Bitcoin FAQ (Frequently Asked Questions)

The Bitcoin FAQ gives short answers to recurring questions about the Bitcoin network and its use. For a fuller explanation of the system, see Bitcoin; for its development, see Bitcoin history. Rules, services, fees, prices, and local law can change, so answers about those subjects should be checked against current primary information.

Understanding Bitcoin

What is Bitcoin?

Bitcoin is a peer-to-peer payment network with a native digital unit, BTC. Nodes independently check transactions and blocks against shared rules. The Bitcoin article explains the system in more detail.

Who created Bitcoin?

The person or group using the name Satoshi Nakamoto published the design in 2008, released the first reference software, and launched the network in 2009. Satoshi withdrew from public development by late 2010. Their real-world identity has not been established. See Bitcoin history for the documented chronology.

Who controls Bitcoin?

No single party controls the network. Developers propose software changes, while operators choose what software and rules to run; miners select transactions and propose blocks but cannot make invalid blocks valid for independently validating nodes.

What is the difference between Bitcoin and bitcoin?

Bitcoin usually names the network or protocol; bitcoin refers to its monetary unit. BTC is a common unit symbol.

What is a satoshi, and what are mBTC and μBTC?

One satoshi is 0.00000001 BTC, or one hundred-millionth of a bitcoin. A millibitcoin (mBTC) is 0.001 BTC, and a microbitcoin (μBTC) is 0.000001 BTC. Thus 1 mBTC is 100,000 satoshis and 1 μBTC is 100 satoshis. These labels describe amounts of bitcoin rather than separate coins; a payment need not be a whole BTC. Under current consensus rules, an on-chain output uses whole satoshis, so a proposed finer unit would require more than changing a wallet's display.

Are physical bitcoins the same as on-chain bitcoin?

A metal or paper object can display a Bitcoin address or hold a concealed key, but the object itself is not an entry in the blockchain. Its holder must check whether any claimed bitcoin remains at the relevant output and whether the key can actually spend it. A collectible or preloaded token also carries issuer, tampering and redemption risks. For ordinary use, a wallet and the public transaction record determine access, not the appearance of a coin.

How is Bitcoin different from a bank balance?

A self-custody wallet controls the keys that authorize spending under network rules. A custodial service instead controls the keys on a customer's behalf and introduces a separate trust relationship.

Do I need to download the entire blockchain?

No. Many wallets rely on other nodes or service providers for network information. Running a full node gives its operator independent validation of the rules and transactions it receives, but requires storage, bandwidth, and time to synchronize.

Why does a full node take time to synchronize?

It must download and validate historical blocks before it can independently assess the current chain. That means checking the history rather than merely trusting another server's reported balance. The time depends on hardware, storage, bandwidth, and how far behind the node is. A pruned full node can discard old block files after validation, reducing ongoing storage needs without skipping the initial checks. A wallet connected to a node that is still catching up may show an incomplete or old view of recent payments.

Is Bitcoin anonymous?

Transactions are recorded publicly. Addresses do not inherently contain names, but other information can connect activity to people or organizations. Address reuse can reduce privacy.

How can I obtain bitcoin?

You can receive it as payment for goods or work, or purchase it from a willing seller or service. Compare the total price, fees, custody arrangement, identity requirements, withdrawal conditions, and the network used before paying. The protocol does not certify a seller. See Bitcoin for the distinction between holding your own keys and relying on a custodian.

Can I buy bitcoin with a particular payment method?

Availability depends on the seller, jurisdiction, and payment provider. Reversible payment methods can expose the seller to chargeback risk, so acceptance and pricing vary. An old recommendation for a named exchange or payment route should not be treated as current. Check the provider's present terms and whether you can withdraw bitcoin to a wallet you control.

Does installing a Bitcoin wallet earn bitcoin automatically?

No. A wallet receives and spends bitcoin; it does not create an income merely by running. Mining is a separate activity requiring equipment and electricity, and a mining reward is uncertain. Offers that promise effortless or guaranteed returns warrant scrutiny.

Payments

How do I receive bitcoin?

A wallet can generate a receiving address or payment request. Check the network and address with the sender; the wallet need not stay online for an on-chain payment to be recorded.

Why does my receiving address change?

Wallets often generate a new address for each payment to improve privacy and accounting. Old addresses can generally still receive funds, but reuse makes transactions easier to associate.

