What is Bitcoin?
The first and best-known cryptocurrency, explained in detail.
The basic idea
Bitcoin is digital money that can be sent directly from one person to another over the internet, without a bank or payment company in the middle. Instead of a bank keeping the records, thousands of computers around the world keep copies of a shared public ledger called the blockchain and agree on every payment added to it.
Who created it?
Bitcoin was described in a short paper published in October 2008 by someone using the name Satoshi Nakamoto. The first coins were created in January 2009. Nakamoto's real identity has never been confirmed, and they stopped communicating publicly in the early 2010s. Since then Bitcoin has been maintained by a worldwide community of volunteer and professional developers, with no single owner or boss.
How Bitcoin works
When you send bitcoin, your wallet signs the payment with your private key and broadcasts it to the network. Computers called miners collect waiting payments into a block and compete to solve a difficult mathematical puzzle. The winner adds the block to the chain and earns newly created bitcoin plus the fees from the payments inside. This system is called proof of work. It takes a lot of computing power and electricity, which is exactly what makes rewriting history so expensive that it is not practical.
A new block is added roughly every ten minutes. Most people wait for several blocks to be added on top of their payment before treating it as final.
A fixed supply and the halving
Only 21 million bitcoin can ever exist, and this limit is written into the software. New coins are released as mining rewards, and the reward is cut in half about every four years in an event called the halving. It started at 50 bitcoin per block in 2009, then fell to 25 (2012), 12.5 (2016), 6.25 (2020) and 3.125 (2024). Because new supply keeps shrinking, supporters often compare Bitcoin to "digital gold". Critics point out that a limited supply doesn't guarantee a rising price.
Small units
You don't need to buy a whole bitcoin. One bitcoin divides into 100 million units called satoshis, so you can buy any amount, even a few pounds' worth.
What do people use it for?
- Long-term holding as a store of value, which is the main use today.
- Sending money across borders without a bank, sometimes more quickly or cheaply.
- Investment products. In some countries, including the US, exchange-traded funds that track the price have been approved, letting people get exposure without holding coins directly.
Risks and criticisms
- Volatility: the price has fallen by half or more several times, and you could lose everything you put in.
- Energy use: mining uses large amounts of electricity, a frequent point of criticism, though miners increasingly use renewable or otherwise surplus power.
- Loss and theft: if you lose your private key, nobody can recover your coins. Read about wallets.
- Scams: fake investment schemes and impersonators are common.
Following Bitcoin prices on your smartphone
You don't need to sit at a computer to keep an eye on the price. This site works on phones, so you can open the rates page in your phone's browser and switch between US dollars, pounds sterling and euros.
- Add it to your home screen. On an iPhone, open the site in Safari, tap the Share button and choose "Add to Home Screen". On Android, open the browser menu in Chrome and choose "Add to Home screen" (the wording varies a little by phone).
- Use an exchange or wallet app. Most major exchange apps show live prices and charts, and many let you set price alerts that send a notification when a coin passes a level you choose. Look in the app's settings.
- Try a price-tracking app. Several free apps in the App Store and Google Play let you build a watchlist without buying anything.
A word of caution: checking prices constantly can tempt people into rash decisions. Many people find it healthier to check once a day, or to set alerts and then leave it alone.
Ready to learn more? See how to buy cryptocurrency or compare exchanges.