Crypto 101 · Coins
What Is Bitcoin? How It Works and Why It Has 21 Million Coins
Abstract
Bitcoin is a peer-to-peer digital currency that needs no bank because thousands of computers agree on a shared record secured by proof of work. Its total supply is fixed at just under 21 million coins, released on a schedule that halves every 210,000 blocks. We explain how it works, why scarcity matters, and link live Bitcoin data.
Keywords: Bitcoin, 21 million, halving, proof of work, digital scarcity
1. In plain English
Bitcoin, introduced in a 2008 paper by someone using the name Satoshi Nakamoto, is digital money that works without a bank. Instead of a company keeping the ledger, thousands of computers keep identical copies and agree on new entries. To stop cheating, adding a page to the ledger requires solving a costly puzzle, which is called proof of work [1].
Bitcoin's second distinguishing feature is its fixed supply. New coins are created only as a reward for the computers that add pages, the reward is cut in half every 210,000 pages, roughly every four years, and the total can never exceed just under 21 million. Nobody can decide to create more, which is why many people describe it as digital gold [2, 3].
2. How you use it
You do not need to mine to own Bitcoin. You need a wallet that holds your keys, an address to receive to, and a way to get some, for example by receiving a payment or using an exchange. To send, your wallet signs a transaction and the network confirms it, as explained in how transactions work.
3. Go deeper: the design
Bitcoin's proof of work is a variation of Hashcash, a scheme that makes producing a value costly and verifying it cheap [4]. A block is valid only if the hash of its header is below a target that adjusts every 2,016 blocks to keep blocks about ten minutes apart [5]. Because the fixed schedule is enforced by every full node, the supply is not a promise but a rule of the software. A deeper look at the numbers is in Bitcoin tokenomics.
4. Key facts
Table 1. Bitcoin at a glance.
| Fact | Value |
|---|---|
| Launched | 2009, following the 2008 paper [1] |
| Consensus | Proof of work (SHA-256) |
| Block time | About 10 minutes |
| New coins per block | 50 at launch, halved every 210,000 blocks [2] |
| Maximum supply | Just under 21 million [3] |
5. Common misconceptions
Bitcoin is not anonymous: transactions are public and tied to addresses. It is not controlled by a company: nobody can change the rules alone. And owning it does not require mining: mining is how new coins are issued and the network is secured, while holding only requires keeping your keys safe.
6. In Scrypt Wallet
Scrypt Wallet supports Bitcoin natively and non-custodially. See the live Bitcoin price page for the chart, supply and network data, and the Bitcoin wallet page to start receiving.
References
- Nakamoto, S. (2008). Bitcoin: A Peer-to-Peer Electronic Cash System. Whitepaper. https://bitcoin.org/bitcoin.pdf
- Bitcoin Core developers (2009). GetBlockSubsidy (src/validation.cpp). Bitcoin Core source code: the consensus rule for the block subsidy (50 coins, halved every nSubsidyHalvingInterval blocks). https://github.com/bitcoin/bitcoin/blob/master/src/validation.cpp
- Bitcoin Wiki contributors (2010). Controlled supply. Bitcoin Wiki: derivation of the 21 million cap from the halving schedule. https://en.bitcoin.it/wiki/Controlled_supply
- Back, A. (2002). Hashcash: A Denial of Service Counter-Measure. Technical report; the proof-of-work construction Bitcoin builds on. http://www.hashcash.org/papers/hashcash.pdf
- Bitcoin Wiki contributors (2010). Difficulty. Bitcoin Wiki: the target is retargeted every 2,016 blocks to hold the average block interval near ten minutes. https://en.bitcoin.it/wiki/Difficulty
Common questions
Who controls Bitcoin?
No single party. The rules are enforced by thousands of independent nodes, and changing them requires broad agreement.
How many bitcoin will ever exist?
Just under 21 million, released on a schedule that halves every 210,000 blocks.
General education, not financial, tax or legal advice. Figures are schematic. Protocol parameters are cited to primary sources and can change; verify against the linked source before relying on them.