What is
Bitcoin?

In October 2008, a person or group using the name Satoshi Nakamoto published a nine-page paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System.” Three months later, the network went live.

The idea was straightforward: money that moves between people without banks in the middle. No central authority issues it. No single entity controls it. Transactions are verified by a distributed network of computers running the same software.

Nakamoto disappeared from public communication in 2011. Their identity remains unknown. The network has run uninterrupted since 3 January 2009.

The blockchain. Every Bitcoin transaction is recorded on a public ledger. This ledger is maintained by thousands of computers worldwide. Once a transaction is confirmed, it cannot be reversed or altered. Anyone can view the record.

Mining.New transactions are grouped into blocks. Miners — specialised computers — compete to solve a mathematical puzzle. The winner adds the block to the chain and receives newly created bitcoin as a reward. This is called proof of work. It is energy-intensive by design: the cost of attacking the network must exceed the reward.

The halving. Roughly every four years, the mining reward is cut in half. In 2009 miners received 50 BTC per block. After the April 2024 halving, they receive 3.125 BTC. This built-in scarcity schedule means the last bitcoin will be mined around the year 2140.

Fixed supply.There will only ever be 21 million bitcoin. Approximately 19.8 million have been mined so far. This cap is the foundation of the “digital gold” argument: like gold, you cannot create more of it on demand.

Bitcoin is traded on every major exchange accessible to UK residents. You can buy it in pounds via FCA-registered platforms. Since January 2024, spot Bitcoin ETFs have traded in the US. UK investors cannot buy those ETFs directly under current FCA rules, but they signal institutional acceptance of Bitcoin as an asset class.

HMRC treats Bitcoin as property, not currency. Selling it, swapping it for another cryptocurrency, or spending it triggers Capital Gains Tax. The annual CGT allowance is £3,000. You need records of every transaction from day one.

Bitcoin is volatile. Drops of 50% or more have occurred multiple times in its history. It has also been the best-performing asset class over any ten-year rolling period since its creation. That combination of extreme risk and extreme return is what draws investors in — and what makes position sizing critical.