How Bitcoin Works: The Blockchain Architecture

Bitcoin operates on a blockchain - a chain of "blocks" containing groups of transactions ordered sequentially. The blockchain serves as a public, distributed ledger that permanently records all transactions.

Key components of Bitcoin's architecture include:

1. Nodes: Computers that participate in the network by validating and relaying transactions
2. Miners: Special nodes that compete to produce new blocks and earn rewards
3. Transactions: Transfers of Bitcoin between addresses, secured by cryptographic signatures
4. Blocks: Groups of transactions that are added to the blockchain approximately every 10 minutes

Consensus Rules: The protocols determining how the network reaches agreement on transaction validity