BitcoinMadeClear1. Money you can send online.
Bitcoin is a system for sending digital money. A bitcoin is a unit of that money, often written as BTC. You can send a fraction of one; you do not need a whole bitcoin.
A bank usually keeps track of the money in your account. Bitcoin lets people send payments without a bank keeping that record for everyone.
Bitcoin's price can change sharply. Some businesses accept it, and many do not. Learning how it works does not mean you need to own any.
2. A notebook with many copies.
Bitcoin's blockchain is a public record of payments, copied and checked by many computers.
A ledger is simply a record of payments. Imagine a notebook that says which amounts moved from one person to another. Bitcoin has a public version of that notebook.
Transfers are grouped into pages called blocks. Each page is linked to the previous one. That linked record is the blockchain.
The record uses addresses rather than a list of people's names. But it is public, so Bitcoin is not automatically anonymous.
3. Mining adds the next page.
Mining is computing work used to propose the next block of Bitcoin payments. Specialised computers gather payments and compete to solve a difficult number puzzle. This takes real computing work and electricity.
A successful miner proposes the next block. Other computers, called nodes, check it against Bitcoin's rules. A miner cannot make an invalid payment valid just by winning the puzzle.
The miner of an accepted block can receive newly created bitcoin and fees from its payments. The amount of new bitcoin allowed gets smaller over time.
4. A limit of 21 million.
Bitcoin's current rules limit the total supply to 21 million bitcoin. New bitcoin enters circulation through mining, on a schedule that slows down over time.
This limit does not guarantee value or rising prices. Lost keys can also leave some bitcoin permanently unspendable.
The part to keep with you.
Bitcoin combines digital money, a shared public record, and rules checked by many computers. Your wallet uses secret keys to approve spending. That is our next lesson.
Quick answers about Bitcoin
Bitcoin combines digital payments, a public record and rules checked by computers.
Can I send less than one bitcoin?
Yes. You can send a fraction of one bitcoin; you do not need a whole coin. BTC is the common short label for bitcoin, and a satoshi is a smaller unit. Your wallet helps enter an amount and shows the payment fee before you approve sending it.
What is the Bitcoin blockchain?
The Bitcoin blockchain is a shared public record of confirmed payments. Transfers are grouped into blocks, and each block points back to the previous one. Many computers keep copies and check new blocks against the same rules. Addresses appear in the record, so payments are not automatically anonymous.
What does Bitcoin mining do?
Mining uses computing work to propose the next block of payments. A successful miner proposes a block, but other computers still check that it follows Bitcoin's rules. An accepted block can give the miner newly created bitcoin and payment fees. Winning the computing puzzle cannot make an invalid payment valid.
Why is Bitcoin's supply limited?
Bitcoin's current rules limit total supply to 21 million bitcoin. New bitcoin enters circulation through mining on a schedule that slows over time. Computers checking blocks reject rewards that exceed those rules. A limited supply does not guarantee value or rising prices, and lost keys can leave bitcoin unspendable.
Look up the meaning of satoshi or continue to how Bitcoin wallets and keys work.