Bitcoin is a digital currency that no bank, company or government runs. Its rules live in open-source software, thousands of independent computers check every payment against those rules, and miners compete to add new batches of transactions to a shared public ledger. This guide reads the system from its source documents, Satoshi Nakamoto's whitepaper, the Bitcoin Core code and public block data, then covers what owning bitcoin involves today, from fees and custody to price falls of half or more. For the wider asset class, start at the crypto hub.
What problem does the Bitcoin whitepaper solve?
The whitepaper solves double spending: how to stop a digital coin, which is just copyable data, from being spent twice when no bank keeps the master ledger.
Nakamoto posted "Bitcoin: A Peer-to-Peer Electronic Cash System" to a cryptography mailing list on Friday, October 31, 2008. The paper opens by arguing that online payments depend on financial institutions acting as trusted third parties, which makes reversals possible, raises costs and rules out small casual payments. Digital signatures alone could prove who owns a coin, it says, but a payee could not tell whether an earlier owner had already signed the same coin over to someone else. The usual fix is a central mint that checks every transaction, and then "the fate of the entire money system depends on the company running the mint."
Nakamoto's answer was to publish every transaction and have the whole network agree on a single order of events, because "the earliest transaction is the one that counts." The paper runs to nine pages in 12 sections, and its core ideas map closely onto the network that runs today.
| Whitepaper section | What the paper proposed | How it works in 2026 |
|---|---|---|
| 2. Transactions | A coin is a chain of digital signatures, each owner signing it over to the next | Wallets spend unspent outputs of earlier transactions, signed with ECDSA or, since the Taproot upgrade at block 709,632 in November 2021, Schnorr signatures |
| 4. Proof-of-work | Miners vary a nonce until a block's hash starts with enough zero bits, with difficulty set by a moving average | Difficulty resets every 2,016 blocks, about two weeks, and can move at most fourfold either way |
| 5. Network | Nodes treat the longest chain as the correct one | Nodes follow the valid chain with the most accumulated work, which is what longest means in practice |
| 6. Incentive | New coins plus fees reward block creators, moving to fees alone once a set number of coins exist | Each block pays a subsidy that halves every 210,000 blocks, plus fees |
| 10. Privacy | Keys stay anonymous, and a new key pair is used for each transaction | Every transaction is public, and address reuse or exchange records can link payments to a person |
| 11. Calculations | An attacker with 10% of the computing power has a 0.0002428 chance of reversing a payment buried under 6 blocks | Waiting for six confirmations remains a widely used rule of thumb for large payments |
Some things are missing. The paper never uses the word "blockchain," it never mentions 21 million coins, and it never describes a halving. Those rules arrived with the software that started the network: the first block, mined at 18:15 UTC on January 3, 2009, carries an embedded newspaper headline, "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks."
How does proof of work secure Bitcoin?
Proof of work makes adding a block expensive and checking it cheap, so rewriting history would mean outspending every honest miner combined.
A miner bundles waiting transactions into a candidate block and runs its 80-byte header through the SHA-256 hash function twice, changing a 32-bit field called the nonce, and other fields when those values run out, until the result falls below a target set by the network. Each attempt is a guess, yet any node can verify the winning block with a single hash, the asymmetry the whitepaper borrowed from Adam Back's Hashcash.
The target moves so that blocks keep arriving about every 10 minutes, however much computing power joins or leaves. Bitcoin Core recalculates it every 2,016 blocks by comparing how long those blocks actually took with 14 days, and it caps any single change at a factor of four. The adjustment at block 973,728 on October 29, 2026 raised difficulty by 5.54% to about 148.4 trillion, and mempool.space estimated the network's hash rate at roughly 1,046 exahashes per second on November 2.
Because each header contains the hash of the block before it, editing an old payment would mean redoing the work for that block and every block since, then overtaking the honest chain. The whitepaper's calculations show how quickly that becomes hopeless: to push an attacker's odds below 0.1%, a payee needs to wait 5 blocks if the attacker controls 10% of the computing power, and 24 blocks if it controls 30%.
Worked example: How many guesses does one block take?
Difficulty measures how much harder today's target is than the easiest one allowed, difficulty 1, at which a valid hash took about 2 to the 32nd power, or 4.29 billion, guesses on average.
- Difficulty after the October 29, 2026 adjustment: about 148,364,561,003,867
- Expected hashes per block: 148,364,561,003,867 × 4,294,967,296 ≈ 6.37 × 10²³
- Network speed on November 2, 2026: about 1,046 exahashes, or 1.046 × 10²¹ hashes, a second
- Expected time per block: 6.37 × 10²³ ÷ 1.046 × 10²¹ ≈ 609 seconds, just over 10 minutes
The winning hash for block 974,194, mined at 00:39 UTC on November 2, 2026, started with 20 zeros in hexadecimal: 00000000000000000000b6ac3dab32b1, and so on.
