Once that information is confirmed, my transaction gets included in a “block” which gets attached to the previous block – hence the term “blockchain. My bitcoin wallet doesn’t actually hold my bitcoin. What it does bitcoin paypal information hold my bitcoin address, which keeps a record of all of my transactions, and therefore of my balance. I don’t mind that the whole world can see this sequence.
That’s important, because any transaction I issue from my bitcoin address needs to be “signed” with my private key. With this information, the program spits out a digital signature, which gets sent out to the network for validation. This is one of the genius parts of bitcoin: if the signature was made with the private key that corresponds to that public key, the program will validate the transaction, without knowing what the private key is. Once my transaction has been validated, it gets included into a “block,” along with a bunch of other transactions. A brief detour to discuss what a “hash” is, because it’s important for the next paragraph: a hash is produced by a “hash function,” which is a complex math equation that reduces any amount of text or data to 64-character string. But if you change so much as a comma, you’ll get a completely different 64-character string. Back to our blocks: each block includes, as part of its data, a hash of the previous block.
That’s what makes it part of a chain, hence the term “blockchain. This is what makes Bitcoin virtually tamper-proof. I say virtually because it’s not impossible, just very very, very, very, very difficult and therefore unlikely. And if you want to indulge in some mindless fascination, you can sit at your desk and watch bitcoin transactions float by.
For more detail on how blocks are processed and on how bitcoin mining works, see this article. The legality of your bitcoin activities will depend on who you are and what you are doing with it. What Can You Buy with Bitcoin? What are pools how and how to join them?