Bitcoin

Bitcoin (BTC) is a decentralized digital currency and the first cryptocurrency. It was described in a 2008 whitepaper by the pseudonymous Satoshi Nakamoto and launched in January 2009. Bitcoin uses proof of work to order transactions in a public ledger, the blockchain, without a central authority.¹ Its supply is capped at 21 million BTC.²

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Precursors

Bitcoin drew on two decades of work on digital cash. David Chaum's DigiCash, founded in 1989, offered private electronic payments but depended on a central issuer and went bankrupt in 1998. Adam Back's Hashcash (1997) introduced a proof-of-work function to deter email spam.³ Wei Dai's b-money (1998) and Nick Szabo's bit gold, which Szabo says he devised in 1998 and published in 2005, outlined money created by computational work and recorded by a distributed group of servers.⁴⁵ In 2004 Hal Finney built reusable proofs of work (RPOW), which let Hashcash tokens be transferred.⁶ None solved the problem of preventing double spending without a trusted party. The Bitcoin whitepaper cites both Hashcash and b-money.¹

Origins

The domain bitcoin.org was registered on 18 August 2008. On 31 October 2008 Satoshi Nakamoto published the whitepaper Bitcoin: A Peer-to-Peer Electronic Cash System to the Cryptography Mailing List.⁷ The genesis block was mined on 3 January 2009. Its coinbase transaction contains the text "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks", a headline from The Times of London.⁸⁹ The first version of the software was released days later, and the first transaction between two people, from Nakamoto to Hal Finney, was included in block 170 on 12 January 2009.

For most of 2009 bitcoin had no market price. In October 2009 the exchange New Liberty Standard published the first exchange rate, US$1 for 1,309.03 BTC, based on the cost of the electricity used to mine it.¹⁰ In November 2009 Nakamoto and Martti Malmi started a discussion forum that became Bitcointalk, which for years was the main venue for development and debate.¹¹

On 22 May 2010 Laszlo Hanyecz paid 10,000 BTC for two pizzas, the first widely known purchase of physical goods with bitcoin. The date is celebrated as Bitcoin Pizza Day.

Nakamoto's departure

Nakamoto wrote most of the early code and ran the project until late 2010. Their last post on Bitcointalk was on 12 December 2010.¹² In private correspondence with developer Mike Hearn in April 2011 they wrote that they had "moved on to other things".¹³ Gavin Andresen, who had taken over day-to-day leadership of the software, became its lead maintainer.

Analysis of early blocks suggests that a single miner, widely believed to be Nakamoto, mined roughly one million BTC in 2009 and 2010. Almost none of those coins have ever moved.¹⁴

Identity of Satoshi Nakamoto

Nakamoto's identity remains unknown. In March 2014 Newsweek named Dorian Nakamoto, a Californian engineer, who denied any involvement. Australian computer scientist Craig Wright claimed from 2016 to be Nakamoto. On 14 March 2024 the High Court of England and Wales ruled that he is not Nakamoto and did not write the whitepaper,¹⁵ and in its full judgment in May 2024 found that he had forged documents to support his claim.¹⁶ In October 2024 the HBO documentary Money Electric suggested that early developer Peter Todd was Nakamoto, which he denied.¹⁷ Hal Finney, Nick Szabo, and Adam Back have also been proposed, and all have denied it. Finney died in August 2014.

Value overflow incident

On 15 August 2010 a bug allowed block 74,638 to create about 184 billion BTC.¹⁸ A fix was released within about five hours, and the corrected chain overtook the invalid one at block 74,691.¹⁹ It is the only time a bug has been exploited to create bitcoin beyond the supply limit.

Early growth

Bitcoin first reached parity with the US dollar in February 2011. The same month Silk Road, a darknet marketplace that accepted only bitcoin, opened. It gave bitcoin its first sustained real-world use and much of its early notoriety. The FBI shut it down in October 2013 and arrested its operator, Ross Ulbricht, who was sentenced to life in prison in 2015²⁰ and pardoned by US President Donald Trump on 21 January 2025.

