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My Crypto Guide
Module 3 of 16

Micro Lesson · 4–7 minutes

How It Works

Bitcoin works by recording transactions on a shared public ledger. The network checks the rules, groups transactions into blocks, and adds those blocks one after another.

Transactions Blocks Public ledger Verification
This is Module 3 of 16. The goal is to understand the basic flow of how Bitcoin moves and gets recorded without getting buried in jargon.

Step 1 of 7 · Big picture

Bitcoin works like a shared record book

Imagine a record book that is copied across many computers around the world. Instead of one bank keeping the official version, the network keeps matching copies.

When someone sends Bitcoin, the network updates that record book according to agreed rules.

Simple way to think about it: a public ledger shared across many computers.

Step 2 of 7 · Sending

A transaction is a message that says where the Bitcoin should go

When you send Bitcoin, your wallet creates a transaction. That transaction says which bitcoin is being spent and which address should receive it.

  • You create the transaction: usually with a wallet app or device.
  • The network receives it: many computers see the same transaction.
  • The rules are checked: the network makes sure it is valid.
In plain English: “I want to send this amount from my wallet to that address.”
A transaction is the starting point.

Step 3 of 7 · Grouping

Transactions are grouped into blocks

Bitcoin does not usually add each transaction one by one forever in a loose list. Instead, transactions are grouped together into blocks.

Those blocks are added in order, which is why people call it a blockchain.

  • Many transactions go into one block.
  • Each new block connects to the one before it.
Blockchain = a chain of blocks linked together in order.

Step 4 of 7 · Verification

The network checks whether transactions follow the rules

Before transactions are accepted into the blockchain, the network checks things like whether the sender is allowed to spend those funds and whether the same bitcoin is being spent twice.

The system works because the rules are checked openly.

Step 5 of 7 · Finalising

Once a transaction is in a block, it starts getting confirmations

When your transaction gets added to a block, it has its first confirmation. As more blocks are added after it, confidence grows that the transaction is final.

  • Waiting: the transaction is seen by the network.
  • Included in a block: first confirmation.
  • More blocks added: stronger confirmation.
That is why wallets often show pending first, then confirmed later.
Confirmations help show how settled a transaction is.

Step 6 of 7 · Recap

Bitcoin’s basic flow

  • A wallet creates a transaction.
  • The network checks the rules.
  • Transactions are grouped into blocks.
  • Blocks are added to the blockchain.
  • Confirmations build over time.
Try this: explain Bitcoin as “a public shared record that updates when valid transactions are added in blocks.”
You’re ready for a quick check.

Step 7 of 7 · Quick check

Which answer best explains how Bitcoin works?

Wrap-up

Nice work! 🎉

You now understand the basic flow of how Bitcoin works: a transaction is created, checked by the network, grouped into a block, added to the blockchain, and strengthened by confirmations over time.

Score: 0/1
Next lesson: Your First Wallet — what a wallet actually does and how it helps you send, receive, and control Bitcoin.