Bitcoin Basics
FAQs — Bitcoin
What is Bitcoin?
Bitcoin is open, borderless digital money secured by math and a global network of computers. No company or government controls it; anyone can run software (“a node”) to independently verify the rules. That neutrality lets people exchange value online without permission.
Why is the supply capped at 21 million?
Bitcoin follows a transparent issuance schedule that asymptotically approaches 21,000,000 coins. A hard cap creates digital scarcity similar to gold, but auditable in software. Changing it would require broad, voluntary user consensus—so the default is discipline.
What is the halving—and why does it matter?
Roughly every four years, the new-coin reward given to miners is cut in half. This slows fresh supply and reinforces long-term scarcity. The schedule is known years in advance, making Bitcoin’s monetary policy predictable.
What gives Bitcoin value?
It combines scarce supply, global portability, easy divisibility (satoshis), and resistance to censorship or seizure. Most importantly, its rules are transparent and verifiable—trust shifts from institutions to open-source code and user validation.
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FAQs —
How Bitcoin Works
What is Proof-of-Work in simple terms?
Miners expend real-world energy to propose blocks of transactions. That cost makes rewriting history prohibitively expensive, while anyone can cheaply verify the chain. Energy is converted into security—an idea Satoshi designed to keep the system honest.
Who actually runs Bitcoin?
Users running full nodes enforce the rules; miners order transactions; developers propose improvements; markets decide what software to run. No single actor can change the rules without users opting in. Power is intentionally decentralized.
Bitcoin on-chain vs. Lightning—what’s the difference?
On-chain Bitcoin is the high-security settlement layer—every transaction is recorded in the global ledger. The Lightning Network is a Layer-2 for instant, low-fee payments that eventually settle back to Bitcoin, ideal for everyday use.
Why do Bitcoin fees and confirmations vary?
Block space is limited, so fees reflect current demand. One confirmation takes ~10 minutes on average; more confirmations mean more finality for larger payments. You can choose to wait longer or pay more depending on urgency.
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FAQs— Bitcoin: Self-Custody & Security
What does “Your keys, your Bitcoin” mean?
If you control the private keys, only you can move your bitcoin; no exchange can freeze or lose it. Self-custody turns money into a bearer asset you control directly—powerful, but it requires good backup habits.
What is a Bitcoin seed phrase and how should I store it?
It’s a 12/24-word backup that recreates your wallet if a device is lost. Write it offline (paper or metal), store it securely, and never share it. Test restoring with a small amount before saving more funds.
Bitcoin hot vs. cold wallets—when should I use each?
Hot wallets are connected to the internet—perfect for small, everyday spending. Cold wallets keep keys offline—better for savings and long-term storage. Many users keep a little hot and most cold.
What is Bitcoin multisig (e.g., 2-of-3) and why use it?
Multisig requires multiple keys to spend, reducing single-point failure from loss, theft, or coercion. It’s excellent for families, teams, and small businesses that want shared control and safer backups.
FAQs Bitcoin — Privacy, Safety & Practical Use
Do I need 1 whole BTC to start?
No. Bitcoin is divisible into 100,000,000 satoshis (sats) per BTC, so you can begin with a few dollars. Many newcomers start small, practice self-custody, and try a Lightning payment to learn the flow. Consider dollar-cost averaging (DCA) to reduce timing risk and focus on long-term learning rather than short-term price moves.
How do I protect my privacy when using Bitcoin?
Avoid address reuse and generate a fresh address for each payment—your wallet can do this automatically. Learn basic UTXO/coin control so you don’t accidentally link past transactions, and be mindful of KYC trails from regulated on-ramps. Verify wallet downloads from official sources and keep your device updated; good hygiene beats complicated tricks.
Is Bitcoin bad for the environment?
Proof-of-Work anchors money to real-world energy, making attacks costly and verification cheap. Mining frequently taps otherwise wasted or stranded energy and can help stabilize grids by being interruptible demand. The goal is credible neutrality: rules anyone can verify to protect savings regardless of borders or politics.
Isn’t Bitcoin just speculation?
People use Bitcoin for long-term savings, cross-border remittances, and censorship-resistant payments—use cases that don’t depend on daily price swings. Volatility is real in the short run, but the protocol’s supply schedule and validation rules are steady. Start with an educational mindset: small amounts, self-custody, and a multi-year time horizon.
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