1. How does Bitcoin verify transactions without a bank?
Bitcoin relies on thousands of independent nodes that follow the same protocol rules. They verify signatures, confirm that inputs exist and reject invalid or already-spent outputs.
2. What is a UTXO in Bitcoin?
An UTXO, or Unspent Transaction Output, represents Bitcoin that can still be spent. Transactions consume existing UTXOs and create new ones for recipients and change.
3. What role do digital signatures play in Bitcoin?
Digital signatures prove that a transaction was authorized by the holder of the relevant private key. Nodes can verify the signature without ever seeing the private key itself.
4. What do Bitcoin miners actually do?
Miners collect valid transactions and compete to add them to new blocks using Proof-of-Work. Full nodes then independently verify the block before accepting it.
5. Why do Bitcoin transactions need confirmations?
Each additional block built after a transaction increases the computational effort required to reverse it. High-value transfers often wait for multiple confirmations to improve settlement confidence.