Bitcoin
Bitcoin: Bitcoin is a decentralised digital currency and the peer-to-peer network that runs it. Thousands of independent nodes keep a shared ledger of every transaction, new blocks are added through proof of work mining, and the total supply is capped at 21 million bitcoin.
How the Bitcoin network works
Miners compete to add the next block of transactions by solving a proof of work puzzle, and the winner earns newly issued bitcoin plus transaction fees. A new block is found roughly every ten minutes. The block reward halves about every four years, which is why new supply keeps shrinking until the 21 million cap is reached.
What is a UTXO?
Bitcoin does not track account balances. It tracks unspent transaction outputs (UTXOs), which are chunks of bitcoin you have received and not yet spent. When you send bitcoin, your wallet uses one or more UTXOs as inputs and creates new outputs: one to the recipient and, usually, one returning change to you. Your balance is the sum of your UTXOs.
Bitcoin vs Ethereum
Bitcoin is designed mainly as a scarce store of value and payment network. Ethereum is a programmable blockchain that runs smart contracts and applications, uses proof of stake and has no fixed supply cap. Many investors hold both because they do different jobs.
Frequently asked questions
Is Bitcoin the same as bitcoin?
Bitcoin with a capital B usually means the network, and bitcoin or BTC means the currency that moves on it.
Can more than 21 million bitcoin be created?
Not under the current rules. The cap is built into the protocol and changing it would need the network to agree.