Quick take
- Bitcoin is a digital currency recorded on a public blockchain that no company runs.
- Only 21 million will ever exist; new coins are paid to miners and the reward halves about every four years.
- The price has no earnings to anchor it and has repeatedly fallen more than 70% from its highs.
The ledger everyone can check
Imagine a notebook that records every payment ever made, copied onto thousands of computers worldwide. Every ten minutes or so, a new page of payments is added, and every copy updates. That notebook is the Bitcoin blockchain. Because so many independent copies exist, no single company can quietly rewrite it.
Who adds the pages
Miners compete to add each new block by running specialised computers that try trillions of guesses per second. The winner collects newly created bitcoin plus the fees attached to the transactions in the block. This competition, called proof of work, is what makes rewriting history so expensive.
What "owning" bitcoin means
You own bitcoin by controlling a private key, a long secret number. A wallet app stores it for you and backs it up as a list of words. Lose the key and the coins are frozen forever; share it and they can be taken. There is no help desk.
A fixed supply
Bitcoin's rules cap the supply at 21 million coins. New ones are released only as mining rewards, and that reward halves every 210,000 blocks, roughly every four years. After the halving in April 2024, each block pays 3.125 BTC. Our halving guide explains what that does to miners and supply.
Why the price swings
A share has profits behind it; a bond has interest. Bitcoin has neither, so its price is whatever buyers will pay. That makes it very sensitive to sentiment, interest rates and the flow of money into and out of the market. It has fallen by more than 70% from a peak several times, including in 2018 and 2022, and has also recovered to new highs afterwards. Nobody can reliably say which comes next.
Ways people hold it
- On an exchange, which is simple but exposes you to the exchange.
- In a self-custody wallet, where you are fully responsible for the keys.
- Through regulated funds; the US approved spot bitcoin exchange-traded funds in January 2024.
Before trading, check the numbers with the crypto profit calculator and read how to spot crypto scams.
Common questions
Who created Bitcoin?
A person or group using the name Satoshi Nakamoto, who published the Bitcoin paper in 2008 and launched the network in January 2009. Their identity has never been confirmed.
Can Bitcoin be shut down?
There is no central company to shut, and the network runs on computers in many countries. Governments can restrict exchanges and usage within their borders, which affects access and price.
Sources
- Bitcoin whitepaper (2008)