Blockchain: The financial system to validate bitcoin transactions is known as the blockchain, and depends on a decentralised network of computers connected over the internet.
Like peer-to-peer (P2P) networks where unidentified people upload and download music and films, the blockchain depends on a growing community of people and institutions online.
Those peers run bitcoin software to verify bitcoin transactions, independent of any bank or treasury.
Every time people exchange bitcoin online, the whole network gets updated with the new information, creating new "blocks", i.e. long chains of data for computers to solve.