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Understanding
Bitcoin

TABLE OF CONTENT

Your one-stop page for everything Bitcoin

Think of this page as your personal Bitcoin manual. It breaks down what Bitcoin is, why people can’t stop talking about it, how to buy it, keep it safe, and an analysis of what might happen to it in the future.

Use the handy navigation below to jump straight to the sections you find most interesting or just start from the top and soak it all in. Either way, we recommend bookmarking this page. Chances are you’ll want to come back here the next time Bitcoin makes the headlines (which is probably tomorrow).

What is it?

Bitcoin is a decentralized digital currency that allows peer-to-peer transactions without banks or governments. It runs on the blockchain, which is a public ledger that records and verifies transactions.

Blockchain technology

Think of it as a chain of blocks. Each block contains transaction data and links to the previous one. This sharing and linking across a global network keeps Bitcoin secure and tamper-proof.

Where does Bitcoin come from?

Bitcoin doesn’t come from a printing press or a central bank. It’s created through a process called mining. Mining is when computers all over the world race to solve complex math puzzles that also happen to secure the Bitcoin network.

When a miner’s computer solves the right answer, it gets to add a new block of transactions to the blockchain, and earns freshly minted Bitcoin as a reward. This is how new Bitcoin enters the circulation.

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Fig. 1 - Diagram of miner verifying a block, broadcasting it to the network, adding it to the chain.

How Bitcoin transactions work

When you send Bitcoin, your transaction travels across a global network of computers called nodes. These nodes use cryptography to check that you actually have the Bitcoin you’re trying to send and that you haven’t already spent it somewhere else.

Once enough nodes agree that your transaction is valid, it gets bundled into a block and permanently added to the blockchain. At that point, it’s locked in — transactions can’t be reversed or edited. That’s why it’s so important to always double-check the address and the amount before hitting send. In Bitcoin, there are no “oops, can I cancel that?” moments.

Bitcoin supply and halving

Bitcoin has a hard cap of 21 million coins. This limit is built right into its code, making it impossible to create more out of thin air like governments can with paper money.

To control how quickly new Bitcoin enters circulation, the network follows a schedule. About every four years the reward miners get for adding a new block gets cut in half. This event is called a halving.

The most recent halving happened on April 2024, reducing the reward from 6.25 BTC to just 3.125 BTC per block. These halvings will continue until around the year 2140, when the last tiny fraction of Bitcoin is mined. This steady drop in new supply is a big reason why people call Bitcoin “digital gold.”

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Fig. 2 - Timeline of Bitcoin halving events and block rewards.

FAQ

What exactly is Bitcoin?
Bitcoin is a digital currency that works without banks or governments. It runs on a global network of computers that record every transaction on a public ledger called the blockchain.
Can Bitcoin be converted to cash?
Yes. You can sell Bitcoin on exchanges or through brokers and withdraw the money straight to your bank account. You can also use Bitcoin ATMs in many countries to get cash.
What determines the price of Bitcoin?
Mainly supply and demand. Bitcoin has a fixed maximum supply of 21 million, so as more people want it, the price generally goes up. It’s also heavily influenced by investor sentiment, news, regulations, and big moves by institutional players.
Is Bitcoin mining legal?
In most countries, yes. But some places have banned or restricted it due to concerns over energy use or financial controls. Always check the rules in your country before setting up mining equipment.
Am I too late for Bitcoin?
Not necessarily. While early investors saw huge gains, many believe Bitcoin is still in the early stages of broader adoption. It’s volatile, so smart investors usually take a long-term view.
Is investing in Bitcoin risky?
Yes. Bitcoin’s price can swing dramatically in short periods. That’s why it’s best to treat it as a high-risk asset and diversify your investments.
How many people own Bitcoin?
It’s estimated that over 100 million people worldwide hold some Bitcoin, from tiny amounts in mobile apps to large institutional holdings. The number continues to grow as it becomes easier to buy and store.
Can Bitcoin be hacked?
The Bitcoin network itself has never been hacked. But individuals can lose their Bitcoin through phishing, exchange hacks, or by mishandling private keys. That’s why using secure wallets and practicing good security habits is so important.