Bitcoin FAQ

Bitcoin is decentralised digital money: a network of computers follows shared rules to record transactions on a public ledger called the blockchain, instead of a bank keeping the ledger. Bitcoin (capital B) is the network; bitcoin (lowercase, BTC) is the currency unit. Nobody owns the network, and no single company can change its rules alone.

Bitcoin was described in a 2008 paper by Satoshi Nakamoto — a name, not a confirmed identity — and the network launched in 2009. Satoshi stopped communicating publicly around 2010. The code is open source, so anyone can read the rules, and changes only take effect if network participants adopt them.

Wallets create transactions signed with your private keys, nodes check them against shared rules, and miners group valid transactions into blocks about every ten minutes. Once a transaction is buried under more blocks, it becomes increasingly hard to reverse. That is why recipients wait for confirmations on larger payments.

The blockchain is Bitcoin's public, chronological record of transactions, grouped into blocks that each reference the previous block. Anyone can inspect it, but it contains addresses and amounts, not names or email addresses. That is why Bitcoin is pseudonymous, not anonymous.

Bitcoin's supply is capped at 21 million coins. New bitcoin is issued to miners as a block reward, and that reward halves roughly every four years in an event called the halving, so new supply slows over time.

A satoshi (sat) is the smallest Bitcoin unit: 0.00000001 BTC, so one bitcoin equals 100,000,000 sats. You do not need to buy a whole bitcoin; most payments are fractions of one.

It depends where you live, and the rules change. In many countries Bitcoin is legal to own and use but may be taxed or regulated; in some it is restricted or banned. Check your local rules — this site cannot give legal advice for your jurisdiction.

BTC is the common abbreviation for bitcoin, the currency unit. Bitcoin with a capital B usually means the network and protocol; bitcoin with a lowercase b means the asset itself.

Bitcoin is not backed by gold, a government, or a company's assets. Its value comes from people being willing to accept it, and from its fixed supply, open rules, and the security of its network — which is also why its price is volatile.

A node is a computer running Bitcoin software that checks transactions and blocks against the shared rules and passes valid ones on. Anyone can run one, and nodes are part of what keeps the network decentralised: no single node can rewrite the rules for everyone else.

A halving is when the new bitcoin issued to miners per block is cut in half, roughly every four years. It is built into Bitcoin's issuance schedule, and it is why new supply slows over time toward the 21 million cap.

Bitcoin's price moves sharply because its supply is fixed and its market is still relatively small, so even modest buying or selling can move the price. News, regulation, and speculation add to the swings. Volatility is a property of the market, not a bug in the payment system — but it makes bitcoin a poor short-term store of value for money you need soon.

There is no single company, server, or switch to turn off. Shutting Bitcoin down would require stopping nodes and miners all over the world at once, which is why it has kept running since 2009. Individual countries can restrict exchanges or access locally, but that does not stop the network elsewhere.

A wallet is software — or, for a hardware wallet, a device plus software — that manages your keys and creates transactions. It does not store coins inside it. Your bitcoin lives on the blockchain; the wallet holds the keys that let you spend it.

A private key is a secret number that lets you sign transactions and spend bitcoin from an address. Anyone who has it can spend your bitcoin, so never share it, photograph it, or paste it into a website.

A seed phrase — usually 12 or 24 ordinary words — is a human-readable backup of your wallet's keys, and entering it into a compatible wallet restores your bitcoin. Write it on paper, store it privately and offline, and never share it or type it into a website. Anyone with it can take your bitcoin, normally irreversibly.

In a custodial wallet, such as an exchange account, someone else holds your keys — convenient, but you trust that company to stay solvent and let you withdraw. In self-custody, you hold your own keys: nobody can freeze your wallet for you, but nobody can recover it for you either.

A hot wallet is connected to the internet, such as a phone wallet: convenient for everyday spending, but exposed to malware and phishing on that device. A cold wallet keeps keys offline, usually on a hardware device, making it slower but better for larger amounts you rarely spend. A common approach is spending money hot, savings cold.

If you have your seed phrase or another valid backup, you can restore the wallet on a new device — the coins were never on the phone. If you have no backup and nobody else holds your keys, the bitcoin is normally lost for good. Test restoring from your backup with a small amount first.

You can, but it is better not to. Reusing one address links all its payments together on the public blockchain, harming your privacy and the privacy of people who pay you. Most modern wallets generate a fresh address for each payment automatically.

A hardware wallet is a small device that keeps your private keys offline and signs transactions without exposing the keys to your computer. You still need its PIN and seed-phrase backup: lose both, and the device alone will not recover your bitcoin.

