How does cocaine actually effect the brain?

Cocaine on the Brain. This is a complex answer to address here, but in summary it works on specific receptors in certain areas of the brain responsible for pleasure. As a result, this highly addictive sensation is then craved psychologically while at the same time your body will physically depend on the substance being present to feel "normal" when in fact you're in a heightened sense of stimulation and arousal.
Dopamine. Dopamine is a chemical responsible for many things in the brain, including (in the limbic system) pleasure, euphoria and reward. Cocaine releases Dopamine in large amounts from its storage sites. However, the more Cocaine you use, the less Dopamine you have, and you keep "chasing the dragon". It is a dangerous addiction. It also causes brain damage when used in high doses for long periods of time.