Bitcoin basics: start here

New to bitcoin? This page is the short, honest version of what you need to know first: what bitcoin is, why there will only ever be 21 million, what “self-custody” means, and the words you’ll keep running into. Every fact links to where you can check it.

What bitcoin is

Bitcoin is money that runs on a network of computers instead of a bank. The Bitcoin white paper describes it as “a purely peer-to-peer version of electronic cash” that lets one person pay another directly, without going through a financial institution.

Every transaction is recorded on a public ledger, the blockchain. Thousands of independent nodes check each one against the same rules, so no single company or government runs it.

Why only 21 million

The supply is fixed by the software. According to bitcoin.org’s FAQ, only 21 million bitcoins will ever be created. New coins are released to miners on a schedule that is cut in half every 210,000 blocks, roughly every four years. That event is called the halving (Bitcoin Wiki: Controlled supply).

You don’t need to buy a whole coin. Each bitcoin splits into 100 million sats (Bitcoin Wiki: Satoshi), so you can start with a few dollars.

Quick facts

Sources: bitcoin.org FAQ (supply, ~10-minute blocks), Controlled supply (halving), Satoshi (unit), white paper.

How it stays secure: proof of work

Miners bundle transactions into blocks. To add a block they have to spend real computing work, and the chain with the most work is the one everyone follows. The white paper says that as long as honest nodes control most of the computing power, the honest chain grows fastest and outpaces attackers. That’s where this site’s name comes from. Rewriting history would mean redoing all that work (Bitcoin developer guide: block chain).

You can run a node yourself to check every transaction against the rules on your own. I still run a Bitcoin node using Umbrel. Affiliate links. If you buy through them, I may earn a commission at no extra cost to you. Want to do the same? Here’s how to run your own bitcoin node at home.

Self-custody: not your keys, not your coins

If your bitcoin sits on an exchange, the exchange holds the keys. That’s a fine place to start, and it beats holding cash that loses value. But only when you hold the keys yourself can nobody freeze, lose or lend out your coins.

Most people do that with a hardware wallet, a small device that keeps the keys offline, plus a written backup called a seed phrase. Two rules matter more than anything else:

• Never type your seed phrase into a website, app, phone or computer.
• Nobody legitimate will ever ask for it. Not support, not the wallet maker, not me.

When you’re ready, read Hardware wallets explained and how to back up your seed phrase. Already have a wallet? Run the Is My Wallet Safe? check.

Lightning: fast, cheap payments

The Lightning Network is a layer built on top of bitcoin for instant, low-fee payments. Instead of putting every small payment on the blockchain, it moves them through payment channels and settles to bitcoin later. It’s great for spending and sending small amounts.

My videos

Two videos from my YouTube channel to go with this page:

Glossary

Sats

Short for satoshis, the smallest unit of bitcoin. 100,000,000 sats = 1 BTC.

Seed phrase

The 12, 20 or 24 words that back up your wallet. Whoever has them controls the bitcoin.

Hardware wallet

A small device that keeps your keys offline and signs transactions.

Self-custody

Holding your own keys instead of leaving bitcoin with an exchange.

Mempool

The waiting room of unconfirmed transactions before they make it into a block.

UTXO

An unspent transaction output: the “coins” a bitcoin wallet actually spends.

Halving

The scheduled cut in new bitcoin issuance every 210,000 blocks.

HODL

Slang for holding bitcoin long-term instead of trading it.

Go deeper

If you want to go deeper, I’d read Bitcoin Is for Everyone first. It’s at the top of my beginner reading list.

Bookmark-worthy sites: mempool.space (live blocks and fees), bitcoin.org (the original project site and white paper), and Bitcoin Optech (a technical newsletter, for later).