What Is Bitcoin in Simple Terms?
Bitcoin is a form of digital money that runs on a shared network. No single company, bank, or government controls it. Instead, the rules are written in software, and many computers around the world keep the system running and check that transactions are valid. You can think of it as a payment system that works peer-to-peer: people can send value to each other directly, without needing a central intermediary to approve or process the transfer.
How Does Bitcoin Work? (The Basics)
A Shared Ledger Everyone Can Verify
Every Bitcoin payment is recorded in a public record. This record is often called a blockchain: a chain of blocks, where each block contains many transactions. The same record is copied on many computers, so no one can change past entries without the rest of the network agreeing. That makes the history of who sent what to whom transparent and hard to alter. New transactions are added to this record through a process called mining, where participants run software that helps secure and update the network.
Because the ledger is shared and open, anyone can verify that a transaction happened. You do not have to trust a single institution; you can check the data yourself or use tools that do it for you. No single party controls the ledger, which is one of the main design features of Bitcoin.
Sending and Receiving Bitcoin
To receive Bitcoin, you need an address: a string of letters and numbers that works like an account number. When someone sends Bitcoin to your address, the network records that transfer in the shared ledger. Once the transaction is confirmed, the balance associated with your address is updated. Sending works the same way in reverse: you enter the recipient's address and the amount, and the network records the transfer.
To hold and use Bitcoin, you use something called a wallet. A wallet lets you manage your addresses and send or receive Bitcoin. We explain what a wallet is and how to choose one in a separate guide: What Is a Bitcoin Wallet?
Why Does Bitcoin Exist?
Bitcoin was created to allow peer-to-peer electronic payments without a central intermediary. The design is based on a few ideas: a fixed maximum supply of units, a transparent and verifiable record of all transactions, and rules enforced by software and network participants rather than a single authority. For some users, these properties make Bitcoin useful for sending value across borders or holding a form of money that does not depend on a specific bank or government. That can matter in places where access to banking is limited or where people want an alternative way to move or store value. This guide does not recommend whether or how to use Bitcoin; it only describes what it is and how it works.
How Do People Use Bitcoin?
People use Bitcoin in several ways:
- Sending and receiving money — Individuals and businesses can send payments to each other using Bitcoin, often across countries, without going through a traditional bank.
- Paying for goods and services — Some merchants and platforms accept Bitcoin as payment.
- Receiving remittances — People in one country can receive money from family or friends abroad in the form of Bitcoin, which the recipient can then use or convert locally. If you want step-by-step guidance on receiving Bitcoin in Gaza, see our guide: How to Receive Bitcoin in Gaza.
- Holding value — Some people choose to hold Bitcoin as a non-bank form of value. This is a use case, not a recommendation; holding any asset carries risk.
These are factual uses. Bitcoin Gaza does not advise you to buy, sell, or hold Bitcoin for investment purposes.
Key Terms You Might Hear
- Blockchain
- The shared public record of Bitcoin transactions. It is stored in blocks linked in order, and many copies exist across the network so that the history can be checked by anyone.
- Wallet
- Software or a device that stores the information needed to access your Bitcoin and send or receive it. Wallets do not "hold" the coins themselves; they hold keys that control the addresses where your Bitcoin is recorded on the blockchain. For more, see What Is a Bitcoin Wallet?
- Address
- A string of letters and numbers that represents a destination for Bitcoin. To receive Bitcoin, you share your address with the sender. Each address is tied to a wallet.
- Transaction
- A transfer of Bitcoin from one address to another. Once a transaction is included in the blockchain and confirmed, it is considered settled.
- Satoshi
- The smallest unit of Bitcoin. One Bitcoin is made up of many satoshis, so amounts can be expressed in whole numbers of satoshis for small payments.
Where to Go Next
If you want to hold Bitcoin, the next step is to understand how wallets work. Read our guide What Is a Bitcoin Wallet? How to Choose and Use One Safely.
If you want to receive Bitcoin—for example in Gaza—see our step-by-step guide How to Receive Bitcoin in Gaza.
If you are ready to open an account and get started with a wallet, our page on Open a Bitcoin Account walks you through the basics.
To learn more about who we are and our educational work, visit About Bitcoin Gaza.
Content for educational use only. Last reviewed: 2025. For questions, Get in Touch.