Technology

Bitcoin works as a shared public ledger that thousands of computers keep identical copies of. Users sign transactions with private keys, miners bundle them into a block about every 10 minutes, and nodes check every block against the rules. Each block links to the one before it, which makes rewriting history extremely costly. How Does Bitcoin Work? walks through each step.

Bitcoin mining is the competition to add the next block of transactions to the chain. Miners repeatedly guess a number until a hash meets a difficulty target, which is called proof of work. The winner earns newly issued bitcoin plus transaction fees. The work is costly to do and easy for everyone else to verify. See Inside a Bitcoin Mining Operation.

Mining uses a lot of electricity because proof of work is deliberately expensive: the security comes from the real cost of attacking the network. Critics point to emissions and local power prices, while defenders note that miners seek cheap, sometimes otherwise unused power. Estimates of the renewable share differ, so check the source and date. More in Inside a Bitcoin Mining Operation.

The halving is a scheduled cut in the block subsidy, the new bitcoin paid to miners, that happens every 210,000 blocks, roughly every four years. The subsidy fell from 50 bitcoin in 2009 to 3.125 after April 2024, and total supply approaches 21 million around 2140. Learn more in What Is the Bitcoin Halving? and Inside a Bitcoin Mining Operation.

No single party runs Bitcoin. Nodes are computers that store the ledger and check every block against the rules, and miners compete to add blocks. A miner cannot create extra coins or spend other people's coins, because nodes reject blocks that break the rules, and anyone can run a node. See How Does Bitcoin Work? for how the roles fit together.

The Lightning Network is a payment layer built on top of Bitcoin, not a separate coin. Two people lock bitcoin into a shared channel and update balances off-chain, so only the opening and closing reach the blockchain. It suits small, fast payments but has liquidity limits and custody trade-offs. See What Is the Lightning Network?.

Proof of work secures a network with computing power and electricity, as Bitcoin does, while proof of stake secures it with coins that validators lock up as a deposit. Ethereum switched to proof of stake in 2022. Each approach has different trade-offs in energy use, hardware and security assumptions. See Proof of Work vs Proof of Stake.

Bitcoin transactions pay a fee to miners for including them in a block, and block space is limited. The fee depends mostly on how large the transaction is and how busy the network is, not on how much bitcoin is sent. Exchanges may charge their own separate fees. See Bitcoin Fees Explained.

In theory a large, fault-tolerant quantum computer could threaten the signature scheme that proves ownership of coins, while Bitcoin's hashing is much less exposed. No existing quantum computer can do this, and experts disagree about when, or whether, one will. See Could Quantum Computers Break Bitcoin?.

A node is a computer that downloads every block and checks each transaction against Bitcoin's rules itself, instead of trusting anyone else. Nodes are what enforce the rules, and running one earns no money. It needs several hundred gigabytes of storage and a steady connection. See What Is a Bitcoin Node?.

A soft fork tightens the rules, so blocks made under the new rules are still accepted by old nodes. A hard fork loosens them, so old nodes reject the new blocks and the chain can split. Taproot was a soft fork, and the 2017 split that created Bitcoin Cash was a hard fork. See Bitcoin Forks Explained.

Taproot is a soft fork that activated in November 2021. It added Schnorr signatures and a more flexible way to set spending conditions, so complex transactions such as multisig can look like ordinary payments on the chain. Most users only notice that wallets support addresses starting with bc1p. See What Is Taproot?.

A blockchain is a shared, append-only record made of blocks, where each block points to the one before it through a hash. Changing an old block would break every later link, which is why Bitcoin's history is hard to rewrite. The blockchain is the data structure, and Bitcoin is the network and coin built on it. See What Is a Blockchain?.

Your transaction is waiting in the mempool, the queue of valid transactions that miners have not yet put in a block. When demand is high, miners take the highest fees first, so a low-fee transaction can wait. Some wallets let you raise the fee. See What Is the Bitcoin Mempool?.

Bitcoin Cash is a separate cryptocurrency created in August 2017 when a group split from Bitcoin over the block size limit. It has its own chain and coin, BCH, and a larger block size limit. Both use proof of work and a 21 million cap. See What Is Bitcoin Cash?.

The private key is a secret number that authorises spending, and the public key is derived from it with one-way maths, so it cannot be reversed. You can share addresses and public keys, but never the private key or seed phrase. See Public Key vs Private Key in Bitcoin.

A transaction is confirmed when a miner includes it in a block, which happens about every ten minutes on average, so waits range from minutes to an hour or more in busy periods. A higher fee usually means faster inclusion. See How Long Does a Bitcoin Transaction Take?.

A 51% attack is when one actor controls a majority of mining power and uses it to reorganize recent blocks, which lets them double spend their own coins or block others' transactions. It cannot take coins without keys or change the rules nodes enforce. See Double Spending and 51% Attacks.

The next halving, the fifth, comes at block 1,050,000 and is expected around 2028, but the exact date cannot be known because block times vary. The subsidy will fall from 3.125 to 1.5625 bitcoin. See When Is the Next Bitcoin Halving?.