Under the hood: how does Bitcoin actually work?

Blockchain, blocks, mining, proof of work, public and private keys — the essentials, with no jargon.

sommaire · 6 sections

In the first article we saw that Bitcoin is a giant ledger shared between thousands of computers. How is this ledger maintained without anyone being able to cheat? That’s what we’ll cover here, no jargon.

The blockchain: a ledger broken into pages

A ledger is a list of transactions. Bitcoin does exactly that, but instead of adding transactions one by one, it groups them into blocks, roughly every 10 minutes.

Each block contains:

  • a list of recent transactions,
  • a cryptographic link to the previous block (a mathematical “fingerprint” of the block before),
  • a proof of work (more on that).

Hence the name: block-chain, a chain of blocks. Each block references the previous one. Modifying a past block would change its fingerprint, which would invalidate all blocks after it. That’s what makes the ledger tamper-resistant: the further back you go, the more locked-in it is.

BLOCK #842prev:9a…f2TRANSACTIONSnonce:38,291hash:7e…11BLOCK #843prev:7e…11TRANSACTIONSnonce:84,932hash:4c…0dBLOCK #844prev:4c…0dTRANSACTIONSnonce:12,740hash:each block's hash becomes the next block's “prev” — that's the chain
Each block carries the previous block’s hash — tampering breaks the whole chain forward.

Nodes: who keeps the book?

The book isn’t hosted on a central server. It’s copied identically onto tens of thousands of computers called nodes, distributed around the world. Anyone can run a node from home — it’s open-source software.

When you send a transaction, you announce it to the network. Nodes pass it along to each other. A valid transaction eventually gets included in a block, and from then on, everyone has it in their copy of the book.

Mining: who decides what goes in the next block?

Here’s the tricky part. If anyone can write to the book, what stops a clever person from writing “Alice sends me 1000 bitcoins” without Alice’s consent?

First, cryptographic signatures (we’ll get there). But mostly: the right to add the next block has to be earned.

Every 10 minutes or so, specialized computers called miners compete. The challenge: find a number that, combined with the transactions to be included, produces a mathematical fingerprint starting with a certain number of zeros. There’s no shortcut — you have to try billions of trillions of combinations. That’s Proof of Work.

Whoever finds it first wins:

  • the right to add their block to the chain,
  • a reward in bitcoins (3.125 BTC as of 2026, after the 2024 halving),
  • the fees paid by the included transactions.

This competition costs electricity. That’s on purpose: it makes rewriting history (redoing the whole chain faster than the entire network) economically absurd.

Your accounts: they’re your keys

On Bitcoin, you don’t have an account in the banking sense. You have cryptographic key pairs:

  • A public key, which acts as an address. You can share it. It’s like a bank account number.
  • A private key, which signs transactions. This is your absolute secret. Anyone who has it can spend your bitcoins. Anyone who loses it loses their bitcoins forever.

When you send 0.1 BTC to a friend, your wallet uses your private key to produce a cryptographic signature proving that you (and only you) authorize this transaction. Nodes verify the signature and accept — or not — the transaction in the next block.

That’s the logic replacing the bank: no one is needed to validate that you own those bitcoins — the mathematical signature proves it.

ALICE (sender)NETWORK (verification)transaction0.1 BTC → Bobprivate key(absolute secret)functionSIGN ( tx, private key )signature3a4f…b8e1tx + signature received0.1 BTC → Bob ·3a4f…b8e1public key(shared openly)functionVERIFY ( tx, sig, public key )✓ valid signaturethe signature proves Alice (and only Alice) authorized this transaction
The private key signs, the public key verifies — the bank becomes unnecessary.

An analogy to tie it together

Imagine a shared notebook copied identically across thousands of people worldwide:

  • Anyone can read the notebook (transactions are public).
  • To write a transaction, you have to sign with your personal stamp (your private key).
  • Continuously, every participant tries to open a combination safe whose number of possible codes is astronomical. There’s no shortcut: you have to try billions of codes per second. The first to crack it earns the right to add the next page to the notebook and finds a reward inside. The more computing power you have, the higher your odds of winning.
  • The safe is smart: every 2,016 safes opened (~14 days), it adjusts the length of the combination so that, no matter how many people are trying (ten or ten million), it takes on average 10 minutes to open. That’s what keeps the notebook’s pace stable over time.
  • Each page references the previous one at the top: modifying an old page breaks the entire chain after it.

It’s deliberately simplified, but the essence is there.

What you don’t need to understand

Good news: to use Bitcoin, you need none of this. Like the internet — you send emails without knowing TCP/IP. You install a wallet, get an address, use it. The rest is transparent.

But knowing the basics protects you: it helps you spot scams (“send us your private key to recover your funds” — never, ever), and make informed decisions about where to store your keys.


Next → Why does Bitcoin have value?

This article is not investment advice.

Series · Understanding Bitcoin in 5 articles 40% · 2/5
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nicolas
// solo writer

I write this blog in French (translated to English), roughly one article per week. The goal isn't to make you trade — it's to give you the tools to decide on your own.

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