The numbers first
- Bitcoin is a peer-to-peer digital currency launched in 2009, with supply capped at 21 million coins.
- New coins come from mining; the reward halves every 210,000 blocks and has been 3.125 BTC per block since April 2024.
- Blocks arrive roughly every ten minutes, and transactions cannot be reversed once confirmed.
What is Bitcoin? It is a digital currency that runs without a central operator. Anyone can hold it, send it or help secure the network, and the rules that govern supply are written into software that thousands of independent computers enforce. It was described in a 2008 paper under the pseudonym Satoshi Nakamoto, and the network went live in January 2009.
What is Bitcoin's supply schedule?
Bitcoin's supply is capped at 21 million coins. New bitcoin enters circulation only as a reward to the miner who adds each block, and that reward halves every 210,000 blocks, which at roughly ten minutes a block works out to about four years (210,000 × 10 minutes ≈ 1,458 days).
The next halving, to 1.5625 BTC, is expected around 2028. The exact date depends on how fast blocks are found.
At around 144 blocks a day, today's reward produces about 144 × 3.125 = 450 new bitcoin daily. Because each halving cuts issuance in half, the total approaches but never quite exceeds 21 million, with the last fractions expected to be mined over a century from now.
Mining and the ten-minute block
Miners compete to find a number that makes the new block's fingerprint fall below a target. It takes enormous numbers of attempts, so the winner is effectively the one with the most computing power at that moment. The winner collects the block reward plus the fees users attached to their transactions.
Every 2,016 blocks, about two weeks, the network adjusts the difficulty so that blocks keep arriving around every ten minutes regardless of how much mining power joins or leaves. As block rewards shrink with each halving, transaction fees are meant to make up a larger share of miners' income over time.
Units, addresses and custody
One bitcoin divides into 100 million satoshis, so 0.002 BTC is 200,000 sats. Prices on platforms are usually shown per whole coin, but you can buy any fraction.
As with every cryptocurrency, control comes from the private key. Coins held on a platform are controlled by that platform's keys; coins in your own wallet are controlled by yours, backed up by a seed phrase. A confirmed transaction cannot be reversed, so a wrong address or a stolen key usually means a permanent loss. The general picture is in how crypto works.
Transactions, fees and the mempool
A new bitcoin transaction waits in a pool of unconfirmed transactions, the mempool, until a miner includes it in a block. Blocks have limited space, so miners favour transactions paying higher fees per unit of data. When demand is high, fees rise and low-fee transactions can wait for hours. Fees depend on the size of the transaction in data, not on the amount of bitcoin sent, so moving a large sum can cost the same as moving a small one. Most wallets estimate a fee for a target confirmation time, and platforms usually wait for several confirmations before crediting a deposit.
Upgrades and forks
Bitcoin's rules change only when the network's participants adopt new software. Backward-compatible upgrades, known as soft forks, have added features over the years without splitting the chain. When a group adopts incompatible rules, the result is a hard fork and a separate chain with its own coin, which has happened more than once. The original network, with the largest share of computing power and users, kept the Bitcoin name.
What moves the bitcoin price
Bitcoin has no earnings or interest payments to value, so its price reflects supply and demand in a more raw form than shares or currencies. Factors that are commonly discussed include:
- Liquidity and interest rates. Bitcoin has often traded like other risk assets, rising when money is cheap and falling when it tightens.
- Access. Regulated products and new platforms can change who is able to buy.
- Regulation and enforcement. Actions against large platforms have caused sharp falls.
- Leverage in derivatives markets. Forced liquidations of leveraged positions can turn a fall into a cascade.
Halvings are also widely watched, but whether they move the price, and when, is a matter of debate rather than a rule.
Bitcoin compared with gold and currencies
| Bitcoin | Gold | US dollar | |
|---|---|---|---|
| Supply | Fixed schedule, 21 million cap | Grows slowly with mining output | Set by central bank and banking system |
| Trading hours | Continuous | Weekdays, nearly 24 hours | Forex hours, weekdays |
| Retail CFD leverage cap (UK/EU) | 2:1 (not offered to UK retail) | 20:1 | 30:1 on major pairs |
| Who can reverse a payment | Nobody | Not applicable | Banks, in some circumstances |
Ways people get exposure
Buying the coin itself, on a platform or into a personal wallet, gives direct ownership. Exchange-traded products that hold bitcoin, including US spot bitcoin funds approved in January 2024, offer exposure through an ordinary brokerage account without handling keys, at the cost of a management fee. Futures on regulated exchanges and CFDs give price exposure without ownership, usually with leverage; in the UK, crypto derivatives cannot be sold to retail clients, and EU retail crypto CFDs are capped at 2:1. Each route has different costs, custody arrangements and tax treatment.
The energy question
Proof of work consumes a great deal of electricity by design, because that cost is what makes rewriting the ledger expensive. Critics point to the environmental impact; supporters point to mining's use of surplus or stranded energy. Estimates vary widely, and the debate affects how some investors and regulators view the asset.
Risks specific to Bitcoin
- Volatility. Falls of more than half from a peak have happened several times.
- Custody. Lost keys, hacked platforms and phishing account for large, permanent losses.
- Scams. Fake "bitcoin investment" sites and doubling schemes are common; see how to spot trading scams.
- Rules and tax. Treatment differs by country and can change.
To see how fees change the result of a buy-and-sell round trip, try the crypto profit calculator.
Reader questions
How many bitcoin will there ever be?
The protocol caps supply at 21 million. Because the block reward halves every 210,000 blocks, the final fractions are expected to be mined well over a century from now.
What is the current block reward?
Since the April 2024 halving, miners receive 3.125 BTC per block plus transaction fees. The next halving, expected around 2028, will cut it to 1.5625 BTC.
Do I have to buy a whole bitcoin?
No. Bitcoin divides into 100 million satoshis, so you can hold any fraction, such as 0.002 BTC (200,000 satoshis).
Sources
- Bitcoin whitepaper (Satoshi Nakamoto, 2008)
- Bitcoin Core protocol documentation on block subsidy and difficulty adjustment
- US Securities and Exchange Commission, approval of spot bitcoin exchange-traded products (January 2024)
- UK Financial Conduct Authority, ban on crypto-derivatives for retail consumers (2021)