Every bitcoin is the computer file stored at the digital bitcoin wallet on the computer and smartphone. In order, to understand how the bitcoin works, this helps to understand the terms and little context:

Blockchain: BTC is been powered by the open-source code called as the blockchain that creates the shared public ledger. Every transaction is “block” and it is “chained” to a code, creating the permanent record of every transaction. The blockchain technology is at a heart of over 2,200 cryptocurrencies, which have followed in the bitcoin’s wake.

Private & public keys: The bitcoin wallet has the public key and private key that work together and allow owner to initiate as well as digitally sign the transactions, offering the proof of authorization.

Bitcoin miners: The miners —and members of peer-to-peer network— then confirm this transaction by using the high-speed computers, generally within 10 – 20 minutes. The miners are paid in the bitcoin for the efforts.

The bitcoin value follows law of the supply & demand — and because the demand waxes & wanes, there is lots of volatility in crypto currency’s price.

Storing bitcoins: cold wallets and hot wallets

Bitcoins are stored in two types of the digital wallets:

Cold wallet: The encrypted portable device very much like the thumb drive, which allows you download or carry the bitcoins.

Hot wallet: The digital currency is been stored in a cloud on trusted exchange and provider, and been accessed through the computer browser, smartphone app or desktop.

Basically, the hot wallet will be connected to internet; cold wallet isn’t. However, you need the hot wallet to install bitcoin in the portable cold wallet.

Can you buy bitcoin?

The bitcoin is very speculative & volatile buy. It is worth to know that the stock trading will give you the similar thrill —or picking stocks of the established companies is normally less risky than to invest in the bitcoin.