A public record
The blockchain records which addresses control bitcoin. Anyone can inspect it, although an address does not automatically reveal the person behind it.
Learn — Bitcoin
Bitcoin is a set of rules
people choose to run.
It is part payment network, part public ledger and part scarce digital asset. Understanding those three layers is more useful than deciding whether it is simply “money” or “digital gold”.
Useful anchors
21MSupply limit
The maximum set by the rules used by today’s Bitcoin network
2009Network launch
The first block was mined on 3 January 2009
~10 minBlock target
The protocol adjusts mining difficulty to target a block about every ten minutes
The mental model
One word, three connected ideas
A set of rules
Bitcoin software defines valid transactions, the supply schedule and how participants agree on the ledger. Independent operators choose which software rules to accept.
A digital asset
Bitcoin can be transferred without asking a bank to update its own database. Control comes from the private keys that authorise transactions.
What happens when you send bitcoin
Your wallet creates a transaction and signs it with your private key. The network checks that the signature is valid and that the bitcoin has not already been spent. The transaction then waits to be included in a block.
Miners use specialised equipment to compete for the right to add the next block. The successful miner receives newly issued bitcoin and transaction fees. This proof-of-work process makes rewriting settled history costly, but it also consumes substantial energy.
A payment becomes harder to reverse as more blocks are added after it. There is no bank chargeback process: a mistaken address, compromised key or fraudulent payment can be permanent in practice.
Supply
Scarcity is a rule, not a guarantee of value
New bitcoin enters circulation through mining. The block reward halves roughly every four years; after the April 2024 halving it became 3.125 BTC. Under the current schedule, issuance approaches a maximum of 21 million over time.
That limit is strongly defended by participants, but it is not a law of physics. Changing it would require people and businesses to adopt different, incompatible rules. The network's social agreement is part of its design.
Scarcity alone does not create a price. Bitcoin's market value also depends on demand, liquidity, security, regulation and whether people continue to find it useful. A limited supply does not prevent a severe or lasting fall.
For UK readers
Ownership, tax and protection are separate questions
You can hold bitcoin directly or gain exposure through certain exchange-traded products available to eligible UK retail investors. The structure, fees, custody and protections differ, so the name of the asset is not enough to understand what you own.
HMRC generally treats disposals of exchange tokens by individuals as capital gains matters, depending on the facts. Selling, spending or swapping bitcoin can be a disposal. Keep your own GBP-denominated records from the start.
Do not assume the Financial Services Compensation Scheme or Financial Ombudsman Service will cover a crypto loss. Check the exact firm and web address, and treat promises of guaranteed returns as a warning sign.
Next step
Learn what custody really means
Buying an asset is one decision. Deciding who controls the keys is another.
Read the wallet guide →