Bitcoin is the first decentralized payment network and, at the same time, digital money that works without a bank or any other central operator: that is how the FAQ on bitcoin.org describes it. Below, in simple terms: how a transfer works, where new coins come from, what halving is and how to store bitcoin so you do not lose it. Data checked on 21 October 2026.
Important. This material is for information only and is not investment advice. In Ukraine, as of 21 October 2026, the Law of Ukraine on Virtual Assets No. 2074-IX has the status “Not yet in force” (law card), and Bill No. 10225-d on taxation is “Being prepared for second reading.” Back in 2017, the NBU together with other financial regulators stated that cryptocurrencies are neither money nor currency, and that people carry out transactions with them at their own risk.
Who Created Bitcoin and Who Controls It
The description of the system, the paper “Bitcoin: A Peer-to-Peer Electronic Cash System,” was published by an author using the name Satoshi Nakamoto. According to Wikipedia, this happened on 31 October 2008, and the first block of the network appeared on 3 January 2009. Who Nakamoto is remains unknown, and at the end of 2010 he stepped away from the project.
No one owns the network, just as no one owns the technology behind email. Developers improve the software, but they cannot force everyone to accept new rules: each participant decides which version of the software to run. The code is open, and anyone can check it.
How a Transfer Works
For the user, everything starts with a wallet, a program or device that creates bitcoin addresses. You can give an address to another person so they can pay you, much like an email address. Bitcoin.org advises using each address only once. Then three things come into play:
- Blockchain. This is a shared public ledger that the whole network relies on. It stores all confirmed transactions, so a wallet can calculate your balance and the network can check that the sender has the right to spend the coins.
- Private key. Secret data in the wallet used to sign a transaction. The signature proves that the transfer comes from the owner and prevents anyone from changing it after it has been sent.
- Confirmation. The transaction is broadcast to the network, and it usually gets its first confirmation in about 10–60 minutes, when it is included in a block.
New blocks appear on average once every 10 minutes, but this is a probability, not a schedule: a given confirmation can come much earlier or later, and with a low fee noticeably later. Each subsequent block makes reversing a transaction increasingly difficult. For large transfers, bitcoin.org considers 6 confirmations the minimum recommendation.
Where New Bitcoins Come From: Mining
New coins are created in a process called mining. Miners use special equipment to collect transactions into blocks and perform proof of work: a huge amount of computation without which the network will not accept a block. When more miners join, the difficulty rises automatically so that a block is found on average once every 10 minutes. The miner’s reward is new bitcoins for the block plus the fees paid by users.
Proof of work is tied to the previous block. To rewrite an old transaction, one would have to redo the work for all the blocks that follow, so faking the history is very expensive. A miner cannot award themselves a larger reward either: network nodes reject blocks that break the rules. The bitcoin.org FAQ also acknowledges a weak point: whoever controls half of the network’s computing power could block or reverse recent transactions, although maintaining such power is extremely expensive.
Mining used to be possible on an ordinary computer, but now, according to bitcoin.org, only specialized equipment makes economic sense. It is a competitive business with no guarantee of profit.
Halving and the 21 Million Limit
Every 210,000 blocks, that is roughly once every four years, the block reward is cut in half. This event is called halving. In 2009 the reward was 50 bitcoins per block, and issuance is expected to end around 2140, when there will be 21 million bitcoins in total. Here is the history of halvings according to the bitcoin.org page:
| Event | Date | Block | New reward |
|---|---|---|---|
| First halving | 28 November 2012 | 210,000 | 25 BTC |
| Second halving | 9 July 2016 | 420,000 | 12.5 BTC |
| Third halving | 11 May 2020 | 630,000 | 6.25 BTC |
| Fourth halving | 20 April 2024 | 840,000 | 3.125 BTC |
| Fifth halving | 2028 (estimate) | 1,050,000 | 1.5625 BTC |
After each halving, fees make up a larger share of miners’ income, and over time they are expected to fully replace the block reward. The 21 million limit does not get in the way of payments: bitcoin is divisible to the eighth decimal place, and 1 bitcoin equals 100,000,000 satoshis, so you can buy a fraction of a coin. Halving does not guarantee the price: bitcoin.org states plainly that the purchasing power of bitcoin is not guaranteed by anything and that its exchange rate floats freely.
Four Properties Worth Knowing About
- There is no “cancel” button. A transaction cannot be recalled; only the recipient can return the money. If you send funds to a valid address that no one controls, they will be lost forever (bitcoin.org).
- It is not anonymous. All transactions are stored publicly, and the balance of any address is visible to everyone. The owner’s identity is unknown until it is revealed, for example during a purchase.
- You are your own bank. Whoever holds the private keys controls the coins and is responsible for protecting them.
- The price is volatile. Bitcoin.org advises treating bitcoin as a high-risk asset and not keeping money in it that you cannot afford to lose.
In their 2017 statement, the regulators added one more risk: savings in cryptocurrency are not guaranteed by the Deposit Guarantee Fund, because they are not bank deposits.
How to Store Bitcoin
You can keep bitcoin on an exchange or with another custodian, or in your own wallet. If your coins are on an exchange, you depend on its security, solvency and withdrawal rules. Bitcoin.org reminds that exchanges and online wallets have been hacked in the past, have shut down or have blocked access to funds. Its tips for your own wallet:
- small amounts for everyday spending in a wallet on your phone or computer, the rest in a more secure place;
- for savings, an offline wallet (cold storage); bitcoin.org considers hardware wallets a good balance between high security and convenience;
- backups in several physical locations, and anything stored online only in encrypted form;
- do not forget your wallet password: there are almost no ways to recover it;
- think about inheritance: your loved ones should know how to get access if something happens to you.
Risk. The recovery phrase (seed phrase) gives full access to a wallet. Do not show it to anyone, do not photograph it and never enter it on websites or in “support” chats. If you lose it, no one will return the money from your own wallet: not the developers, not the miners, not the exchanges. More in How to Store Crypto and Cryptocurrency Fraud: 10 Schemes.
For how to buy bitcoin with hryvnias on an exchange, via a quick purchase or through P2P, see How to Buy Bitcoin with Hryvnia, and for taxes, see Cryptocurrency Taxes in Ukraine in 2026.
Frequently Asked Questions
How many bitcoins will there be in total?
No more than 21 million. New coins appear more and more slowly because of halvings, and issuance is expected to end around 2140.
Can I buy less than a whole bitcoin?
Yes. Bitcoin is divisible to the eighth decimal place: the smallest unit, the satoshi, is 0.00000001 BTC. You can buy and send any fraction.
What will miners live on once all bitcoins are issued?
On the fees that users pay for transactions. According to bitcoin.org, mining will remain necessary even after the last bitcoin is issued, because it confirms transactions and protects the network.
Is bitcoin anonymous?
No. All transactions are public and stored forever, and the balance of any address can be viewed. Only the owner’s identity remains unknown until it is revealed, for example by an exchange during verification or by a seller during a purchase.
Can bitcoin lose its value?
Yes. Bitcoin.org answers directly that bitcoin could become worthless, as has happened to other currencies in history. So you should not keep money in it that you cannot afford to lose.
