# What Is Bitcoin and How Does It Work? Bitcoin is a digital asset whose payments are checked by computers on an open network and recorded in a shared ledger, with no bank or central operator in between. It was described in a 2008 paper, and the network started in January 2009. Its price can swing widely, payments cannot be reversed and a lost key means lost access. 9 min read · Updated: 27 October 2026 · Reviewed by the Lzzo.com editorial team ## Key points - No company or central bank issues or backs Bitcoin; computers on the network check payments against shared rules and record them in blocks. - New bitcoin reach miners as a block subsidy that halves every 210,000 blocks, so total issuance stops just under 21 million. - Prices can move over a wide range, confirmed payments are final and whoever controls the private key controls the coins. This guide explains; it does not forecast prices or suggest trades. Block rules, dates and the supply ceiling were checked on 27 October 2026 against the Bitcoin paper, the bitcoin.org glossary, FAQ and developer documentation, the Bitcoin Wiki and the original mailing-list post. Time-dependent values such as the circulating supply are not given as fixed numbers. The Türkiye section summarises Law No. 7518 as published in the Official Gazette on 2 July 2024; later changes are not covered. ## What is Bitcoin? Bitcoin is two things sharing one name: an open payment network and the digital asset that moves on it. A person or group using the name Satoshi Nakamoto described it in the paper "Bitcoin: A Peer-to-Peer Electronic Cash System", announced on a cryptography mailing list on 31 October 2008. The paper's goal was to let online payments go directly from one party to another without passing through a financial institution. The first block of the chain is dated 3 January 2009. No issuer stands behind Bitcoin. It is not a company's debt or a bank deposit, and nobody has promised to buy it back at a set value. Its rules are enforced by software anyone can run, and its price is whatever buyers and sellers agree on. ## How does the network confirm a payment without a bank? The paper defines an electronic coin as a chain of digital signatures. Each owner passes the coin on by signing a hash of the previous transaction together with the next owner's public key, and the person receiving it can check those signatures. Signatures alone cannot stop the same coin from being spent twice, a problem a bank normally solves by keeping the only ledger. Bitcoin replaces that private ledger with a public one: transactions are grouped into blocks, and each block is chained to the one before it. Computers running the software, called nodes, check every block against the rules. When two valid blocks compete, the bitcoin.org developer documentation says peers follow the chain that would be most difficult to recreate, the one with the most proof of work behind it. The paper adds that a block cannot be changed without redoing its work and the work of every block after it, which is why old records are hard to rewrite. A payment gets its first confirmation when it enters a block, and each later block adds one more. The bitcoin.org glossary says a single confirmation can be considered secure for low-value payments, while for larger amounts it makes sense to wait for six or more. Once confirmed, a payment can only be refunded by the person who received it. ## What do miners do, and why does difficulty adjust? Miners collect waiting transactions into a candidate block and search for proof of work. In the paper's words, the search is for a value that, when hashed with a function such as SHA-256, gives a hash beginning with a required number of zero bits. Finding it takes a huge number of attempts; checking it takes one hash. The miner whose block is accepted claims the block subsidy, newly created bitcoin, plus the fees of the transactions it included. Difficulty sets how hard that search is. According to the developer documentation, it is recalculated every 2,016 blocks, and the ideal time for those blocks is 1,209,600 seconds, or two weeks: one block every ten minutes on average. If blocks arrived faster, difficulty rises; if slower, it falls, so block timing stays near the target as computing power joins or leaves. ## Why is the supply limited, and what is the halving? The bitcoin.org glossary says the block subsidy started at 50 BTC in 2009 and halves every 210,000 blocks, roughly every four years, which is what produces the supply cap of 21 million coins. Each halving cuts the number of new coins added per block, so issuance shrinks step by step. The paper anticipated this: once a predetermined number of coins have entered circulation, the incentive can move entirely to transaction fees. The exact ceiling sits slightly below 21 million: the Bitcoin Wiki gives 20,999,999.9769 BTC, because amounts are stored as whole satoshis. A fixed ceiling says nothing about where the price goes; that depends on demand. The [halving guide](https://lzzo.com/learn/what-is-the-bitcoin-halving) lists the dates of past halvings. ## Why does the Bitcoin price move over such a wide range? Bitcoin has no earnings, cash flow or balance sheet to anchor a valuation, so its price is set by supply and demand across many trading venues at once. The Lzzo.com [Bitcoin page](https://lzzo.com/crypto/bitcoin) lists some of the forces it reacts to: institutional demand through channels such as [spot ETFs](https://lzzo.com/learn/what-is-an-etf) and company treasuries, miner supply that shifts after each halving, global interest rates and liquidity, and the regulatory approach of different countries. The bitcoin.org FAQ adds a structural reason: the market is still relatively small, so relatively small events, trades or business activities can significantly affect the price. The same page says no one is in a position to predict the future of Bitcoin. Past moves describe history; they are not a forecast. ## What are the main risks of holding Bitcoin? Bitcoin carries high risk. The points below describe risks; they are not a prompt to act: - Price swings: the value can fall sharply, and a large part of it can be lost. - Final payments: a confirmed payment comes back only if the receiver returns