What is Bitcoin?

Bitcoin is digital money. It lives on the internet, not in a bank, and nobody runs it the way a company runs an app. There is no office building, no CEO, and no customer-service line.

Instead, thousands of computers around the world cooperate to keep track of who owns what. The rules are written in software, and the software is public.

Regular money — dollars, euros, pesos — is printed by governments. When more is printed, each unit tends to buy a little less over time. A dollar in 2010 buys clearly less today.

Bitcoin was designed in 2008 as an experiment: what if there were a kind of money no government could print more of? The supply is fixed in code at 21 million coins, forever.

You don't open a Bitcoin account at a company. You generate a wallet, which is really just a pair of keys: a public one (like an email address — you share it) and a private one (like a password — you keep it secret).

To send Bitcoin, your wallet uses the private key to sign a message that says “move this coin to that address.” The network checks the signature. If it's valid, the transfer happens. No bank in the middle.

Every ten minutes or so, all the new transactions are bundled into a block — like a page in a giant shared ledger. Each new block points back to the one before it, so the blocks form a chain.

Because every computer on the network keeps a copy of the same chain, nobody can secretly change an old transaction. Editing history would require redoing every block since, on every computer at once. In practice, that's impossible.

Adding a new block isn't free. Computers around the world compete to solve a math puzzle. The first to solve it wins the right to add the next block and earns some newly created Bitcoin as a reward. This is called mining.

The puzzle is hard on purpose. The cost of electricity and hardware is what makes it expensive for anyone to attack the network — they would have to out-compute everyone else combined.

The reward for mining a block cuts in half roughly every four years — an event called the halving. It started at 50 coins per block in 2009; by 2024 it was down to 3.125.

Because of this schedule, new Bitcoin enters circulation more and more slowly, and the total will never exceed 21 million. The last coin is expected to be mined around the year 2140.

Most people start at an exchange— a regulated website or app where you can connect a bank account or card and swap regular money for Bitcoin. You don't have to buy a whole coin; Bitcoin divides into 100 million tiny units, so $20 worth is perfectly normal.

The steps are usually: create an account, verify your identity (ID + selfie, like opening a bank account online), deposit some money, and click Buy. The coins land in the wallet the exchange manages for you.

A few well-known options: Coinbase, Binance, Kraken, and Strike. Availability and fees vary by country — check which ones operate where you live before picking one.

These links are for reference only. Dummyfi does not endorse any exchange and earns nothing if you sign up.

Once you own Bitcoin, you need to decide where it lives. There are two broad categories.

A hot wallet is connected to the internet — the exchange app you bought from, or a mobile wallet like Coinbase Wallet, Muun, or BlueWallet. Convenient for small amounts and everyday use, but if the device or service is hacked, the coins are at risk.

A cold wallet stays offline. Most people use a small hardware device (Ledger or Trezor) that holds the private key and only signs transactions when plugged in. Less convenient, but it's the standard recommendation for larger amounts you don't need every day.

Common rule of thumb: keep what you'd carry in a wallet hot, and what you'd keep in a safe cold.

Bitcoin's price moves a lot — sometimes 50% in a year, in either direction. It is not insured by any government. If you lose your private key, the coins are gone forever. There is no customer support to call.

Whether Bitcoin is a good fit for any one person depends on their goals, time horizon, and risk tolerance — questions this page deliberately does not try to answer.