Mining moved from ordinary computer processors to graphics cards in 2010, and the first mining pool, which shared rewards among many small miners, found its first block in December 2010.²¹ In early 2013 the first application-specific integrated circuits (ASICs) built for Bitcoin mining shipped.²² Mining became an industrial activity concentrated in places with cheap electricity.

In 2011 Amir Taaki published BIP 1, which established the Bitcoin Improvement Proposal process, since revised by BIP 2 and BIP 3.²³ In April 2012 pay-to-script-hash (P2SH, BIP 16) activated, allowing multisignature addresses that begin with "3".²⁴²⁵ In September 2012 a group of early supporters founded the Bitcoin Foundation, a non-profit that funded core development for several years.²⁶

Regulators began to respond. In March 2013 the US Financial Crimes Enforcement Network issued guidance that bitcoin exchangers and administrators were money transmitters.²⁷ New York introduced the BitLicense in 2015.²⁸ In April 2017 Japan recognised bitcoin as a legal means of payment.²⁹

Block size war and SegWit

In 2010 Nakamoto added a 1 MB limit on block size, widely understood as a temporary anti-spam measure. By 2015 blocks were filling up and fees were rising, and the community split over how to scale. One side, including Andresen and Hearn, favoured raising the limit with a hard fork. The other, including most Bitcoin Core developers, favoured keeping blocks small so that ordinary users could run full nodes, and moving activity to off-chain layers.

In August 2015 Hearn and Andresen released Bitcoin XT, a client that would have raised the limit to 8 MB.³⁰ It failed to win miner support, as did Bitcoin Classic in 2016. In January 2016 Hearn left the project, declaring the experiment had failed.³¹

Segregated Witness (SegWit), proposed in 2015, moved signature data out of the part of the block counted against the limit. This raised capacity and fixed transaction malleability without a hard fork. Miners were slow to signal for it. In May 2017 a group of companies and miners agreed the New York Agreement, known as SegWit2x: activate SegWit, then raise the limit to 2 MB with a hard fork within six months.³² Separately, users backed BIP 148, a "user-activated soft fork" under which their nodes would reject blocks not signalling SegWit from 1 August 2017.³³

SegWit activated as a soft fork on 24 August 2017 at block 481,824.³⁴⁸³⁵ Earlier that month, on 1 August 2017, a group favouring larger blocks forked the chain to create Bitcoin Cash. The SegWit2x hard fork was called off in November 2017.³² Bitcoin Cash itself split in November 2018, when supporters of Craig Wright created Bitcoin SV.³⁶ The outcome established that changes to Bitcoin's consensus rules need the support of users running nodes, not only miners and businesses.

Lightning Network

The Lightning Network, proposed by Joseph Poon and Thaddeus Dryja in 2015, lets two parties open a payment channel by locking bitcoin in a shared output and then exchange many payments off-chain, settling only the final balance on the blockchain.³⁷ Payments can be routed across a network of channels. SegWit's malleability fix made it practical, and the first implementations were released for mainnet use in March 2018.³⁸

Taproot

Taproot, a soft fork adding Schnorr signatures and more private, more efficient scripts, activated on 14 November 2021 at block 709,632.³⁹⁴⁰ It was the first major upgrade since SegWit. The change itself had broad support, though the activation method was debated. Taproot addresses begin with "bc1p".⁴¹

Mining migration

In mid-2021 China banned cryptocurrency mining. Global hashrate fell 38% in June 2021 as miners shut down or moved abroad, and by August 2021 the United States had the largest share of hashrate, at 35.4%.⁴²

Institutional adoption

The Cboe and CME began trading bitcoin futures in December 2017.⁴³ In August 2020 MicroStrategy, a US software company, began buying bitcoin as its main treasury reserve asset, and it has continued to buy since; it rebranded as Strategy in February 2025 and is the largest corporate holder.⁴⁴ In February 2021 Tesla announced it had bought US$1.5 billion of bitcoin.⁴⁵

El Salvador made bitcoin legal tender on 7 September 2021, the first country to do so. On 29 January 2025, under an agreement with the International Monetary Fund, its legislature amended the law to make acceptance voluntary and to end tax payments in bitcoin.⁴⁶

On 10 January 2024 the US Securities and Exchange Commission approved the first spot bitcoin exchange-traded products, which began trading the next day.⁴⁷ On 6 March 2025 a US executive order declared it US policy to establish a Strategic Bitcoin Reserve.⁴⁸

Market history

Bitcoin's price has moved in boom-and-bust cycles that have roughly tracked the halvings.

