In short
- Bitcoin was described in a 2008 paper by the pseudonymous Satoshi Nakamoto and launched in January 2009.
- No more than 21 million bitcoin will ever exist; new coins are released to miners on a fixed schedule.
- Roughly every four years the reward for mining halves; the most recent halving was in April 2024.
- The price is highly volatile and has fallen by more than 70% from its peak several times.
Where Bitcoin came from
In October 2008 a person or group using the name Satoshi Nakamoto published a nine-page paper describing "a peer-to-peer electronic cash system". The network went live in January 2009. Its central idea was that people could send value directly to each other without a bank in the middle, with a public ledger kept honest by many independent computers.
How Bitcoin works
Every bitcoin transaction is broadcast to the network and collected into a block roughly every ten minutes. Miners compete to add each block by performing huge numbers of calculations; the winner receives newly created bitcoin plus the transaction fees in that block. This process, called proof of work, makes it extremely expensive to rewrite the history of transactions.
Ownership is controlled by private keys. Whoever holds the key for an address can spend the bitcoin at it. There is no password reset: if the key is lost, the coins are effectively gone.
The 21 million cap and halvings
Bitcoin's rules limit the total supply to 21 million coins. New bitcoin enter circulation only as mining rewards, and that reward halves every 210,000 blocks, roughly every four years.
| Halving | Year | Reward per block after |
|---|---|---|
| Launch | 2009 | 50 BTC |
| 1st | 2012 | 25 BTC |
| 2nd | 2016 | 12.5 BTC |
| 3rd | 2020 | 6.25 BTC |
| 4th | April 2024 | 3.125 BTC |
The next halving is expected around 2028. The fixed, predictable supply is why supporters compare bitcoin to gold. Critics point out that a fixed supply does not guarantee a stable or rising price: value still depends entirely on demand.
Why the price is so volatile
Bitcoin produces no income, so there is no earnings figure or interest rate to anchor its value. The price is set by what buyers will pay, which moves with sentiment, regulation, interest rates, large holders' decisions and flows into investment products. Bitcoin has fallen more than 70% from its peak in several cycles, including in 2018 and 2022. Anyone holding it should be prepared for moves of that size.
Ways people hold bitcoin
- On an exchange: simple, but you depend on the exchange's security and solvency.
- In a self-custody wallet: you control the keys; you are also fully responsible for keeping them safe.
- Through funds: in some countries, regulated exchange-traded products hold bitcoin on investors' behalf. US spot bitcoin ETFs were approved in January 2024.
Bitcoin versus other cryptocurrencies
Bitcoin is deliberately simple and slow to change. Ethereum and other networks support programmable applications, and stablecoins such as USDT aim for a fixed dollar value instead of a floating price. Our crypto guide compares them.
Checking the numbers on a trade
Trading fees are charged on both the purchase and the sale. Use the crypto profit calculator to see what a price move actually means after fees, and read risk management for traders before sizing any position.
Frequently asked questions
How many bitcoin are there?
Bitcoin's supply is capped at 21 million coins. Most have already been mined; the remainder will be released gradually as mining rewards until around the year 2140.
What happens when all bitcoin are mined?
Miners will be paid only through transaction fees. Whether fees alone will be enough to keep the network secure is an open debate.
Who controls Bitcoin?
No single person or company. Changes to the rules require broad agreement among the people who run the software, which is why the core rules have changed very little since launch.
Sources
- Bitcoin whitepaper (2008)
- U.S. SEC Investor.gov: crypto asset investing