it. A transfer to a wrong address has no help desk inside the network. - Key loss or theft: ownership is proven with a private key. Lose the key or the [recovery phrase](https://lzzo.com/learn/what-is-a-seed-phrase) and access is gone; anyone who obtains it can move the coins. - Platform dependence: coins held on a trading platform depend on how that platform stores them. - Scams: messages promising returns, fake websites and fake apps are common. - Rule changes: laws differ between countries and can change over time. ## How does Türkiye regulate Bitcoin services? How Bitcoin is regulated depends on the country. In Türkiye, the main framework is Law No. 7518, adopted on 26 June 2024 and published in the Official Gazette (Resmî Gazete) on 2 July 2024, issue 32590. It added a definition of [crypto asset](https://lzzo.com/learn/what-is-cryptocurrency) to the Capital Markets Law: intangible assets that can be created and stored electronically using distributed ledger or similar technology, are distributed over digital networks and can represent value or rights. Bitcoin falls within that broad wording. The law concentrates on service providers. Under Türkiye's rules, a crypto asset service provider needs permission from the Capital Markets Board of Türkiye before it can be set up and start operating, and operating without permission is a criminal offence punishable by three to five years in prison and a judicial fine. A listing on a platform, or a platform's authorisation, says nothing about a coin's price. This section is not legal guidance, does not cover [tax](https://lzzo.com/learn/crypto-tax-in-turkiye) and summarises the law as first published. ## How is the Bitcoin price shown on Lzzo.com? Lzzo.com shows Bitcoin in US dollars, with its 24-hour change and the time of each observation, on the [crypto list](https://lzzo.com/crypto) and on the Bitcoin page. For another currency, multiply the dollar price by that currency's rate against the dollar; the result is a calculation, not a platform's trading price, and it also moves when the exchange rate moves. Read each value with its observation time: the price may have changed since the page was opened. ## Worked example ### How does the cap of roughly 21 million come about? 1. Rule: the subsidy starts at 50 BTC per block, each period lasts 210,000 blocks, and the subsidy halves at the end of every period. 2. First period: 210,000 × 50 = 10,500,000 BTC. 3. Second period: 210,000 × 25 = 5,250,000 BTC. Third period: 210,000 × 12.5 = 2,625,000 BTC. 4. Each period adds half as much as the one before. A series that keeps halving adds up to 1 ÷ (1 − 0.5) = 2 times its first term. 5. Total: 10,500,000 × 2 = 21,000,000 BTC. Rounding to whole satoshis is why the real ceiling ends slightly below that figure. 6. Result: the cap is arithmetic that follows from the halving rule. This is a simplified view of the rule, not a supply forecast or a price signal. Illustrative example built from the 50 BTC starting subsidy and the 210,000-block period stated on bitcoin.org; it uses no observed price and makes no forecast. ## Common mistakes and risks - Treating the supply cap as a promise about price. A ceiling on issuance does not set the price; demand does, and demand can fall. - Treating Bitcoin like a bank account. There is no chargeback: a confirmed payment comes back only if the receiver sends it back. - Sharing a private key or recovery phrase. Whoever holds them can move the coins, and genuine support staff never ask for them. - Accepting one confirmation for any amount. The bitcoin.org glossary describes waiting for six or more confirmations for larger payments. - Assuming a balance on a trading platform means you hold the keys. The platform may hold them for you, which adds its own risk. ## Frequently asked questions ### Are Bitcoin and blockchain the same thing? No. A blockchain is a way of keeping records in linked blocks. Bitcoin is a network that uses one, and the asset that moves on it. As the Lzzo.com Bitcoin page puts it, BTC is both the name of the network and the unit of its native asset. ### Can I own a fraction of a bitcoin? Yes. According to the bitcoin.org glossary, one bitcoin equals 100,000,000 satoshis, and amounts are recorded down to a single satoshi. ### How is Bitcoin different from Ethereum? The Lzzo.com Bitcoin page notes that Bitcoin's programmability has been kept deliberately narrow. Ethereum's own site says its smart contracts let anyone create digital assets and applications. The difference shapes what each network is used for; it does not make either one more valuable or safer. ### Is Bitcoin anonymous? No. The bitcoin.org FAQ says Bitcoin is not anonymous and leaves extensive public records, because the ledger holds every transaction ever processed. Names are not written on the chain, but an address can be linked to a person through a purchase or an account. ### Does a company run the Bitcoin network? No single company owns it. Nodes check every block against the rules, and the bitcoin.org developer documentation says new blocks are added to the chain only if their hash meets the required difficulty. ## Related pages on Lzzo.com - [Bitcoin (BTC) price](https://lzzo.com/crypto/bitcoin) - [Crypto prices](https://lzzo.com/crypto) - [Ethereum (ETH) price](https://lzzo.com/crypto/ethereum) - [How prices are observed and displayed](https://lzzo.com/methodology) ## Sources 1. bitcoin.org 2. developer.bitcoin.org 3. en.bitcoin.it 4. metzdowd.com 5. ethereum.org 6. resmigazete.gov.tr Primary and official publications. Author: [Lzzo Editor](https://lzzo.com/lzzo-editor) Content last changed on 27 October 2026. Reviewed by the Lzzo.com editorial team on 28 October 2026. This page is for education only and is not investment advice. Crypto assets carry a high level of risk. ## Related pages - [What is cryptocurrency?](https://lzzo.com/learn/what-is-cryptocurrency) - [Bitcoin halving](https://lzzo.com/learn/what-is-the-bitcoin-halving) - [Bitcoin dominance](https://lzzo.com/learn/what-is-bitcoin-dominance) - [Hot vs Cold Crypto Wallets](https://lzzo.com/learn/hot-vs-cold-crypto-wallets) - [Open the Learn section](https://lzzo.com/learn) --- Canonical HTML page: https://lzzo.com/learn/what-is-bitcoin · Not investment advice.