How It Works: The Blockchain
Imagine a digital ledger that is shared across thousands of computers worldwide. Every time a transaction occurs, it is broadcast to the network. "Miners" use powerful hardware to verify these transactions and group them into "blocks." Once a block is added to the chain, it is virtually impossible to alter.
This process, known as Proof of Work, ensures that the network remains secure without needing a middleman like a bank. It is the first time in history that humans have achieved digital scarcity.
Key Concept: Decentralization
"The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust."
— Satoshi Nakamoto
The Halving: Built-in Deflation
Every four years, the reward that miners receive for securing the network is cut in half. This event, known as "The Halving," reduces the rate at which new Bitcoins are created. This programmatic supply shock is one of the primary reasons many investors view Bitcoin as "Digital Gold."
To learn more about the technical details of mining and consensus, visit our Fundamentals Guide.