What is Bitcoin?
Written for someone starting from nothing. No prior knowledge, no jargon left unexplained, and no pretending the risks are smaller than they are.
Start with what money already is
Look at your bank balance. It is not a pile of notes in a vault with your name on it. It is a row in a database, owned and edited by your bank, that says the bank owes you that much. When you pay someone, nothing physically moves. Your bank subtracts from one row and adds to another, and the whole system works because everyone agrees to treat that database as the truth.
Once you see money as a ledger — a list of who has what — a lot of things get simpler. Cash is a ledger you carry. A bank balance is a ledger someone else keeps. And the interesting question about any money is not what it is made of. It is who is allowed to edit the ledger.
Bitcoin is a ledger that nobody is allowed to edit on their own. It is maintained simultaneously by tens of thousands of computers around the world, none of which is in charge, and it is arranged so that they can agree on what it says without trusting each other or anyone else. That is the invention. Everything else is detail.
So what is "a bitcoin"?
An entry in that ledger. There is no coin, no file on your computer, nothing that could be copied. Owning bitcoin means the shared ledger records a balance at an address you control, and controlling it means holding a secret key that can sign an instruction to move it.
You do not have to buy a whole one. A bitcoin divides into 100 million pieces, called satoshis after Bitcoin's pseudonymous inventor, and the calculator on this site shows your holding to eight decimal places for exactly that reason. Buying $20 of Bitcoin is a perfectly ordinary thing to do; you get a small fraction, and the fraction is the point.
Where new bitcoin comes from
Roughly every ten minutes, a batch of recent transactions is added to the ledger. The computers competing to add it — miners — burn a great deal of electricity racing to solve a meaningless puzzle, and whoever solves it first gets to publish the batch and is paid newly created bitcoin for doing so. The wasted effort is deliberate: it makes rewriting history ruinously expensive, because you would have to redo all of it faster than everyone else can extend it.
The payment is what makes the supply schedule work. It started at 50 bitcoin per batch in 2009 and halves every four years. It is 3.125 today, becomes about 1.56 in 2028, and keeps halving until it reaches zero.
Add up that shrinking series and it converges. There will only ever be 21 million bitcoin. A little over 20 million of them already exist, so more than 95% of the supply that will ever be created has been created, and the remainder trickles out over the next century. New issuance today runs at under 1% a year and halves again in 2028. A meaningful number — the usual estimates are three to four million — are already lost for good, in wallets whose keys were thrown away when the whole thing was a curiosity.
This is the part that matters for the rest of this site. The supply is fixed and known in advance, by everyone, forever. No committee can vote to make more, and there is no equivalent of a central bank. What that has to do with your shrinking pay packet is a separate article.
Who is in charge?
Nobody, and this is genuinely unusual rather than a slogan. There is no company, no chief executive, no head office and no support line. Bitcoin was published as a nine-page paper in 2008 under the name Satoshi Nakamoto, launched in January 2009, and its author disappeared in 2011 without ever being identified.
The rules are enforced by everyone running the software. If someone published a version that created extra coins, they would be free to run it — and everyone else's computers would simply reject their blocks as invalid, leaving them alone on a ledger nobody else recognises. Changing something as fundamental as the 21 million limit would require nearly every participant to agree to devalue what they already own. That is why it has never happened, despite fifteen years of people wanting it to.
What gives it value?
Nothing backs it. That is worth saying plainly, because half the arguments about Bitcoin are really arguments about this sentence.
But then, nothing backs gold either. Gold is valuable because it is scarce, durable, divisible and universally recognised, and because people have agreed for several thousand years to treat it as valuable. The dollar in your pocket is backed by nothing physical at all — only by a government's ability to tax and by the shared expectation that it will still be accepted tomorrow.
Bitcoin's claim is that it has the useful properties of gold — scarce, durable, hard to counterfeit — plus some gold does not have: it can be sent anywhere in minutes, verified by anyone, divided into a hundred-millionth, and stored in a sentence you can memorise. Whether those properties are worth what the market currently pays for them is a genuine open question, and reasonable people answer it differently. This site does not answer it for you. It shows you what the price actually did.
Owning it: the part that catches people out
There are two quite different ways to hold Bitcoin, and mixing them up is the most expensive mistake beginners make.
On an exchange, you have an account with a company that holds the coins and owes them to you. It is convenient, it is how nearly everyone starts, and it is a claim on a business rather than possession of the asset. Mt. Gox handled most of the world's Bitcoin trading and collapsed in 2014 with hundreds of thousands of customer coins missing. FTX collapsed in 2022. Both times, customers discovered that a balance on a screen and coins in your control are not the same thing.
In your own wallet, you hold the keys — usually written down as twelve or twenty-four ordinary words. Nobody can freeze it, and nobody can help you. Lose the words and the coins are gone permanently; there is no reset link and no fraud department. Give the words to someone who asks nicely and the coins are theirs. This is the trade Bitcoin makes: complete control, complete responsibility.
Neither of those is a recommendation. They are the two shapes the thing comes in, and you should know which one you are holding.
What Bitcoin is bad at
An honest page has to include this list.
- Price stability. It is extraordinarily volatile. A 10% move in a day is unremarkable. It is not something to keep next month's rent in.
- Everyday payments. The base network settles a limited number of transactions per block, so when demand spikes, fees spike and confirmations slow. Buying coffee with it is possible but rarely sensible.
- Undo. Transactions are final. Send to the wrong address and there is no recourse of any kind. This also makes it a magnet for scams, which are relentless and often very well produced.
- Energy. The mining that secures it consumes electricity on the scale of a mid-sized country. Whether that is a fair price for a monetary network nobody controls is a real argument with real people on both sides, not a settled question.
- Tax and paperwork. In most countries, disposing of Bitcoin is a taxable event and record-keeping is your problem. This site does not model tax at all.
The falls
If you take one thing from this page, take this. Bitcoin's history is not a line going up. It is a series of violent rises separated by collapses that were long and deep enough to look final at the time. It has fallen more than 70% from a high on several separate occasions, and more than 80% on three of them.
- 2011: from about $32 to about $2 in five months — roughly 93%.
- 2013 to 2015: from about $1,150 to about $170 — roughly 85%, over more than a year.
- 2017 to 2018: from about $19,800 to about $3,200 — roughly 84%.
- 2021 to 2022: from about $69,000 to about $15,500 — roughly 77%.
Read those as experiences rather than statistics. In each case the press declared it dead, the people who had bought near the top were down by more than half their money for a year or more, and there was no way to know from inside it whether this was the drawdown that did not recover. A dollar cost averaging plan only produces the results this site shows if it is still running through those stretches, which is a harder thing to do than to read about.
Nothing here predicts the next one. Past results describe the past.
Where to go next
If you now want to know how people actually buy it without trying to time the market, read what dollar cost averaging is. If you want the argument for why anyone bothers, read Bitcoin vs inflation. And if you just want to see the numbers for yourself, the calculator is on the front page and uses real daily closing prices going back to 2011.