Syntalium Wiki
How Does Bitcoin Work?
TL;DR
Bitcoin uses proof-of-work to secure transaction ordering and enforce predictable issuance without central control.
Clear explanation
Bitcoin nodes validate transactions under shared consensus rules, while miners compete to add new blocks.
Proof-of-work creates economic cost for rewriting history, supporting settlement integrity.
Confirmation depth increases confidence, which is why professional desks define confirmation policies by transfer size.
Technical example: transaction lifecycle
A treasury desk sends BTC to an exchange and waits for six confirmations before final booking.
- Create and sign transaction from UTXOs.
- Broadcast transaction to mempool.
- Wait for mined block inclusion.
- Track confirmation depth before crediting funds.
ASCII model
UTXO selection -> Signed transaction -> Mempool -> Mined block -> +confirmationsBitcoin operational components
| Component | Function | Operational implication |
|---|---|---|
| Nodes | Validate and relay | Consensus integrity relies on broad participation |
| Miners | Secure ordering | Hashrate affects attack cost |
| Wallets | Sign transactions | Custody controls determine safety |
Internal links
- BTC market context
Frame BTC execution decisions with regime and score context.
- Verify market snapshots
Validate historical context used in BTC trade review.
- What is cryptocurrency
Return to core digital asset concepts.
- What is crypto volatility
Understand volatility regimes that drive BTC risk.
FAQ
Why does confirmation time vary?
Block discovery is probabilistic and mempool congestion changes inclusion speed.
Can confirmed transactions be reversed?
Practically no, absent extraordinary chain reorganization events.
Is mining the same as validation?
No. Nodes validate rules; miners compete to append blocks.