How does Bitcoin work?

Bitcoin uses public-key cryptography, peer-to-peer networking, and proof-of-work to process and verify payments. Bitcoins are sent (or signed over) from one address to another with each user potentially having many, many addresses. Each payment transaction is broadcast to the network and included in the blockchain so that the included bitcoins cannot be spent twice. After a certain number of blocks have been confirmed, each transaction is locked in time by the massive amount of processing power that continues to extend the blockchain.