What is bitcoin? How it works, supply and who created it

What is bitcoin? Bitcoin is digital money that runs without a bank, a government or any central operator. Transactions are recorded on a shared public ledger, the blockchain, copied across thousands of independent computers; new coins are issued on a fixed schedule to miners; and there will never be more than 21 million bitcoins. Whoever holds the private key controls the coins and can send them anywhere in the world without asking permission.

This guide covers where bitcoin came from, how the network actually works, how new coins are created, why the price swings so hard, and what bitcoin looked like in numbers on November 6, 2026.

What is bitcoin and who created it?

Bitcoin was described by a person or group using the name Satoshi Nakamoto in a nine-page paper, "Bitcoin: A Peer-to-Peer Electronic Cash System," sent to a cryptography mailing list on October 31, 2008. The goal, stated in the abstract: let online payments go directly from one party to another without a financial institution, while making sure nobody can spend the same coin twice. Before bitcoin, only a trusted middleman keeping a single master ledger could prevent that double spending.

The network went live on January 3, 2009, when the first "genesis" block was recorded with a 50 BTC reward (mempool.space, block 0). Satoshi's identity is still unknown. According to the bitcoin.org FAQ, the creator left the project in late 2010 and revealed very little about themselves; development has been run by an open community of contributors ever since.

"Bitcoin" refers to two things: the network (protocol and software) and its currency, BTC. One coin splits into 100 million units, the smallest called a "satoshi" (0.00000001 BTC), so you never need to buy a whole bitcoin.

How does bitcoin work? Four moving parts

1. Keys and addresses. A wallet is not a folder of coins but a pair of keys. The public key becomes an address people send BTC to. The private key, usually backed up as a seed phrase, signs outgoing payments. Whoever has the key controls the funds.
2. Transactions. A payment is a message saying "move this much BTC from these coins to that address," signed with the private key. Anyone on the network can verify the signature without ever seeing the key.
3. The blockchain. Valid transactions are bundled into blocks roughly every 10 minutes, and each block includes the hash of the one before it. The result is a chain that can't be quietly rewritten. More in our explainer What is blockchain.
4. Mining and nodes. Miners race to find a valid hash for the next block (proof of work) and earn newly issued coins plus fees. Nodes, computers that keep a full copy of the chain, check every block against the rules and reject anything that breaks them. See How bitcoin mining works.

The whitepaper puts the security model simply: as long as honest participants control most of the computing power, they extend the longest chain faster than any attacker. Changing an old record would mean redoing the work for that block and every block after it.

How many bitcoins are there, and where do new ones come from?

New BTC only enter circulation as the reward a miner earns for a block. The reward started at 50 BTC in 2009 and is cut in half every 210,000 blocks, roughly every four years. That's the halving. Since the April 2024 halving at block 840,000, the reward has been 3.125 BTC.

The schedule comes from the Bitcoin Wiki, which also gives the exact cap, 20,999,999.9769 BTC, and estimates that the last satoshi will be mined around 2140. At 3.125 BTC per block, that works out to about 450 BTC a day (144 blocks × 3.125 BTC).

Some coins are gone for good. As bitcoin.org notes, BTC whose keys are lost stay on the blockchain but can never be spent, so the coins actually in circulation are fewer than the issuance counter shows.

Bitcoin by the numbers on November 6, 2026

Here's what the network looked like in CoinLab's market data as of 3:00 AM ET on November 6, 2026:

A few takeaways. At $75,600, one dollar buys roughly 1,320 satoshis. In 17 years the network has recorded nearly 975,000 blocks, and more than 95% of all coins already exist, even though issuance will continue for over a century. And for a beginner, the most useful number: in the 24 hours before this snapshot the price fell almost 6%, and it sat 40% below its peak. For bitcoin, that range is normal. Live figures are on our bitcoin page.

Why is bitcoin worth anything, and why is it so volatile?

Bitcoin has no issuer backing it and pays no dividends. Its price is set purely by supply and demand on exchanges. The case its buyers make:

• Predictable supply. The issuance schedule is known a century in advance and can't change without the nodes agreeing. Hence the "digital gold" comparison.
• No middleman. No single company can block or reverse a payment, and you can hold the coins yourself.
• Global and always on. The network works the same in every country, 24/7.

Why the price swings: per bitcoin.org, the market is still relatively small, so fairly modest trades can move it. Add leverage in the derivatives market, central bank rate news and ETF flows, and 5⁠–⁠10% daily moves become routine.

Is bitcoin legal, and how do people use it?

It depends on the country: in some places it's a legal asset taxed on gains, in others banks and exchanges face restrictions, and a few ban it outright. Even the best-known experiment with bitcoin as legal tender was walked back in part: in January 2025, El Salvador's legislature amended its Bitcoin law to meet IMF loan terms, and private businesses are no longer required to accept it (Decrypt).

In practice, people use bitcoin:

• as long-term savings or an investment: buy on an exchange and hold (how to buy bitcoin, bitcoin cold wallets);
• for cross-border transfers without a bank;
• as a trading instrument: spot, futures, options and exchange-traded funds (ETFs).

Common beginner mistakes

• "Bitcoin is anonymous." It isn't. Every transaction is public and permanent; bitcoin.org says plainly that it offers less privacy than cash. Addresses don't carry names, but exchanges that verify identity link addresses to people.
• "I can cancel a transfer." Nobody can reverse a confirmed transaction. Send to the wrong address and the money is most likely gone.
• "My exchange account is my wallet." Coins on an exchange are the exchange's IOU to you. It holds the keys; if it's hacked or freezes withdrawals, you depend on it.
• Seed phrase in the cloud or a photo. Whoever gets the seed phrase gets the coins. Keep it offline.
• Going all in after a rally. Drawdowns of 50⁠–⁠80% have happened many times in bitcoin's history; see bitcoin annual returns.

FAQ

Who controls bitcoin? No single party. The rules live in software that nodes run voluntarily, and changes take effect only if the network adopts them.

Can more than 21 million bitcoins be created? Only if nearly all nodes agreed to run software that allows it. Today, the network automatically rejects any block that pays itself too much.

Do I have to buy a whole bitcoin? No. BTC divides down to 0.00000001 (one satoshi), and exchanges sell it in amounts as small as a few dollars.

How is bitcoin different from other cryptocurrencies? The whole industry started with bitcoin, and it remains the largest coin by market value: on November 6, 2026, it made up 59.2% of the total crypto market. For a comparison with the second-largest network, see Ethereum vs bitcoin.

This is not investment advice.