| 1. | Person X, Y and Z get a Bitcoin addresses. |
| 2. | Person X mines (guesses a number) to try to create new coins |
| 3. | X is first to successfully guess the number (mining) and gets reward of 50 Bitcoins sent to their address |
| 4. | This is recorded to the record of all mining rewards and transfers aka Blockchain, and is updated on all computers in the network |
| 5. | Person Y gets their own Bitcoin address |
| 6. | X transfers 25 Bitcoins to Y for a Pizza and 25 to self. X must prove they own the 50 Bitcoins |
| 7. | Miner Z picks up the transaction, verifies it (X has the unspent 50 Bitcoins), tries to create a new block for the reward |
| 8. | n Miners are also working on solving the Block to receive the reward |
| 9. | Miner Z solves the problem, Transfer of 25 Bitcoins to Y and X gets added to the Blockchain. Z receives 50 Bitcoins reward. |
| 10. | X - 50 BTC -spent, Y - 25 BTC unspent, X - 25 BTC unspent, Z - 50 BTC unspent |