(ATP) Cells work: they engage in mechanical work (such as muscle cell contraction); transport (moving molecules across various kinds of MEMBRANE for example); and they do chemical work, powering chemical reactions that do not happen of their own accord. This work requires fuel, and it is this that ATP provides. ATP, when subject to hydrolysis (the addition of water) breaks down: a phosphate molecule leaves ATP (which thus becomes adenosine diphosphate, ADP). This breakdown liberates ENERGY. If the reaction occurred in a test tube this energy would be present as heat.
Heat in cells is clearly not a good thing, so cells use another molecule to capture the phosphate that is liberated from ATP in water (a process said to involve a phosphorylated intermediate). This process is simply a means for transferring the phosphate molecule from ATP to a target molecule without generating unwanted heat energy. The donation of a phosphate molecule by ATP is reciprocated: the product, ADP, can acquire phosphate molecules to become ATP again, a process known as the ATP cycle. This cycle is tremendously powerful: a single muscle cell can recycle all its ATP—all 10 million molecules of it—in about 60 seconds (see Campbell et al. for a clear exposition of the functions and properties of ATP).
Reference
Campbell N.A., Reece J.B. & Mitchell L.G. Menlo Park CA. (1999) Biology, 5th edn, Addison-Wesley:
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