On 10 October 2025 a market-wide crash caused the largest single day of liquidations in crypto history.⁴⁹ For current prices, see live data sources.

TechnologyReport an error

Blocks and mining

Transactions are grouped into blocks. Miners compete to find a block header whose double SHA-256 hash is below a target; the first to do so earns the block subsidy plus transaction fees. Nodes follow the valid chain with the most accumulated proof of work. The difficulty target is recalculated every 2,016 blocks so that blocks arrive about every ten minutes. Newly mined coins cannot be spent for 100 blocks.⁵⁰

Because changing a past block would require redoing its proof of work and that of every later block, the deeper a transaction is buried, the harder it is to reverse. A common convention treats six confirmations, about an hour, as final for large payments.

Transactions and scripts

Bitcoin uses an unspent transaction output (UTXO) model. Each transaction spends earlier outputs and creates new ones; a wallet's balance is the sum of the outputs it can spend. The conditions for spending an output are written in Script, a deliberately limited, non-Turing-complete language. Since SegWit, block size is measured in weight units, with a limit of 4 million.

Address formats have changed as the protocol has evolved:²⁵⁵¹⁴¹

Nodes and development

Unconfirmed transactions wait in each node's memory pool, or mempool, and miners generally choose those paying the highest fee per unit of weight. When demand for block space is high, fees rise.

Changes to the protocol are proposed as Bitcoin Improvement Proposals (BIPs).⁵² There is no formal governance; changes require broad adoption by node operators, miners, and users. Most nodes run Bitcoin Core, which was called Bitcoin-Qt until 2014.⁵³ Alternative clients include Bitcoin Knots and btcd. Development is funded by grants and donations from companies and non-profits rather than by a single foundation or a pre-mined token.

SupplyReport an error

New bitcoin enters circulation only through the block subsidy. The subsidy started at 50 BTC and halves every 210,000 blocks, about every four years, so total supply approaches but never exceeds 21 million.² The last fraction of a bitcoin is expected to be mined around 2140, after which miners will be paid only in fees.

Coins sent to lost keys or unspendable outputs are permanently removed from use, so the usable supply is lower than the number of coins mined.

Incidents and controversiesReport an error

• Value overflow (2010). See above.
• March 2013 chain split. On 11 March 2013 a database limit in version 0.7 of the software made it reject a large block, block 225,430, that version 0.8 accepted, splitting the chain in two. Developers asked miners to return to version 0.7, and the split was resolved within hours.⁵⁴
• Mt. Gox (2014). Mt. Gox, then the largest bitcoin exchange, halted withdrawals and filed for bankruptcy on 28 February 2014, reporting about 850,000 BTC missing. In March 2014 it said it had found about 200,000 BTC in an old wallet.⁵⁵ Repayments to creditors began in December 2023, and repayments in bitcoin followed in July 2024.⁵⁶⁵⁷
• Bitfinex hack (2016). In August 2016 about 120,000 BTC was stolen from the exchange Bitfinex. In February 2022 US authorities arrested two people in connection with laundering the funds and seized about 94,000 BTC.⁵⁸
• Block size war (2015–2017). See above.
• Energy use. Proof-of-work mining consumes large amounts of electricity, a recurring point of criticism.
• Ordinals and OP_RETURN (2023–2026). The Ordinals protocol, launched in January 2023, made it possible to inscribe arbitrary data in transactions, which reopened the debate about what block space is for. The debate intensified in October 2025 when Bitcoin Core 30 raised its default limit on OP_RETURN data to 100,000 bytes and allowed multiple OP_RETURN outputs.⁵⁹ Some node operators switched to Bitcoin Knots in protest. On 8 August 2026 nodes enforcing BIP-110, a Knots-backed soft fork to restrict data in transactions, split from the main chain at block 961,632. With little miner support, the minority chain mined two blocks and then stopped.⁶⁰

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See alsoReport an error

• Ethereum

ReferencesReport an error