What happens when I send a transaction?

A wallet authorizes a transfer, broadcasts it, and nodes verify it. A miner may include it in a block. The recipient can then observe confirmations as later blocks build on that block.

How long does confirmation take?

Blocks arrive at an average target interval of about ten minutes, but any particular block can take more or less time. The fee, available block space, and transaction validity affect when a transaction is included; no exact arrival time is guaranteed.

Why does Bitcoin target about ten minutes between blocks?

The target is an average, not a timer: the next block can appear much sooner or later. A shorter target could bring an initial confirmation sooner, but would give a newly found block less time to spread before another miner finds a competing block. Frequent competing blocks waste work and can increase short-term uncertainty. A longer target would delay the first confirmation. The original ten-minute setting is a design choice, not proof that every payment needs ten minutes or that a different interval could be adopted without a rule change.

Why might I wait before spending bitcoin I just received?

A wallet may show an unconfirmed incoming transaction and may even allow a subsequent spend, but another participant may not accept that spend until the first transaction is confirmed. Wallet and node policies differ. There is no rule requiring every recipient to wait exactly ten minutes: ten minutes is the target average interval between blocks, not a guaranteed delay or settlement threshold.

Should a merchant wait for confirmation before delivering goods?

The merchant decides based on the value, whether delivery can be reversed, and the risk of a conflicting or replaced transaction. An unconfirmed transaction is higher risk; additional confirmations make a chain reversal more costly but cannot give mathematical finality. Payment acceptance policy belongs to the recipient, not to a universal number printed in a wallet. If the merchant hands over an irreversible digital good as soon as a transaction appears, a dishonest buyer may try to replace that payment before it enters a block. A pre-mined competing block is one historical example of this risk, often called a Finney attack. A low-value in-person purchase and an automatically delivered high-value asset call for different policies. Waiting and independently checking transaction status are practical controls, but even several confirmations are a risk threshold rather than an absolute promise.

How many confirmations are enough?

There is no universal number. The recipient chooses a policy based on the amount, transaction conditions, and risk; a payment with no confirmation can be replaced or conflicted.

How much is a transaction fee?

On-chain fees depend mainly on transaction size in data and demand for block space, rather than the bitcoin amount transferred. A wallet estimates a fee for the desired confirmation target; estimates and actual confirmation times vary. The fee is the difference between the total value of the inputs spent and the new outputs created, including any change returned to the sender. A wallet spending many small outputs may need a larger transaction than one spending a single output of the same total value, so its fee can be higher. The fee belongs to the block's miner when included; a wallet service may separately charge its own service or withdrawal fee.

Can I reverse a Bitcoin payment or recover one sent to the wrong address?

There is no network operator with a routine chargeback function. A recipient may voluntarily return funds, but users should verify payment details before sending.

Can I receive bitcoin while my phone or computer is off?

Yes, for an on-chain payment. The sender broadcasts the transaction to the network, and miners may confirm it while your device is offline. When the wallet reconnects, it can update its view of the chain. A custodial service may use separate deposit and crediting policies, and a Lightning payment may require a different receiving setup.

Where is a payment that has not appeared?

Check the transaction ID in the sending wallet, whether it was broadcast, whether the receiving wallet is synchronized, and whether it has entered a block. A low-fee transaction may wait; avoid assuming that a wallet display alone proves settlement.

Why can an unconfirmed transaction disappear or change status?

Different nodes can have different memory-pool contents. A transaction can be replaced under a node's relay policy, be dropped, or conflict with another transaction; a recent block can also be displaced by a competing chain. A transaction identifier and a wallet alert establish what a service observed, not irreversible settlement.

What is the Lightning Network?

It is a network of payment channels that can move payments without recording every individual payment on the Bitcoin blockchain. Its operation, liquidity, custody, and failure risks differ from an ordinary on-chain transfer. See Lightning Network.

How do Bitcoin nodes find one another?

Software can use known peers, DNS seeds, and addresses learned from other peers. A wallet's connection method depends on its design; it need not behave like a full node.

Must I open a firewall port to use Bitcoin?

Usually not for an ordinary wallet or a node making outbound connections. Accepting inbound peer connections can require network configuration. The exact steps depend on the software and local network.

Does every Bitcoin transaction use the whole network's bandwidth?

