What is Bitcoin?

Where it came from

In October 2008, someone using the name Satoshi Nakamoto published a nine-page paper describing “a peer-to-peer electronic cash system.” The Bitcoin network started running in January 2009. Satoshi’s identity is still unknown.

How it works

Every Bitcoin transaction is broadcast to the network and collected into a blockBlock A batch of transactions added to a blockchain at one time. roughly every ten minutes. MinersMining Using specialised computers to secure a proof-of-work blockchain in exchange for new coins and fees. compete to add each block using proof of workProof of work A consensus method where miners spend computing power to earn the right to add the next block.: they run specialised machines that make trillions of guesses per second, and the first to find a valid answer earns the block rewardBlock reward The newly created coins paid to whoever adds a block, on top of transaction fees. plus fees.

That work makes rewriting history extremely expensive. To change a past transaction, an attacker would need to redo the work for that block and every block since, faster than everyone else combined.

The 21 million cap

Only 21 million bitcoin will ever exist. New coins enter circulation through block rewards, and those rewards are cut in half about every four years in the halvingHalving The scheduled event, about every four years, when Bitcoin's block reward is cut in half.. Nearly 20 million have already been created. The last fractions will be mined around the year 2140.

Why people hold it

Supporters see bitcoin as “digital gold”: scarce, hard to confiscate, and independent of any government’s monetary policy. Critics point to its price swings, its energy use and its limited use in everyday payments. Both views are worth understanding.

Following bitcoin news

Common topics you’ll see:

• Spot ETFsSpot ETF A fund traded on a stock exchange that holds the actual asset, letting investors get exposure through a normal brokerage account.: funds that hold bitcoin and trade on stock exchanges. Their daily flows are watched as a signal of demand.
• HashrateHashrate The total computing power miners are pointing at a proof-of-work network.: how much computing power is securing the network.
• Price levels: round numbers like $100,000 get headlines, but they don’t mean anything to the network itself.