The picture in three lines
- Bitcoin is a digital currency recorded on a public ledger maintained by a global network rather than a bank.
- Supply is capped at 21 million coins, and the reward for new blocks halves roughly every four years; it has been 3.125 BTC since April 2024.
- Its price is set only by trading and can swing violently; owning it means managing keys or trusting a custodian.
What is Bitcoin? It is a digital currency that runs on an open network of computers instead of through a bank or government. Launched in 2009 by a person or group using the name Satoshi Nakamoto, it lets two people transfer value directly, with the network, not a company, confirming that the sender has the coins and has not spent them twice.
- 21 million
- Maximum number of bitcoin that can ever exist
- ~10 min
- Target time between new blocks
- 3.125 BTC
- Reward for each new block since April 2024
- 100,000,000
- Satoshis in one bitcoin
The ledger nobody owns
Every bitcoin transaction ever made sits in a public ledger, the blockchain, copied across thousands of computers called nodes. Each node checks new transactions against the rules: correct signature, no coins spent twice, no coins created from nothing. A node that breaks the rules is simply ignored by the others. No single company can change the ledger, freeze an address at the protocol level or print extra coins.
Mining: how new blocks are added
Fig. 1 · One round of Bitcoin mining
- CollectMiners gather waiting transactions, favouring those with higher fees.
- CompeteThey race to find a number that gives the block a valid fingerprint, which takes enormous computing power.
- PublishThe winner broadcasts the block; other nodes check it in an instant.
- RewardThe winner receives newly created bitcoin plus the fees in the block.
The puzzle's difficulty adjusts every 2,016 blocks, about every two weeks, so that blocks keep arriving roughly every ten minutes however much computing power joins or leaves. This process is called proof of work. It is expensive by design: rewriting history would require outspending all honest miners combined.
A supply schedule written in code
New bitcoin enter circulation only as block rewards. Every 210,000 blocks, about four years, the reward is cut in half. There have been four halvings so far, in 2012, 2016, 2020 and April 2024; the next is expected around 2028.
The first era alone released 210,000 × 50 = 10.5 million BTC, half of the eventual 21 million.
Because the reward keeps halving, issuance slows toward zero and the total approaches 21 million, a limit expected to be reached only in the next century. After that, miners will be paid from transaction fees alone. Whether that fixed supply makes bitcoin valuable is a matter of opinion; the schedule itself is simply a fact of the code.
Units and a worked example
You do not need to buy a whole coin. One bitcoin divides into 100 million satoshis, often shortened to "sats". Illustrative example: at a price of $62,500, spending $50 buys 50 ÷ 62,500 = 0.0008 BTC, which is 80,000 sats, before fees. The crypto profit calculator shows what fees on both sides do to the result.
Fees and confirmations
Each block has limited space, so transactions compete for it by offering fees. When the network is busy, fees rise; when it is quiet, they fall. The fee depends on the data size of the transaction, not on the amount of bitcoin sent, so moving $10 can cost as much as moving $10 million. A transaction is usually treated as settled after several confirmations, meaning several blocks have been added on top of the one containing it. Exchanges set their own confirmation requirements before crediting a deposit, which is why a deposit can take longer than one block to appear.
Wallets and addresses
A bitcoin address is where coins can be sent; the private key behind it is what allows them to be spent. A wallet app manages those keys, usually generating them from a recovery phrase you must write down and keep offline. Leaving coins on an exchange means the exchange holds the keys for you. That is simpler day to day, but it makes you dependent on the exchange's security and solvency. Our crypto guide compares the two approaches in a table.
What is Bitcoin used for in practice?
People hold bitcoin for different reasons: as a long-term speculative asset, as a hedge they believe protects against currency debasement, as a way to move value across borders without a bank, or simply to trade its price swings. Some merchants accept it, though day-to-day spending is limited by price volatility and, on the main network, by fees that rise when blocks are full. Payment layers built on top of Bitcoin, such as the Lightning Network, aim to make small, fast payments cheaper.
Exposure is available in several forms: buying coins on an exchange, holding them in a self-custody wallet, or, in some markets, buying exchange-traded products that hold bitcoin on investors' behalf. Each shifts the risks in a different direction, between you, an exchange and a fund manager.
Bitcoin and other cryptocurrencies
Thousands of other crypto-assets exist. Some copy Bitcoin's design with different settings; others, such as Ethereum, add programmable smart contracts that support tokens, stablecoins and applications. Many have flexible or uncapped supply schedules decided by their developers or holders. Bitcoin's defining features in this landscape are its age, its fixed supply rule and the size of its mining network, not any promise about its future price.
What drives the price
Bitcoin has no earnings or interest payments. Its price is whatever buyers and sellers agree on, which reflects demand for it as a store of value or speculative asset, general appetite for risk, interest rates, regulation news and the flows into and out of investment products that hold it. Wyvexx makes no predictions about where the price is heading, and you should be sceptical of anyone who does so with confidence.
Risks worth writing down
- Volatility: falls of more than half from a peak have happened several times.
- Irreversibility: a transfer to the wrong address cannot be recalled.
- Custody: lost keys mean lost coins; an exchange failure can freeze holdings.
- Scams: fake investment platforms, "doubling" giveaways and impersonators favour bitcoin because it is hard to trace back. See how to spot trading scams.
Asked and answered
Who controls Bitcoin?
No single party. Rules are enforced by the nodes that run the software, miners compete to add blocks, and changes to the protocol only take effect if the wider network adopts them.
What happens when all 21 million bitcoin are mined?
Miners will earn only transaction fees. That point is expected to be reached in the next century because the block reward keeps halving.
Can Bitcoin be hacked?
The ledger itself has proved very hard to attack. Most losses come from hacked exchanges, stolen recovery phrases, malware and scams, not from breaking the protocol.
Sources
- Bitcoin protocol documentation and the original Bitcoin white paper (2008)