Write down your seed phrase on paper, store it somewhere safe and private, and test restoring the wallet from it on a second device before trusting it with a large amount. Never store the phrase in a photo, cloud note, email, or chat message.

A bitcoin address is a shareable destination for receiving bitcoin, generated by your wallet from your keys. It is not an account and does not identify you by itself, but anyone can see payments to it on the public blockchain.

Yes — many people do. You might use one wallet for everyday spending, another for savings, and a separate Lightning wallet, each with its own keys and backup. Just remember that each wallet needs its own seed phrase kept safe.

The usual routes are a regulated exchange, a broker, a Bitcoin ATM, or a peer-to-peer trade, each with different fees, identity checks, limits, and risks. Before you buy, check the total fee, how you will withdraw to your own wallet, and whether the service is legal in your country. Start small while you learn withdrawal and backup.

Get the recipient's address or payment request, paste or scan it carefully, enter the amount, check the fee, and confirm. Addresses are unforgiving — one wrong character can send funds to an address nobody controls. For a first payment to someone new, send a small test amount first.

Open your wallet, choose Receive, and share the address or QR code it shows. The sender does not need you online, and you never need to share a private key or seed phrase to receive a payment. Anyone asking for one as part of receiving is running a scam.

In general, no. Once confirmed in the blockchain, a transaction cannot be undone by you, your wallet, or a support team. If you paid through an exchange or payment service, its refund policy might help, but the Bitcoin transaction itself is not reversible.

No. Bitcoin is divisible to eight decimal places, down to one satoshi (0.00000001 BTC), subject to the minimums and fees of the service you use. A headline price for one bitcoin does not mean you need that much to start.

On-chain, a first confirmation takes about ten minutes on average, but can take more or less depending on the network and your fee. Lightning payments are usually near-instant. A recipient may still wait for several confirmations for a large payment.

Usually, that bitcoin is lost. Bitcoin transactions are generally irreversible, and there is no support team that can pull one back. Always double-check the full address and send a small test payment first to a new recipient.

Once broadcast, you generally cannot cancel an on-chain payment. If it is still unconfirmed and your wallet enabled replace-by-fee, you may be able to replace it with a higher-fee version; otherwise you must wait for it to confirm or drop from the mempool.

Usually, yes, for regulated exchanges and brokers, which must verify identity under anti-money-laundering rules. Peer-to-peer trades and Bitcoin ATMs vary: some require little or no ID but charge higher fees or have lower limits.

On-chain fees pay miners to include your transaction in a block. They are not set by a company; they depend on your transaction's size in bytes and how busy the network is. Wallets normally suggest a fee and let you choose faster (higher fee) or slower (lower fee).

Transactions wait in the mempool until a miner includes them in a block, and blocks arrive about every ten minutes on average — but any single block can take longer, and a low fee means a longer wait when the network is busy. Do not immediately resend the same payment; many wallets can replace it with a higher fee if replace-by-fee was enabled, or it may confirm on its own.

A confirmation means your transaction is included in a block, and each block built on top adds another confirmation, making reversal harder. One confirmation is often enough for small payments; recipients commonly wait for three to six for larger amounts.

The mempool is where unconfirmed transactions wait before miners include them in blocks. When demand is high, the mempool grows and fees rise, because miners naturally prioritise transactions paying more per byte.

Satoshis per virtual byte (sat/vB) is how on-chain fees are usually quoted: the fee rate per unit of transaction size. A smaller, simpler transaction costs less than a larger one at the same rate, and wallets use the current rate to suggest a fee.

Wait for a quieter period, use a wallet that lets you set a lower fee, batch payments where possible, and use Lightning for small, frequent payments. Never set a fee so low that your transaction sits unconfirmed for days unless you are happy to wait.

No — Bitcoin is pseudonymous. Transactions are public on the blockchain, linked to addresses rather than names, but if an address is ever linked to your identity, its history can be traced. Reusing addresses or publishing them publicly reduces privacy further.

Keep your seed phrase offline, private, and backed up — and test restoring from it. Use a reputable, updated wallet on a device you trust, strong unique passwords and two-factor authentication on exchange accounts, and a small test payment before a large one. Be sceptical of urgency, giveaways, and anyone asking for your keys.

Watch for giveaway or doubling scams (“send 0.1 BTC, get 0.2 back”), fake support asking for your seed phrase or remote access, lookalike wallet apps and sites, guaranteed-return investments, and new online contacts steering you to a crypto investment platform. If it needs your seed phrase, password, or a rushed payment, stop.

