What is Bitcoin?

Where it came from

In October 2008 someone using the name Satoshi Nakamoto published a nine-page paper describing “a purely peer-to-peer version of electronic cash”, which would let people pay each other online without a financial institution in the middle. The software followed in January 2009. Nakamoto withdrew from the project in 2011 and has never been identified.

Nobody owns Bitcoin today. Volunteers and companies contribute to open-source software, above all Bitcoin Core, and a change to the rules takes effect only if the people running nodes choose to adopt it. The rules therefore change slowly, and only with broad agreement.

A fixed supply, issued on a schedule

Each block may create a set amount of new bitcoin, the block subsidy, paid to the miner who finds it. It started at 50 BTC and halves every 210,000 blocks, roughly every four years.

subsidy = 50 BTC ÷ 2^(halvings so far)

The halvings continue until the subsidy rounds down to zero, around the year 2140, when just under 21 million coins will exist. Some coins are already gone for good, locked behind lost keys, so the usable supply is smaller than the count. Nobody knows by how much.

Mining keeps the ledger honest

Miners collect waiting transactions into blocks and race to find a valid proof of work: a block hash below a target set by the network, which takes vast numbers of guesses. What is a blockchain? explains why that makes history so expensive to rewrite.

Every 2,016 blocks, about two weeks, the network adjusts the difficulty so that blocks keep arriving about every ten minutes on average, however much mining power joins or leaves. Miners earn the subsidy plus the fees in each block, and as the subsidy shrinks, fees will have to pay for more of the network’s security.

The Bitcoin network dashboard shows the current block height, the countdown to the next halving, the difficulty and the hash rate.

Addresses, sats and change

Bitcoin has no accounts. Your balance is the sum of the unspent outputs, or UTXOs, that your keys control. A payment spends whole outputs and sends the difference back to you as change, much as paying with a banknote gets you coins back.

• Addresses start with 1 (legacy), 3 (script addresses, often multisig or wrapped SegWit), bc1q (native SegWit) or bc1p (Taproot). Wallets give you a fresh one for each payment you receive, which makes your history harder for others to follow.
• Amounts: 1 BTC is 100,000,000 sats. The satoshi converter turns sats into your currency and back.
• Typos: every address format carries a checksum. The address validator catches a mistyped address, though not a valid address that belongs to the wrong person.

Fees and the Lightning Network

Blocks have limited space, so you bid for it with a fee rate in satoshis per virtual byte (sat/vB). A transaction’s size depends on how many coins it spends and how many outputs it creates, which is why sending 0.001 BTC can cost as much as sending 100 BTC. Check the fee estimator before you send. Bitcoin fees and the mempool has the detail, and a payment that gets stuck can be sped up.

For small, frequent payments, the Lightning Network moves bitcoin through payment channels outside the main chain, settling in seconds for a small fraction of an on-chain fee. A Lightning payment starts from an invoice, and the Lightning invoice decoder shows its amount, payee and expiry before you pay.

Holding it safely

Whoever holds the private keys controls the coins. Leaving bitcoin on an exchange means trusting the exchange; holding it yourself means protecting a seed phrase. Self-custody basics covers hardware wallets and backups.