On-chain transactions and blocks are relayed among nodes, so greater activity adds data that participants must process. Not every wallet stores or relays the full chain: lightweight wallets use other nodes or servers. Limited block space constrains on-chain throughput and can raise fees when demand is high. Payment channels can move some activity off-chain, with different operational and custody assumptions.

Wallets and safety

What is a Bitcoin wallet?

Wallet software or a device manages the keys and transaction information used to receive and spend bitcoin. Coins are recorded on the network, not stored as files inside the wallet.

What is the difference between a custodial and self-custody wallet?

With self-custody, the user controls the spending keys and must secure the backup. With custody, another party controls them and may impose access or withdrawal conditions.

What is the difference between a public address and a private key?

A receiving address can be shared so someone can send a payment. A private key authorizes spending from outputs it controls and must be kept secret. A recovery phrase may regenerate many keys in a wallet, so exposure can put more than one address at risk. Check payment details on a trusted display before signing.

What is a recovery phrase?

Many wallets use a sequence of words to recover the wallet's keys. Anyone who obtains it may be able to spend the funds. The exact backup method depends on the wallet; follow its documented procedure and never share the phrase with a supposed support agent.

What happens if I lose my keys?

If no usable backup or custodian can restore access, the bitcoin remains recorded but cannot be spent. Loss does not automatically raise the market value of remaining coins.

Can a lost bitcoin be replaced, and does its loss change the supply limit?

The network does not issue a replacement when a key is lost. The output remains in the ledger, although it may be impossible to spend. The issuance schedule stays the same; the number of coins people can actually access may be lower. This does not establish what future buyers will pay.

Can Bitcoin be hacked?

Software defects, stolen keys, malicious wallets, exchanges, and custodians can cause losses. A failure of a service is distinct from a change to Bitcoin's consensus rules. The 2010 value-overflow incident is covered in Bitcoin history.

How do I avoid scams?

Verify addresses and counterparties, secure wallet backups, and treat guaranteed returns, urgent requests, and requests for a recovery phrase as warning signs. Transactions generally cannot be reversed after confirmation.

Mining, supply, and markets

What does mining actually do?

A miner constructs a candidate block and searches for a header hash below the network target. Other nodes can quickly verify the proof and the block's transactions. Proof of work makes competing histories costly to produce, while the miner's reward encourages participation. It is not a general-purpose calculation that also solves an unrelated scientific problem.

How does mining difficulty change?

Difficulty adjusts every 2,016 blocks so that blocks continue to arrive about every ten minutes on average as total mining power changes. Individual intervals vary widely. More miners do not, by themselves, permanently speed up issuance under the present rules.

How are new bitcoins created?

A valid block may claim a protocol-defined subsidy plus its transaction fees. The subsidy is halved every 210,000 blocks; it became 3.125 BTC at the 2024 halving. See mining and Bitcoin history.

Is Bitcoin's supply exactly 21 million?

The issuance schedule approaches a limit just below 21 million BTC under the present rules. The subsidy is expected to reach zero around 2140, but that calendar estimate depends on when blocks are found. This is an issuance limit, not a count of coins still accessible to their owners.

What happens when the subsidy ends?

Blocks can continue to be produced; miners would then rely on transaction fees. Whether future fees provide a particular level of security cannot be guaranteed in advance.

Can miners cooperate to steal bitcoin or change Bitcoin's rules?

Yes, miners can cooperate. Mining pools combine participants' work and share rewards under agreed terms; pooling itself is an ordinary part of mining. The pool operator usually builds the candidate block and can decide which valid transactions to include. Members can leave a pool or redirect their work, but concentration matters while the pool controls that work.

Can they take someone else's bitcoin? A miner can claim only the allowed block subsidy and fees in a valid block. Spending an existing output requires meeting its spending conditions, normally including a valid signature. Independently validating nodes reject a block that creates extra coins or includes an unauthorized spend, regardless of how much hash power produced it. Theft of a wallet key or failure of a custodian is a different risk; mining cannot prevent either.

Can they reverse a payment or block one? A group with enough hash power can try to build a competing chain of otherwise valid blocks that replaces a recent payment, allowing a double-spend of its own funds. It can also refuse to include particular valid transactions while it has that power. Confirmations increase the work needed to reverse a payment; they reduce risk but do not give an absolute guarantee. This is why a recipient decides how long to wait according to the value and circumstances of a payment.

