At a glance
- Bitcoin is a digital asset whose rules cap total supply at 21 million coins.
- New coins enter through mining rewards that halve roughly every four years; the reward has been 3.125 BTC since April 2024.
- One bitcoin divides into 100 million satoshis, so you never need to buy a whole coin.
What is Bitcoin? At its simplest, it is a public ledger of who owns which units of a digital asset, maintained by a network of computers that no single company controls. The software rules fix the maximum number of coins at 21 million, set a target of one new block about every ten minutes, and decide how new coins are created. Those rules are the reason people describe bitcoin as scarce.
What is Bitcoin, in three numbers
Unlike a company, Bitcoin has no head office, no board and no customer service line. Software developers propose changes, but those changes only take effect if the people running the network choose to install them.
Everything else follows from these. The block time and reward decide how fast new coins appear; the divisibility means a price in the tens of thousands does not stop anyone buying a small amount.
Mining and why the reward halves
Miners compete to add the next block by running computations that are hard to perform and easy to check. The winner collects the transaction fees in that block plus a fixed number of newly created coins, the block subsidy. Every 210,000 blocks the subsidy halves. At ten minutes a block, 210,000 blocks take about 1,458 days, which is why halvings arrive roughly every four years.
With 144 blocks in an average day, the current subsidy adds about 144 × 3.125 = 450 new bitcoin daily. The next halving is expected around 2028. Summing the rewards across all halving periods gives just under 21 million, which is where the cap comes from.
How the network keeps blocks at ten minutes
More mining power would make blocks come faster if nothing adjusted. To keep the average near ten minutes, the network recalculates the mining difficulty every 2,016 blocks, which is about two weeks at the target pace (2,016 × 10 minutes = 14 days). If the last 2,016 blocks arrived too quickly, difficulty rises; too slowly, and it falls. This self-correcting rule is why issuance stays predictable even when mining power changes sharply.
Transactions compete for limited space in each block by offering fees. When many people want to transact at once, fees rise; when the network is quiet, they fall. Wallets estimate a fee for you, and a transaction with too low a fee can wait unconfirmed for a long time.
Satoshis: buying a fraction
Illustrative example With bitcoin at $64,000, $50 buys 50 ÷ 64,000 = 0.00078125 BTC, which is 78,125 satoshis. Wallets and exchanges usually let you enter an amount in your own currency and handle the maths. Fees work the same way: a fixed withdrawal fee can be a large share of a small purchase, so check it first. The crypto profit calculator shows how fees on both sides affect your result.
How people hold bitcoin
- On an exchange: convenient, but the exchange holds the keys, and its failure could leave you as a creditor.
- In a software wallet on your phone or computer: you hold the keys, protected by a seed phrase you must keep offline.
- In a hardware wallet: the keys stay on a dedicated device, which reduces exposure to malware.
- Through a regulated fund such as a spot bitcoin ETF, where available: you own fund shares rather than coins, and cannot send them on-chain.
If you choose self-custody, a few habits prevent most losses:
- Write the seed phrase on paper or metal, never in a photo, cloud note or email.
- Store it somewhere safe from fire and water, and consider a second copy in a separate place.
- Test recovery with a small amount before moving anything significant.
- Decide how someone you trust could access the coins if something happened to you, without exposing the phrase today.
Whatever the method, anyone who asks for your seed phrase is trying to steal from you. Our scam guide lists the most common tricks.
Why the price moves so much
Bitcoin has no earnings or interest payments to anchor its value. Its price reflects supply and demand from people who expect it to hold or gain value, and that demand can change quickly with interest rates, regulation, exchange failures and sentiment. The fixed supply does not stop large falls; it only means supply cannot expand to meet demand. Treat any forecast, including the popular idea that halvings always lift the price, as opinion rather than fact.
Bitcoin compared with other crypto-assets
| Bitcoin | Smart-contract networks | Stablecoins such as USDT | |
|---|---|---|---|
| Main purpose | Transferring and holding a scarce digital asset | Running applications and issuing tokens | Holding a steady dollar value on a blockchain |
| Supply | Capped at 21 million | Varies by network; some have no hard cap | Expands and shrinks with deposits and redemptions |
| Who issues new units | Miners, following fixed rules | Validators or miners, following each network's rules | A company |
| Price behaviour | Volatile | Often more volatile | Designed to stay near $1 |
For the stablecoin side of the table, see what is USDT.
Common misunderstandings
| Claim | What is actually true |
|---|---|
| "Bitcoin is anonymous." | It is pseudonymous. Every transaction is public, and exchanges link addresses to verified identities. |
| "You have to buy a whole coin." | You can buy any amount down to one satoshi, subject to platform minimums. |
| "Bitcoin can be printed if demand rises." | The supply schedule is set in the software; changing it would require the network to accept new rules. |
| "Lost coins can be recovered by support." | Coins in a self-custody wallet with a lost seed phrase are unrecoverable. |
Reader questions
Who controls Bitcoin?
No single company or person. Rules are enforced by the software that thousands of independent computers run. Changing them requires broad agreement across users, miners and developers.
What happens when all 21 million bitcoin are mined?
Miners will be paid only through transaction fees. Because rewards keep halving, the last fractions are expected to be issued well over a century from now.
Is a bitcoin ETF the same as owning bitcoin?
No. You own shares in a fund that holds bitcoin. That can be simpler and sits inside a regulated structure, but you cannot move the coins to a wallet, and the fund charges a fee.
Sources
- Bitcoin protocol documentation (supply schedule and difficulty adjustment)