How Bitcoin Works — The First Blockchain

Bitcoin, created by the pseudonymous Satoshi Nakamoto in 2009, was the first practical implementation of a public blockchain. It solved a problem that had stumped computer scientists for decades: how do you prevent digital money from being spent twice without a central authority?

The Double-Spend Problem

Digital files can be copied infinitely. Without a bank to track balances, who stops someone from spending the same digital coin twice? Bitcoin’s answer is a public ledger where every transaction ever made is visible to everyone, and the majority of the network must agree that a transaction is valid before it is recorded.

A Bitcoin Transaction, Step by Step

1. You broadcast a signed transaction to the network: “I send 0.1 BTC to address X”
2. Nodes (computers running Bitcoin software) receive and validate the transaction
3. Miners compete to bundle valid transactions into a block by solving a computational puzzle (Proof of Work)
4. The winning miner broadcasts the new block; the network accepts it and the chain grows
5. After ~6 confirmations (~1 hour), the transaction is considered irreversible

Key Numbers

Relevance to Nepal

Nepal receives over NPR 1.2 trillion in remittances annually — around 25% of GDP. Bitcoin and the Lightning Network are being used in remittance corridors (especially US → Nepal, Korea → Nepal) to cut transfer fees from 5–8% to near-zero. Understanding Bitcoin is understanding an alternative financial rail already in use.