Bitcoin is an intangible form of currency that exists on the internet. It is not centralized and therefore operates outside the parameters of local authorities and banks.

There is a public ledger that documents all Bitcoin transactions and stores the data pertaining to them on servers known as nodes. These servers are located all over the world. Ownership of bitcoins can be verified across all servers.

Because you cannot actually touch Bitcoin and it doesn’t get printed out like fiat money, it’s easy to be confused on where it comes from and how it’s ‘mined’.

Simply put, they are mined out of the system. It is referred to as mining because, like other natural resources, there is a predefined amount of Bitcoin available. Technically, mining is adding the data from transactions onto a blockchain. Miners are vital to the network because they maintain the integrity of all payments and receipts. They use powerful computers to solve complex mathematical problems every ten minutes. Once the problem is solved, a block of all the latest confirmed transactions is added to the chain. Miners are rewarded a block of bitcoin for every problem they solve. The more miners there are, the faster transactions can be validated.

Because of Blockchain technology, having Bitcoin is safer than leaving your money in the bank. It’s no secret that banks tend to be corrupt and have had several banking catastrophes. Bitcoin cannot be forged and unless you share your wallet’s password, it's virtually impossible for you to lose track of it.

The bitcoin blockchain is an open ledger that is basically run by a network of unknown people. Historically, security models are based on concealing information and keeping people out. Bitcoin's security model is based on letting people in. It works because of self-interest. Each user is so focused on gaining that they aren’t worried about what another user is doing. People can access shared and updated records without having to communicate with one another.

If you are in possession of Bitcoin, you’re essentially in possession of a private key. A private key is one half of a digital signature that signifies that you own a Bitcoin. The other half of the key is public and is stored in the blockchain. Each block carries numerous transactions. Every transaction refers to a transaction that came before it.

When you want to make a purchase using Bitcoin, your request is broadcast and that request is received by all the computers on the peer-to-peer network. The owners of these computers are called miners. Miners collect requests and put them into a block. They then run the latest block and its predecessor through hash functions. Each miner has ten minutes to solve a cryptographic puzzle. Once it’s solved, it gets added as the latest block at the end of the chain and the miner broadcasts it to their peers who verify it. The first miner to solve the puzzle gets rewarded with some Bitcoin.

The main advantage of having miners is that it beefs up security. The puzzles that the miners solve increase in complexity each time. So, every time a new block is added on to the chain it acts as a barrier for the blocks before it. Trying to tamper with a block is not easy. If a person wants to tamper with one, they have to be fast enough to change the information in every block that comes after it too. This all has to happen before any updates are made to the chain.

Because every miner is out to protect their own interests, the blockchain will always remain secure and functional.