Do not share it — with anyone, for any reason. No legitimate wallet, exchange, or support team needs your seed phrase or private key. If you already shared it, assume the wallet is compromised and move any remaining funds to a brand-new wallet with a new seed phrase, using a device you trust, as quickly as you can.

Bitcoin's core network has never been hacked in the sense of coins being created from nothing or the ledger being rewritten, but using Bitcoin is not risk-free. Most losses happen at the edges: phishing, fake apps, malware, weak passwords, exposed seed phrases, or a custodial service being breached or failing.

If your bitcoin is on an exchange, you are relying on that company. If it freezes withdrawals, is hacked, or becomes insolvent, you may wait a long time for access or lose funds entirely. That is the main case for self-custody for funds you do not need to trade immediately: withdraw to a wallet whose keys you control, with a tested backup.

Phishing is a fake message, site, or app that impersonates a wallet, exchange, or support team to steal your password, seed phrase, or login. Check the sender and web address carefully, never click through to enter a seed phrase, and go to a wallet's official site directly instead of following a link.

Generally, no — not in the way bank deposits are. Self-custody bitcoin has no deposit insurance, and exchange coverage, where it exists, varies and may not cover your coins. Assume you are responsible for your own backup and security.

Two-factor authentication (2FA) requires a second proof, such as a code from an authenticator app, in addition to your password when signing in. It protects exchange accounts, but it does not protect a seed phrase: anyone with your seed phrase can still take self-custody bitcoin.

Act fast, but be realistic: a confirmed Bitcoin payment is generally irreversible. Save all evidence, report it to the platform involved and to local authorities, and warn others. Anyone offering to recover your bitcoin for a fee is almost certainly running a second scam.

Mining is how new blocks are added to the blockchain and new bitcoin is issued. Miners compete to solve a proof-of-work puzzle; the winner's block is added, and that miner earns the block reward plus its transactions' fees. Mining also secures the network, because rewriting history would require redoing all that work.

No. Mining profitability depends on the bitcoin price, mining difficulty, electricity costs, hardware efficiency, and fees — all of which change, so a profitable setup today can become unprofitable tomorrow. Treat anyone selling mining equipment or contracts with guaranteed returns with scepticism.

Difficulty measures how hard the proof-of-work puzzle is, and it adjusts roughly every two weeks so blocks keep arriving about every ten minutes on average. When more miners join, difficulty rises; when miners leave, it falls.

Mining uses a lot of electricity, and its environmental impact depends heavily on where that electricity comes from — renewable, stranded, or fossil-fuel energy have very different footprints. Estimates vary widely because the energy mix is hard to measure precisely, so be wary of any single, certain number.

Proof of work is the puzzle miners compete to solve to add a block to the blockchain. Solving it costs real computing power and electricity, which is what makes rewriting Bitcoin's history expensive and therefore hard to do.

The block reward is the new bitcoin a miner earns for adding a block, plus the fees from that block's transactions. It halves roughly every four years, so over time fees will make up a larger share of miner income.

Lightning is a network built on top of Bitcoin for fast, low-fee payments. Instead of recording every small payment on the blockchain, users open payment channels, transact instantly within them, and settle the net result on-chain when a channel closes. It suits small, frequent payments; on-chain Bitcoin is usually simpler for large, long-term storage.

On-chain payments are recorded directly on the blockchain, take about ten minutes per block on average, and have fees that vary with demand. Lightning payments are near-instant and usually cost a fraction of a cent, but depend on channels having enough liquidity in the right direction. In practice: on-chain for larger, final settlement; Lightning for everyday, coffee-sized payments.

Often, yes — or a wallet that supports both. Some wallets are on-chain only, some Lightning only, and some support both, sometimes with separate balances. Lightning wallets also come in custodial and non-custodial forms, so check which type a wallet is before depositing a large amount.

Lightning is designed for payments, not as a vault. Keeping a large amount in a channel ties it up, depends on the other side of the channel and on your wallet staying available, and can be harder to recover than on-chain funds if something goes wrong. Keep spending money on Lightning and savings on-chain, with a tested backup.

A Lightning channel is a payment link between two parties, funded with bitcoin locked on-chain. The parties can transact instantly within the channel, and only the final balance is settled on the blockchain when the channel closes.

A Lightning invoice is a payment request for a specific amount, usually shown as a QR code or a long string starting with 'lnbc'. It can only be paid once, and it expires, so generate a fresh invoice for each payment.