The gist
- Bitcoin is a digital asset whose rules cap supply at 21 million and cut new issuance in half roughly every four years.
- Miners secure the network with proof of work and add a block about every 10 minutes; the reward has been 3.125 BTC since April 2024.
- It pays no income, its price has swung violently throughout its history, and holding it safely is the owner's responsibility.
What is Bitcoin? It is the first cryptocurrency: a digital asset recorded on a public ledger that no company or government runs, with rules that fix how many units can ever exist. It was described in a 2008 paper published under the name Satoshi Nakamoto and went live in January 2009. Since then it has grown from a curiosity among programmers into an asset held by individuals, companies and listed funds, while remaining one of the most volatile things a long-term investor can own.
The supply schedule
Bitcoin's defining feature is its money supply. New bitcoin is created only as a reward to miners for adding blocks to the chain, and the rules cut that reward in half every 210,000 blocks. At roughly 10 minutes per block, 210,000 blocks take about 1,458 days, a little under four years. The cap on the total supply is 21 million bitcoin.
| Period | New BTC per block |
|---|---|
| 2009 launch | 50 |
| After the 2012 halving | 25 |
| After the 2016 halving | 12.5 |
| After the 2020 halving | 6.25 |
| After the April 2024 halving | 3.125 |
| Next halving, expected around 2028 | 1.5625 |
With about 144 blocks a day, today's reward adds roughly 144 × 3.125 = 450 new bitcoin a day. Most bitcoin that will ever exist has already been created, and the rest arrives ever more slowly. Supporters see that as protection against debasement; critics point out that a fixed supply says nothing about demand, which is what actually sets the price.
How the network stays honest
Bitcoin runs on thousands of computers, called nodes, that each keep a full copy of the ledger and check every transaction against the rules. Miners gather waiting transactions into a candidate block and compete to find a number that gives the block a valid fingerprint. Finding it takes enormous amounts of computation, so it cannot be faked; checking it takes a moment. The winner adds the block and collects the reward plus the fees paid by the transactions inside.
This proof of work is what makes rewriting history impractical: an attacker would need more computing power than the rest of the network combined. It is also why Bitcoin uses a great deal of electricity, a trade-off that remains a subject of real debate.
What is Bitcoin like to use?
Sending bitcoin means signing a transaction with your private key and broadcasting it to the network. It waits in a queue until a miner includes it in a block, and it is generally considered safer after several more blocks have been added on top. You choose a fee; when the network is busy, higher fees get picked first.
Bitcoin divides into 100 million units called satoshis. You do not need to buy a whole coin. At an illustrative price of $60,000, $50 buys about 0.00083 BTC, or roughly 83,333 satoshis. Unit prices look large, but that says nothing about whether bitcoin is expensive.
A few everyday facts surprise new users:
- Addresses are not accounts. Most wallets generate a fresh address for each receipt.
- Transactions are public. Anyone can see amounts and addresses, so bitcoin is pseudonymous, not anonymous.
- There are no chargebacks. A payment sent to the wrong place, or to a fraudster, is gone.
Ways people hold bitcoin
| Route | What you own | Things to weigh |
|---|---|---|
| Your own wallet | The coins themselves, via your private key | Full control; full responsibility for backups and security |
| A crypto platform | A claim on the platform | Convenient; exposed to the platform's solvency and conduct |
| A listed fund that holds bitcoin | Shares in a fund | Traded through a normal broker during market hours; annual fund charges apply |
| Shares in bitcoin-linked companies | Equity in a business | Adds company-specific risk; see our guide to crypto share prices |
In the United States, exchange-traded funds that hold bitcoin directly have been available since January 2024, which let investors gain exposure through an ordinary brokerage account. Whichever route you choose, the price risk is the same; what changes is the custody and counterparty risk layered on top.
Volatility, honestly described
Bitcoin's price history includes several falls of more than 70% from a peak, followed by long recoveries, and there is no rule that says the next fall will be followed by a recovery at all. It pays no dividends or interest, so there are no earnings to anchor a valuation. Its price reflects what the next buyer will pay, shaped by adoption, regulation, liquidity and mood.
For a long-term investor, that points to a few practical rules: only commit money you could see halve without being forced to sell, decide in advance how much of your wealth any single volatile asset may represent, and never borrow to buy it. Leverage on crypto is capped at 2:1 for retail CFD clients in the EU, and the UK bans crypto derivatives for retail consumers entirely, precisely because leverage and this level of volatility combine so badly.
Want to see how fees and price changes affect a trade? The Bitcoin profit and loss calculator shows the result after a fee on both the buy and the sell.
Three common misunderstandings
- "Nobody owns Bitcoin, so nobody can lose it for me." The network has no owner, but a platform holding your coins is a company like any other. If it fails, the network carries on and your balance may not.
- "The halving guarantees a price rise." A halving reduces new supply on a known date. Everyone knows the date in advance, and past price moves around halvings do not show what will happen next.
- "Bitcoin is anonymous." Every transaction is public and permanent. Platforms verify identities, and analysis firms link addresses to people routinely.
Bitcoin and scams
Because it is irreversible and global, bitcoin is a favourite tool of fraud. Fake "investment managers", doubling schemes, cloned platform websites and "recovery" services that charge victims a second time all appear constantly. A genuine opportunity never needs your recovery phrase, never requires an upfront fee to release a withdrawal and never guarantees a return. More in how to spot trading scams.
Reader questions
Can the 21 million limit be changed?
In theory the software could be changed, but only if the people running the network overwhelmingly agreed to adopt new rules. The fixed supply is so central to Bitcoin's appeal that such a change is widely considered very unlikely.
What happens when all bitcoin has been mined?
The block reward keeps halving until it becomes negligible, well over a century from now. After that, miners would be paid only through transaction fees.
Is it safer to hold bitcoin through a fund?
It removes the risk of losing your own keys and puts the holding in a regulated wrapper, but it adds fund charges and relies on the fund's custodian. The price risk is exactly the same.
Sources
- Bitcoin whitepaper, Satoshi Nakamoto (2008)
- Bitcoin protocol rules on block subsidy and halving interval
- US Securities and Exchange Commission, approval of spot bitcoin exchange-traded products (January 2024)