Can they change the rules? Miners choose what software to run and what blocks to propose, but they cannot force nodes that enforce existing rules to accept a larger subsidy or an invalid transaction. A change to the rules takes adoption by participants running compatible software; it does not require a vote from every bitcoin holder. If groups keep incompatible rules, their networks can split.

Can a miner produce a block without ordinary payments?

Yes. A valid block must include its coinbase transaction but need not include other transactions. Miners usually have an incentive to include fee-paying transactions.

Does mining perform other useful calculations?

Its immediate purpose is to provide costly proof of work for block production and transaction ordering. A miner varies a candidate block header and tries hashes until one falls below the current target. Anyone can check a successful result quickly, while finding one normally requires many attempts. That asymmetry lets nodes compare competing histories by accumulated work. The search is tied to the proposed block, so an arbitrary scientific calculation cannot simply replace it without changing what nodes verify and how work secures a particular transaction history.

Does mining waste energy?

Mining uses substantial electricity to make rewriting the transaction record costly. Its environmental effect depends on electricity sources, local conditions, and the comparison being made; no single adjective captures every mining site.

Why does bitcoin have value to some people?

People may value its transferable units, independently checkable issuance rules, and ability to send payments without a central payment operator. Others may give more weight to volatility, technical complexity, limited throughput, energy use, or custody risks. Market value depends on what buyers and sellers actually agree to exchange; neither scarcity nor usefulness guarantees a price. Scarcity alone is insufficient: a rare object need not have a buyer. Likewise, the electricity and equipment used to mine a coin are costs of producing blocks, not a guaranteed resale price. Demand can weaken even while issuance remains limited.

Will lost coins or a fixed supply cause inevitable deflation?

Losing a private key can remove spendable bitcoin from practical circulation, but it does not change the issuance schedule or by itself make the remaining coins more valuable. Whether prices of goods quoted in BTC rise or fall depends on demand, supply, and how people use bitcoin. Bitcoin's divisibility lets the same value be expressed in smaller units, which helps with quoting small payments; it cannot prevent a loss of purchasing power or guarantee economic stability.

Why does bitcoin have a price?

Buyers and sellers exchange it at market prices influenced by demand, liquidity, expectations, and access. Limited issuance alone does not establish a floor or guarantee appreciation.

Is buying bitcoin suitable for everyone?

No single answer fits every person's finances, risk tolerance, or jurisdiction. Price can move sharply; a buyer can lose money, and self-custody or a custodial provider brings different failure risks. A static FAQ cannot assess a person's circumstances or promise a return.

Could bitcoin's price be a speculative bubble?

A sharp rise alone cannot establish that an asset is overpriced; a sharp fall does show that a buyer can lose money. People disagree about what bitcoin should be worth, and there is no protocol-defined fair price against which to measure a supposed bubble. Market prices can reflect changing use, access, liquidity and speculation. A buyer should distinguish a claim about Bitcoin's payment rules from a prediction about its future exchange rate. Neither the fixed issuance schedule nor past price increases prove that a later buyer will profit.

Is Bitcoin a Ponzi scheme or a guaranteed investment?

The protocol does not promise returns or pay holders from later participants. A Ponzi scheme involves an operator promising returns and paying earlier investors from later investors' money; Bitcoin's transfer and issuance rules alone do not make such a promise. A business using bitcoin can nevertheless operate a Ponzi scheme or another fraud. A rising market price can benefit an early buyer at a later buyer's expense, and a later buyer has no assured return. Bitcoin's price can fall sharply, including to a level at which a buyer loses most or all of the amount paid.

Can a large holder manipulate the price?

Large trades and thin markets can move prices, and fraud or manipulation can occur on trading venues. Bitcoin's consensus rules do not prevent market abuse or guarantee liquidity.

Does Bitcoin unfairly favor early adopters?

Early participants could acquire bitcoin when it was less known and less liquid, but also faced substantial technical, custody, and market risk. Later users are not promised the same outcome, and the distribution is a legitimate subject of criticism.

What if someone buys all available bitcoin?

Ownership is spread among parties who decide independently whether to sell. A buyer cannot force holders to sell at a fixed price. Concentrated ownership could affect liquidity and market behavior, but it does not change the issuance rules by itself.

Could another digital currency replace Bitcoin?

