Bitcoin (BTC) is the first decentralized digital currency: money that can be sent anywhere in the world without a bank, recorded on a public blockchain that no single party controls. Only 21 million bitcoins will ever exist, and new coins are created on a fixed, predictable schedule. Those two properties — no central issuer and a hard supply cap — are why many people call Bitcoin «digital gold».
Key takeaways
- Bitcoin was introduced in a 2008 white paper by the pseudonymous Satoshi Nakamoto and launched in January 2009.
- Its supply is capped at 21 million BTC; the issuance rate halves roughly every four years.
- Miners secure the network using proof of work and earn new bitcoin plus transaction fees.
- One bitcoin is divisible into 100 million «satoshis», so you can buy a tiny fraction.
A short history of Bitcoin
On 31 October 2008, someone using the name Satoshi Nakamoto published a nine-page paper titled «Bitcoin: A Peer-to-Peer Electronic Cash System». The network went live on 3 January 2009, when Satoshi mined the first, or «genesis», block. Satoshi gradually stepped away from the project around 2010–2011, and their identity remains unknown.
The first well-known real-world purchase happened in May 2010, when a programmer paid 10,000 BTC for two pizzas — a date the community still celebrates as «Bitcoin Pizza Day». Since then, Bitcoin has grown into a global asset traded around the clock and, in some countries, held through regulated investment funds.
How does Bitcoin work?
The blockchain
Every bitcoin transaction ever made is recorded on Bitcoin’s blockchain, a public ledger copied across thousands of nodes. A new block is added roughly every 10 minutes.
Wallets and keys
To use Bitcoin you need a wallet, which manages your private keys. The private key signs transactions; your public address receives funds. Whoever controls the keys controls the coins — hence the saying «not your keys, not your coins». See hot vs cold wallets for how to store them.
Mining and proof of work
Miners compete to find a number that, combined with a block’s data, produces a hash below a target value. It’s a brute-force guessing game that requires real electricity and specialized hardware (ASICs). The winner adds the block and earns the block reward plus all fees in the block. Every 2,016 blocks (about two weeks) the network adjusts the difficulty so blocks keep arriving roughly every 10 minutes, no matter how many miners join or leave. Learn more in proof of work vs proof of stake.
Bitcoin’s supply: why 21 million matters
New bitcoins enter circulation only through block rewards. The reward started at 50 BTC per block and is cut in half every 210,000 blocks — an event known as the Bitcoin halving. After the April 2024 halving, miners receive 3.125 BTC per block. Because of this schedule, the total supply approaches but never exceeds 21 million, with the last fraction expected to be mined around the year 2140.
| Bitcoin fact | Value |
|---|---|
| Launched | 3 January 2009 |
| Creator | Satoshi Nakamoto (pseudonym) |
| Maximum supply | 21,000,000 BTC |
| Average block time | ~10 minutes |
| Consensus | Proof of work (SHA-256) |
| Smallest unit | 1 satoshi = 0.00000001 BTC |
| Block reward (since April 2024) | 3.125 BTC |
What is Bitcoin used for?
- Store of value: Many holders treat BTC as a long-term hedge against currency debasement, similar to gold.
- Cross-border payments: Send value internationally without a correspondent bank.
- Financial access: Anyone with a phone can hold and receive bitcoin, without permission.
- Fast small payments: The Lightning Network, a layer built on top of Bitcoin, enables near-instant, low-fee payments.
Bitcoin vs Ethereum at a glance
| Bitcoin | Ethereum | |
|---|---|---|
| Main purpose | Digital money / store of value | Programmable platform for apps |
| Supply | Capped at 21 million | No fixed cap; part of fees are burned |
| Consensus | Proof of work | Proof of stake (since 2022) |
| Block time | ~10 minutes | 12 seconds |
Read the full picture in What is Ethereum?
Risks and criticisms
- Price volatility: BTC has fallen more than 70% from its peak several times in its history.
- Energy use: Proof-of-work mining consumes a lot of electricity, though an increasing share comes from surplus and renewable sources.
- Irreversible mistakes: Lost keys and wrong addresses cannot be fixed.
- Regulatory uncertainty: Rules on trading, tax and reporting vary by country.
How to buy and store bitcoin
Most people buy bitcoin on a regulated exchange, then either leave a small amount there for convenience or withdraw it to their own wallet. For larger amounts, a hardware wallet is the safer choice. Follow our step-by-step guide: How to buy cryptocurrency safely. Many long-term buyers also use dollar-cost averaging to reduce timing risk.
Frequently asked questions
Who controls Bitcoin?
No one. Changes to Bitcoin’s rules require broad agreement among developers, node operators, miners and users. Any group that tried to force a change could simply be ignored by the rest of the network.
Can I buy less than one bitcoin?
Yes. Bitcoin is divisible to eight decimal places, so you can buy any amount your exchange allows, often from just a few dollars.
What happens when all 21 million bitcoins are mined?
Miners will be paid only through transaction fees. Because issuance shrinks gradually, this transition takes more than a century.
Is Bitcoin legal?
Owning bitcoin is legal in most countries, but some restrict or ban it. Always check the rules where you live.
