Bitcoin to Bitcoin transactions are made by digitally exchanging anonymous, heavily encrypted hash codes across a peer-to-peer (P2P) network.
The P2P network monitors and verifies the transfer of Bitcoins between users. Each user’s Bitcoins are stored in a program called a digital wallet. This holds each address the user sends and receives Bitcoins from, know as a private key known only by the user.
The Bitcoin network is designed to mathematically generate no more than 21 million Bitcoins.
The network is set up to regulate itself to deal with inflation. Bitcoins can be spent by initiating a transfer request from a Bitcoin address in the customer’s wallet to a Bitcoin address in the vendor’s wallet.