Bitcoin (BTC)

Bitcoin (BTC) is the first cryptocurrency: a digital currency that lets people send value to each other over the internet without a bank or payment company in the middle. It was described in a white paper published in October 2008 by the pseudonymous Satoshi Nakamoto, and the network went live on 3 January 2009. Today it is the best-known and most liquid crypto asset, and many investors treat it as “digital gold”.

How does Bitcoin work?

Every Bitcoin transaction is recorded on a shared public ledger, the blockchain. Thousands of full nodes around the world independently check each transaction and block against the same rules, and any block that breaks those rules is rejected, no matter who produced it.

New blocks are created by miners using proof-of-work. Miners run the SHA-256 hash function billions of times per second; the first to find a valid result adds the next block and collects the reward. The network targets one block roughly every ten minutes, and mining difficulty resets every 2,016 blocks (about two weeks) so that the pace stays steady as miners join or leave.

One bitcoin divides into 100 million satoshis, so you never need to buy a whole coin. Under the hood, your balance is a set of unspent transaction outputs (UTXOs), and your private key produces the signature needed to spend them.

What is Bitcoin used for?

• Store of value: its fixed supply makes it a popular long-term savings asset.
• Cross-border payments: it moves around the clock, weekends included, without correspondent banks.
• Fast small payments: second-layer systems such as the Lightning Network settle small payments in seconds for very low fees.
• Institutional exposure: US spot bitcoin ETFs, approved in January 2024, let investors hold BTC through an ordinary brokerage account.

Bitcoin supply: the 21 million cap and halvings

The protocol caps total supply at 21 million BTC. New coins enter circulation only through the block reward, which is cut in half every 210,000 blocks, or roughly every four years. This event is known as the halving. The reward started at 50 BTC in 2009 and fell to 3.125 BTC with the fourth halving in April 2024. The last fraction of a bitcoin is expected to be mined around 2140, after which miners will rely on transaction fees alone.

Part of the circulating supply is effectively gone for good: coins in wallets whose keys were lost still appear on-chain but can never move. The number of coins that can actually be traded is therefore lower than the headline figure.

Key milestones

• 2010: the first known commercial purchase, two pizzas for 10,000 BTC.
• 2017: the SegWit soft fork activated, raising effective block capacity and paving the way for Lightning. The block-size debate that year ended with the Bitcoin Cash split.
• 2021: the Taproot upgrade introduced Schnorr signatures for better privacy and efficiency, and El Salvador became the first country to make BTC legal tender.
• 2024: US spot ETFs began trading and the fourth halving took place.

What are the risks of Bitcoin?

BTC can swing sharply in price over short periods. Transactions are irreversible, so sending to the wrong address or losing your recovery phrase means the funds are gone. Bitcoin is pseudonymous rather than anonymous: every movement is visible on the public chain and can often be traced. Coins left on an exchange depend on that exchange’s security and solvency, which is why long-term holders often move them to a wallet they control. Regulation also differs from country to country and can affect both price and access.

How to read Bitcoin market data

Market cap is the price multiplied by circulating supply, while maximum supply shows the 21 million ceiling that can never be exceeded. Twenty-four-hour volume tells you how actively BTC is trading. The dollar price is a global benchmark, and the BTC to USD page shows the current conversion. When you actually buy or sell, the exchange’s fee and the bid-ask spread will change the amount you pay or receive.

Official sources

• Bitcoin.org: How does Bitcoin work?
• Bitcoin developer documentation: Transactions
• Bitcoin.org: Securing your wallet