Bitcoin (BTC) is the first and best-known cryptocurrency. It was described in a whitepaper published in October 2008 by someone using the pseudonym Satoshi Nakamoto, and the network went live in January 2009. It is money that runs on a public network rather than through a bank or government.
Understanding Bitcoin Basics
What Makes Bitcoin Different?
- Decentralized: No single entity controls Bitcoin. Thousands of independently run computers (nodes) enforce the same rules.
- Digital: Bitcoin exists only in electronic form. There are no physical bitcoins.
- Limited supply: No more than 21 million bitcoins will ever exist.
- Peer-to-peer: You can send bitcoin directly to anyone, anywhere, without asking a bank's permission.
How Does Bitcoin Work?
Bitcoin runs on a blockchain: a public ledger of every transaction, copied across the network. Our blockchain guide explains the mechanics in more depth.
When you send bitcoin:
- Your wallet signs a transaction with your private key
- The transaction is broadcast to the network
- Miners include it in a new block (roughly every 10 minutes)
- Each later block adds another "confirmation", making it harder to reverse
- The recipient's wallet shows the funds
Supply and the Halving
New bitcoins enter circulation as a reward to miners for each block. That reward is cut in half every 210,000 blocks, roughly every four years:
| Period | New BTC per block |
|---|---|
| 2009–2012 | 50 |
| 2012–2016 | 25 |
| 2016–2020 | 12.5 |
| 2020–April 2024 | 6.25 |
| April 2024–about 2028 | 3.125 |
The fourth halving happened in April 2024 at block 840,000. The 20 millionth bitcoin was mined in March 2026, so more than 95% of all bitcoin that will ever exist is already in circulation. The remaining supply trickles out until around 2140.
Past halvings were followed by large price rallies, but that history is short (four cycles) and it is not a guarantee. Since the 2024 halving, much more of the buying has come through ETFs and large institutions, which may change how cycles behave.
Spot Bitcoin ETFs
Since January 2024, US investors can buy spot Bitcoin exchange-traded funds (ETFs) in an ordinary brokerage account or IRA. Each fund holds actual bitcoin with a custodian, and its shares trade on the stock market like any other ETF. Spot Ether ETFs followed in July 2024.
| Buying bitcoin directly | Buying a spot Bitcoin ETF | |
|---|---|---|
| Where you hold it | Exchange account or your own wallet | Brokerage account or IRA |
| Keys to manage | Yes, if you self-custody | No |
| Trading hours | 24/7 | Stock-market hours |
| Ongoing cost | None to hold (fees when you buy/sell) | Annual expense ratio |
| Can you withdraw coins? | Yes | No |
| Tax paperwork | Form 1099-DA from US brokers (2025+) | Normal brokerage 1099 |
ETFs are a simpler route for many people, especially in retirement accounts. Self-custody gives you full control and no ongoing fee, but you take on the job of protecting your keys. See our wallet guide before choosing that route.
Why People Own Bitcoin
Store of value
Many holders see Bitcoin as "digital gold": a scarce asset whose supply schedule no one can change. Critics point out that its price has been far more volatile than gold, with several falls of 75% or more from a peak.
Payments and access
- Borderless transfers: send value across borders at any hour
- Access: anyone with an internet connection can hold it, without a bank account
- Censorship resistance: coins held in your own wallet cannot be frozen by a third party (coins on an exchange can be)
Price history
Bitcoin went from essentially no value in 2009 to an all-time high of about $126,000 in early October 2025. It has also fallen sharply many times along the way. For the current price, see the market dashboard. Treat past performance as history, not a forecast.
Adoption and legal status
- In the US, spot Bitcoin ETFs have made it a mainstream holding in brokerage accounts and some pension and advisory portfolios.
- El Salvador made bitcoin legal tender in 2021, but in January 2025 it amended the law as part of an IMF agreement, so businesses are no longer required to accept it. The Central African Republic adopted it in 2022 and reversed course in 2023.
- Rules differ by country and keep changing, so check your own country's position.
Key Concepts to Know
- Bitcoin address: a string you share to receive bitcoin, like an account number. Example:
bc1qar0srrr7xfkvy5l643lydnw9re59gtzzwf5mdq - Private key: the secret that lets you spend your bitcoin. Never share it.
- Seed phrase: 12 or 24 words that back up all the keys in a wallet.
- Mining: using specialised computers to add blocks and secure the network in exchange for new bitcoin and fees.
- Satoshi (sat): the smallest unit. 1 BTC = 100,000,000 sats.
The glossary has more terms.
Getting Started with Bitcoin
- Learn the basics and the risks (you are doing that now).
- Decide how you will hold it: an ETF in a brokerage account, an exchange account, or your own wallet. Hardware wallets such as Ledger and Trezor are the usual choice for larger self-custodied amounts.
- Buy from a reputable provider: see How to Buy Your First Cryptocurrency and our exchange comparison.
- Secure it: turn on two-factor authentication, write your seed phrase on paper or metal, and never type it into a website.
Common Bitcoin Myths
- "Bitcoin is anonymous." False. It is pseudonymous. Every transaction is public and can often be traced to a person.
- "Bitcoin is only for criminals." Illicit use exists, but blockchain-analytics firms such as Chainalysis estimate it is a small share of on-chain volume.
- "You have to buy a whole bitcoin." False. You can buy a few dollars' worth.
- "Bitcoin has no value." Its value, like gold's, rests on people agreeing it is scarce and useful. That agreement can weaken, which is one reason the price is volatile.
Risks to Consider
- Volatility: falls of 50–80% have happened several times.
- Irreversible transactions: send to the wrong address and it is usually gone.
- Custody risk: lose your keys and you lose your bitcoin; leave it with a company and you depend on that company.
- Scams: fake giveaways, fake apps and "investment managers" target new buyers. See common mistakes and the scam database.
- Regulation and tax: rules are still evolving. Selling or spending bitcoin can be a taxable event; see crypto taxes.
Key Takeaways
- Bitcoin is a decentralized digital currency with a hard cap of 21 million coins.
- New issuance halves about every four years; the latest halving was April 2024.
- You can own it directly or through a spot Bitcoin ETF.
- It is volatile. Only invest money you can afford to leave alone through a large drop.
Resources
- Bitcoin whitepaper (Satoshi Nakamoto, 2008)
- Bitcoin.org, community-maintained reference