Yes. Other systems can offer different features and may attract users. Bitcoin's current network and history do not guarantee future dominance. An established user base, trading market, compatible wallets and infrastructure can make a new system harder to adopt, but these advantages are not permanent and Bitcoin can also adopt compatible improvements. This is different from an attacker producing a competing branch of the Bitcoin blockchain. A competing branch tries to replace some recent Bitcoin blocks and must satisfy the rules of the nodes it hopes to persuade, including the proof-of-work requirement. A separate digital currency can set different rules and seek its own users; it does not become the Bitcoin chain merely by being newer or faster.

How much is one bitcoin worth now?

There is no single official price. Quotes vary by venue, currency, and time. For a current quote, check its timestamp, currency, and trading venue.

Is Bitcoin legal, and how is it taxed?

Treatment varies by jurisdiction and changes over time. Check current official guidance for the jurisdiction and activity involved; a rule from one country does not apply everywhere.

Where can I check a transaction or current network data?

A wallet can show its transaction identifier and confirmation count. A block explorer offers a convenient view of public transactions and blocks, but it is a third party and may collect the addresses you search. A self-operated full node can validate the chain under rules you choose. Exchange prices and mining statistics are estimates or venue-specific observations, not properties written into every Bitcoin block.

Buying, custody, and interpreting data

How can I buy or sell bitcoin?

A person can receive bitcoin as payment or buy it from a counterparty, an exchange or another service that operates in their area. Selling reverses the commercial exchange, but the service's payment method, identification rules, fees and withdrawal conditions may differ. The Bitcoin network itself does not sell coins, set a quoted market price or guarantee that a counterparty delivers.

What should I compare before choosing a seller?

Check the total amount paid or received after the quoted spread and fees, accepted payment method, identity requirements, reputation, withdrawal limits and the service's custody terms. Check the wallet's supported network and receiving address before a withdrawal. A low advertised trading fee can coexist with a wider price spread or a separate withdrawal fee. Availability and requirements change, so confirm them with the provider and current local rules.

Do I need an exchange account to use Bitcoin?

No. A user can receive payment directly to a wallet and send a transaction without an exchange account. A purchase or sale for local currency normally involves a counterparty or service; that commercial relationship is separate from the network's transaction rules. Merchants may use a payment processor, but can also receive on-chain payments to their own wallet.

If I buy bitcoin through a fund, do I control bitcoin keys?

Buying a share of a bitcoin-linked financial product gives rights defined by that product, not a private key that can sign an on-chain payment. A buyer who wants to send bitcoin directly needs an arrangement that allows an actual bitcoin withdrawal to a wallet they control. In January 2024, the US Securities and Exchange Commission approved listings of spot bitcoin exchange-traded products; the approval did not endorse bitcoin or make every product equivalent to holding keys.

How should I read a bitcoin price chart?

Check the quoted currency, exchange or index, timestamp, trading volume and whether the graph shows trades, bids or an average. There is no official price stored in Bitcoin blocks. A historical rise or fall does not predict the next one; Bitcoin history gives dated context for major events.

Do wallet and address counts tell us how many people use Bitcoin?

No. One person can use many addresses or wallets, while a custodian can hold bitcoin for many customers through a smaller set of addresses. Transaction and node counts describe different kinds of network activity. Any claim about the number of users needs a stated method, time period and uncertainty.

What if one mining pool controls a large share of hash power?

The pool may gain influence over which valid transactions enter its blocks and increase the risk of censorship or recent-chain reorganizations. Its reported share can change as members join, leave, or point their work elsewhere. A pool's hash power is therefore a security concern, but it is not ownership of users' wallet keys or a vote that overrides every validating node. See the question above on what cooperating miners can and cannot do.

What did SegWit and Taproot change?

Segregated Witness moved certain signature-related data into a separately committed witness structure. Taproot added spending rules for certain outputs, including key-path and script-path possibilities. These upgrades changed technical options for wallets and developers, but they did not make every payment private or guarantee low fees. The Bitcoin article explains the design, while Bitcoin history places changes in time.

Sources and further reading

• Bitcoin.org, Frequently Asked Questions
• Bitcoin.org, Some things you need to know
• Bitcoin Developer Guide, Transactions
• Bitcoin Developer Guide, Block Chain
• Bitcoin Developer Guide, Wallets
• Bitcoin white paper
• Bitcoin.org, Getting started

See also

• Bitcoin — how the system works and what the white paper proposed
• Bitcoin history — launch, incidents and later developments