What is Bitcoin?
The first cryptocurrency: who created it, how mining and blocks work, and why its supply is limited.
Bitcoin is the first cryptocurrency. It was described in 2008 in a white paper published under the name Satoshi Nakamoto, and the network started in January 2009. Its goal: let people send money directly to each other online, without a trusted middleman.
Blocks and mining
Bitcoin transactions are grouped into blocks. A new block is added roughly every ten minutes. To add a block, miners repeatedly run a calculation (the SHA-256 hash function) until they find a result that meets a difficulty target. This is called proof of work.
The first miner to find a valid block receives a reward: newly created bitcoin plus the fees of the transactions in the block. Other nodes check the block, and if it follows the rules, they add it to their copy of the chain.
Difficulty
If more computing power joins the network, blocks would be found faster. To keep the pace near ten minutes, the network adjusts the difficulty roughly every two weeks (every 2,016 blocks).
Limited supply
The protocol limits the total number of bitcoin that can ever be created, and the block reward halves at regular intervals. This predictable issuance is one of Bitcoin's best-known features. Read more in Bitcoin halving.
Units and addresses
One bitcoin is divided into 100 million satoshis (sats), so you can send small amounts. Bitcoin is received at addresses derived from a wallet's keys.
Fees and confirmations
Each block has limited space, so users attach fees to their transactions. When the network is busy, transactions with higher fees are confirmed first. A transaction is considered more final with every new block added on top of it (confirmations).
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