transaction is in a block. Additional blocks add work above it, increasing the cost of reorganizing that history.

The appropriate wait depends on value, risk and context.

What this establishesWallets sign; nodes verify; miners order transactions.

Trace a transaction with change

A wallet controls a 120,000-sat output and needs to pay 70,000 sats. If the transaction fee is 500 sats, the wallet can create one 70,000-sat output for the recipient and one 49,500-sat change output for itself. The original 120,000-sat output is consumed completely. There is no remaining balance inside that old output. The fee is the difference between total inputs and total outputs.

Peers verify the authorization and arithmetic before relaying the transaction. A miner can include it only in a block that also follows the consensus rules. When nodes accept that block, the recipient output and change output become part of the UTXO set. This one example connects wallet selection, signatures, relay, mining, validation, fees, and confirmation without treating them as separate magic steps.

What this establishesBroadcast is not the same as confirmation.

A transaction's journey, step by step

Your wallet selects coins you control - earlier outputs - and builds a transaction that spends them to the recipient's address, with change back to you and the remainder left as a fee. It signs each input with the matching private key and hands the result to a few peer nodes.

Each node checks the signatures, confirms the inputs exist and are unspent, verifies the outputs do not exceed the inputs, and relays it. Within seconds it sits in thousands of mempools. A miner includes it in a block; that block is validated by every node; the transaction now has one confirmation, and each further block adds another.

What this establishesFinality strengthens as work accumulates.

Why nobody can cheat

Three checks, all independent, make fraud impractical. You cannot spend coins you do not control because every node verifies the signature against the public key the coins were locked to. You cannot spend the same coins twice because nodes track the unspent set and reject a second spend, and if two conflicting transactions race, only the one mined first survives.

You cannot rewrite history because changing an old block changes its hash and invalidates every block after it, which would require redoing more proof of work than the rest of the network can produce. Miners order transactions; they cannot invent or alter them.

The numbers behind the design

Blocks arrive every ten minutes on average because the difficulty adjusts every 2,016 blocks to keep them there. A block holds up to 4 million weight units, roughly 2,000–3,000 typical transactions, so the base layer settles a few transactions per second and prices block space by fee rate. The subsidy is 3.125 BTC per block until the next halving at block 1,050,000.

Six confirmations - about an hour - is the conventional threshold for large amounts because the chance of a reorganisation that deep is negligible against the network's current hashrate. None of these numbers is arbitrary, and each is checkable on a node or explorer.