How many bitcoins are there, and is supply really capped at 21 million?
About 20.11 million bitcoins had been issued by November 2, 2026, and the code stops issuance just under 21 million, roughly in the year 2140.
No supply total is stored anywhere in Bitcoin. Instead, every block may create a fixed subsidy, and the function that sets it, GetBlockSubsidy in Bitcoin Core, starts at 50 BTC and halves it every 210,000 blocks, roughly every four years. Add up every subsidy until it rounds down to zero satoshis and the total is just under 21 million BTC (20,999,999.9769 BTC). The figure of 21,000,000 that does appear in the code, a constant called MAX_MONEY, is only a sanity check on transaction amounts; the comment beside it notes that the real supply "currently happens to be less than 21,000,000 BTC for various reasons."
The current subsidy is 3.125 BTC per block, since block 840,000 on April 20, 2024. At 144 blocks a day that is 450 new bitcoins daily, or 164,250 a year, about 0.8% of the coins already issued. The next cut comes at block 1,050,000, expected around April 2028, when the subsidy falls to 1.5625 BTC. The bitcoin halving guide lists every past date, block height and subsidy, and works through what each cut means for miners.
Worked example: Counting the coins issued by November 2, 2026
Supply is the sum of every block's subsidy. Block 974,194 was the newest block at 00:39 UTC on November 2, 2026, so 974,195 blocks existed, counting block 0.
- Blocks 0 to 839,999, four completed eras of 210,000 blocks: 210,000 × (50 + 25 + 12.5 + 6.25) = 19,687,500 BTC
- Blocks 840,000 to 974,194: 134,195 blocks × 3.125 = 419,359.375 BTC
- Total by the schedule: 20,106,859.375 BTC, or 95.7% of the 20,999,999.9769 maximum
- Still to be issued: about 893,141 BTC, spread over roughly the next 113 years
Explorers show slightly less, because a few early blocks claimed less than they were allowed and the 50 BTC in the very first block can never be spent. By the same arithmetic, the 20 millionth bitcoin arrived with block 939,999 on March 9, 2026.
How do miners get paid, and what do bitcoin fees cost?
The miner who finds a block keeps the subsidy plus every fee in it, and fees depend on a transaction's size in bytes, not the amount sent.
The payout arrives in the block's first transaction, called the coinbase, and cannot be spent until 100 more blocks are built on top. Most miners combine their machines in pools and share the rewards, because a lone machine producing 200 terahashes a second would expect to find a block about once a century at November 2026 network speeds.
Fees are bids for space in the next block, priced in satoshis per virtual byte (sat/vB). When blocks are full the highest bidders go first; when they are not, as in late 2026, almost anything gets in. In the 144 blocks up to block 974,194, roughly one day, fees totaled 2.11 BTC against 450 BTC of new coins, or 0.47% of what miners earned, and the 677,560 transactions in those blocks paid about 312 satoshis each on average. Bitcoin Core 29.1, released on September 4, 2025, also lowered the default minimum fee rate a node will relay to 0.1 sat/vB. Fees can still spike: the block that carried the April 2024 halving collected 37.63 BTC in fees as users rushed to create tokens with a newly launched protocol.
Worked example: Why two payments of the same amount can cost different fees
Assume a fee rate of 2 sat/vB, more than enough for the next block at the start of November 2026, and native SegWit addresses.
- Paying from one earlier deposit: 1 input and 2 outputs (the payment plus change) take about 141 virtual bytes, so the fee is 141 × 2 = 282 satoshis, or 0.00000282 BTC.
- Paying the same amount by combining 10 small deposits: 10 inputs and 2 outputs take about 10.5 + 10 × 68 + 2 × 31 = 752.5 virtual bytes, so the fee is about 1,505 satoshis.
- The second payment costs 5.3 times as much whether it moves $50 or $50,000, because each extra input adds its own signature data.
- At an assumed price of $80,000 per bitcoin, used only to make the arithmetic concrete, the two fees come to about $0.23 and $1.20.
How does a bitcoin transaction get confirmed?
A signed payment spreads to nodes, waits in their mempools and counts as confirmed once a miner puts it in a block; each later block adds a confirmation.
