What Is a Bitcoin Transaction? How It Works Explained

A Bitcoin transaction is how value moves across the network. When you send bitcoin to someone, you are creating a transaction that tells the network how ownership is changing. --- ## What a transaction actually does A transaction does not move coins in the traditional sense. Instead, it updates the blockchain by: - Using existing UTXOs as inputs - Creating new UTXOs as outputs This is how Bitcoin tracks ownership. --- ## Inputs and outputs Every transaction has two key parts: Inputs: These are existing UTXOs you control. Outputs: These define where the bitcoin is going. Often, one output goes to the recipient, and another returns change back to you. --- ## Transactions are signed To create a valid transaction, your wallet must sign it using your private keys. This proves to the network that you have permission to spend those UTXOs. Without a valid signature, the transaction is rejected. --- ## Transactions are broadcast Once signed, the transaction is sent to the Bitcoin network. Nodes receive it and place it into the mempool, where it waits to be included in a block. --- ## Final takeaway A Bitcoin transaction is not just sending money. It is a structured update to the ledger that changes ownership using cryptographic proof.