If you are new to the world of bitcoin, you may struggle to conceptualise exactly what is going on when people buy and sell the cryptocurrency. Below is an easy guide.

Imagine that you are sitting on a bench with a friend. Your friend has an apple which they give to you. Once the transaction is complete, you now have one apple, and your friend has none. When the apply was exchanged, both you and your friend could see what was happening. You didn't need a third party from a Fruit Bank to assist with the transaction.

Now, imagine your friend gives you a digital apple made using computer code. A bitcoin is just like a digital apply. Your friend transfers the apple between two laptops which makes things a little more complicated.

Because the apple isn't physically passed between you, it may be difficult to know that your friend had an apple in the first place and that you are now in possession of it. How would you know that your friend hadn't made a copy of his apple and given you that instead? 

Thankfully, bitcoin uses a ledger to keep track of things. Think of the ledger as a big book which contains details of all of the apple transactions. Anyone in the park has a copy of the ledger and can easily check which apples are owned by whom. This prevents your friend from cheating the system. This is basically how bitcoin works.