Blocks have averaged 9.94 minutes apart since April 2024, but the gap is random: about 4 blocks in 10 arrive within 5 minutes of the last one, while about 1 in 20 takes longer than half an hour. A payment offering at least the going fee rate usually confirms within a block or two, and waiting for six, about an hour on average, is common for large sums because each block makes a reversal exponentially harder. The guide to how blockchain works follows one payment from wallet to sixth confirmation, with the fee arithmetic, the mempool and the odds of a slow block.
Where can you keep bitcoin?
You can let an exchange or broker hold bitcoin for you, hold the keys yourself in a wallet, or own it indirectly through a spot bitcoin ETF. Each choice moves the main risk somewhere different: a platform can freeze withdrawals or fail, a lost recovery phrase in self-custody is usually permanent, and an ETF adds an annual fee and trades only on weekdays. Custodial vs non-custodial wallets and hot vs cold wallets cover the trade-offs, how to store crypto safely sets out a backup plan, bitcoin ETFs vs owning bitcoin compares the fund route, and how to buy bitcoin covers the purchase itself.
What is the price of bitcoin today, and how has it performed?
The most recent quote for one bitcoin is $78,218.70 (Nov 2, 2026), refreshed hourly from market data, and the table below sets it against bitcoin's own history.
| Asset | Last close | 1 year | 3 years (per year) | 5 years (per year) | 10 years (per year) | Worst drop from a high | Volatility (1 year) |
|---|---|---|---|---|---|---|---|
| Bitcoin | $78,688.00 | -28.8% | +31.1% | +4.5% | n/a | -83.2% (Dec 15, 2018) | 44.0% |
Read the return columns as compound yearly rates between two dates, before fees and taxes, so a long window can hide a deep slump in the middle. The drawdown column answers a blunter question: how far a buyer at the worst possible high would have been down at the lowest point that followed. The volatility figure summarizes how wide the daily swings were over the past year. None of the three says anything about the next year. If the table shows its unavailable notice, the bitcoin price page still has the latest price and chart, and the crypto converter turns any amount of bitcoin into dollars.
What are the risks of owning bitcoin?
The main risks are deep price falls, permanent loss of coins through lost keys or failed custodians, and rules that can still change.
Bitcoin can lose most or all of its value, and its history includes several falls of more than half. The table uses Coinbase's daily closing prices as published in FRED, the St. Louis Fed's database, which records them at 5 p.m. Pacific time, so intraday highs and lows went a little further.
| Peak close | Later low close | Fall | Months from peak to low |
|---|---|---|---|
| $19,650 on December 16, 2017 | $3,183 on December 15, 2018 | −83.8% | 12 |
| $63,661 on April 13, 2021 | $29,789 on July 20, 2021 | −53.2% | 3 |
| $67,510 on November 8, 2021 | $15,756 on November 21, 2022 | −76.7% | 12 |
| $124,720 on October 5, 2025 | $58,586 on June 30, 2026 | −53.0% | 9 |
On October 31, 2026, the latest close in the series, bitcoin was still 37.9% below its 2025 peak. The April to July 2021 row shows that a fall of more than half can strike in the middle of a rally, not only after a cycle peak. The crypto market cycles guide and the bitcoin drawdowns study examine these episodes, and neither past cycles nor halvings work as a timing signal.
Lost keys. Whoever holds a wallet's private keys controls its coins, and the network has no reset button. Chainalysis estimated in 2017 that 2.78 million to 3.79 million bitcoins, 17% to 23% of those mined by then, were already lost for good. Heirs face the same wall if keys are not documented, which crypto inheritance planning addresses.
Custodians. Coins held for you are only as safe as the company holding them, as customers of crypto platforms that failed in 2022 found out, and no federal deposit insurance stands behind bitcoin itself.
Rules and taxes. A March 17, 2026 SEC interpretation, which the CFTC joined, lists bitcoin as a digital commodity rather than a security. The CLARITY Act, which would set a full framework for trading platforms, passed the House in July 2025 but stalled when a September 15, 2026 Senate vote to begin debate failed 49 to 50. The IRS treats bitcoin as property, so selling or spending it is a taxable disposal, and brokers report sales on Form 1099-DA: Gross proceeds for sales from January 1, 2025; cost basis for covered assets bought from January 1, 2026 in a custodial account. Crypto regulation in the US tracks the changes.
Network economics. The subsidy that pays for Bitcoin's security keeps halving while fees supplied only about half a percent of miner revenue in the month to November 2, 2026, and in that month the two largest mining pools found 46.7% of all blocks, according to mempool.space.
Because several of these risks can arrive at once, how much crypto to hold works through position sizing, and crypto vs stocks compares the two asset types. For bitcoin set against the second-largest network, see bitcoin vs ethereum.