Bitcoin works by utilizing a decentralized ledger called the blockchain to record transactions. The blockchain is maintained by a network of computer nodes that work together to validate and process transactions.

Here’s how it works in detail:

1. Users broadcast it to the network when they want to make a transaction.
2. The network’s nodes validate the transaction, ensuring that the sender has sufficient funds and that the transaction follows the rules set by the network.
3. Once a group of validated transactions, called a block, has been created, the nodes compete to solve a complex mathematical problem to add the block to the blockchain.
4. The first node to solve the problem adds the block to the blockchain and is rewarded with newly minted bitcoins. This process is called “mining.”
5. The new block is broadcast to the network, and the process repeats, creating a blockchain containing a permanent and unalterable record of all transactions on the web.

Utilizing this decentralized ledger, Bitcoin eliminates the need for intermediaries, such as banks, to process transactions. Transactions are processed directly between users, making the system fast, secure, and inexpensive. The use of cryptography and the decentralized nature of the network ensures the security and integrity of the transactions.