What Is Bitcoin? Bitcoin Explained: Halving, Supply and How to Buy

Updated on 22 October 2026: fully rewritten with current figures on price, supply, halving and hash rate, plus buying, storing and taxing bitcoin. Corrected: the earlier version said Satoshi Nakamoto developed the currency in November 2008, but the white paper appeared on 31 October 2008 and the software in January 2009; it also gave the block reward as 12.5 bitcoin, which has been 3.125 bitcoin since the halving of 20 April 2024. An unsourced claim that most investors bought bitcoin with illicit money has been removed.

Bitcoin is a digital currency that works without a bank, government or central bank. Thousands of computers around the world keep a shared public ledger, the blockchain, that records every transfer, and so-called miners secure new entries with computing power. There will never be more than 21 million bitcoin, and about 20.1 million have already been issued. On 22 October 2026 one bitcoin cost about $84,040 (€74,800), according to CoinMarketCap, and you can buy small fractions of a coin for a few euros or dollars.

Bitcoin was invented by a person or group using the name Satoshi Nakamoto, and the network has been running since 3 January 2009. This guide explains bitcoin in plain terms: how the blockchain works, why the supply is capped, where to buy bitcoin, how to store it safely and when gains are tax-free in Germany. Our buy bitcoin comparison lines up providers and fees, and our Bitcoin price prediction collects scenarios for the price. The record shows that bitcoin has lost more than half its value seven times since 2011 and set new highs after each of the six earlier crashes; our own assessment of the risks follows further down, clearly labelled.

Bitcoin explained: The key facts at a glance

• Origin: Satoshi Nakamoto published the white paper on 31 October 2008, and the first block was mined on 3 January 2009.
• Supply: A maximum of 21 million bitcoin, of which about 20.1 million, or 95.7 percent, are in circulation (22 October 2026).
• Halving: The reward per block last fell to 3.125 bitcoin on 20 April 2024; the next halving is due around April 2028.
• Market value: About $1.69 trillion, number one among all cryptocurrencies with a 60 percent share of the total market (22 October 2026).
• Volatility: From its record close of $124,753 on 6 October 2025, the price fell 53.1 percent by 30 June 2026.
• Tax in Germany: Gains on bitcoin held for more than a year are tax-free (Section 23 of the Income Tax Act, as of October 2026).

Bitcoin in numbers: Key data for October 2026

The table shows bitcoin's key figures on 22 October 2026 at around midnight UTC. Price, market value and supply come from CoinMarketCap, network data from the block explorer mempool.space.

How does Bitcoin work? Blockchain, mining and keys explained

Bitcoin works like a ledger that is not kept by a bank but copied across thousands of computers known as nodes. Every transfer is broadcast to all nodes, checked and written into a block. Roughly every ten minutes a new block is added, and each block contains a digital fingerprint of the one before it. Anyone trying to forge an old entry would have to recompute every later block faster than the rest of the network.

Miners do this computing work. Specialised machines try trillions of random numbers per second until a block produces a check value below a set target. The method is called proof of work. Whoever finds a valid block first receives the block reward, currently 3.125 bitcoin, plus the fees of the transfers it contains. Every 2,016 blocks, roughly every two weeks, the network adjusts the difficulty so that the ten-minute rhythm holds; it last rose by 5.9 percent on 16 October 2026. Our guide What is Bitcoin mining? works out how much power this takes and when mining pays off.

Ownership of bitcoin rests on pairs of keys. Every bitcoin address has a private key, a long random number used to sign transfers. Whoever knows the key controls the balance; whoever loses it can never get it back. There is no bank to reset a password, and a transfer cannot be reversed once it sits in a block. The smallest unit is called a satoshi and equals 0.00000001 bitcoin, so even amounts of a few euros or dollars can be sent.

Who invented Bitcoin? Satoshi Nakamoto and the 2008 white paper

Bitcoin was invented by Satoshi Nakamoto, a pseudonym that may stand for one person or a group; who is behind it has never been proven. On 31 October 2008 Nakamoto presented the nine-page white paper "Bitcoin: A Peer-to-Peer Electronic Cash System" on a cryptography mailing list. The idea was electronic cash that two people can exchange directly, without a payment company in between.

At 18:15 UTC on 3 January 2009 the first block was created, the so-called genesis block. It carries a headline from The Times of the same day about a second bailout for the banks, a nod to the financial crisis in which bitcoin was born. On 8 January 2009 Nakamoto announced the first software release, version 0.1. At the end of 2010 Nakamoto withdrew from the public forums; since then volunteers and paid developers have maintained the open-source software, known as Bitcoin Core since 2014.

Bitcoin halving: Why there will never be more than 21 million bitcoin

The supply is fixed in the code: every 210,000 blocks, or about every four years, the reward for new blocks is cut in half. This halving makes the number of new bitcoin grow ever more slowly until the last satoshi is issued around the year 2140. On 22 October 2026 just under 900,000 bitcoin remained to be mined before the cap. The most recent halving took place at block 840,000 on 20 April 2024.

The date of the next halving is an estimate, not a fixed appointment: from block 972,546 there are 77,454 blocks to go until block 1,050,000. At exactly ten minutes per block that would be reached around 11 April 2028. Because blocks have recently arrived every nine and a half minutes on average, it could come a few weeks earlier. The halving cuts new supply; it does not set demand.

How to buy Bitcoin: Exchange, broker or ETF

The simplest way to buy bitcoin is through a crypto exchange or broker. In the European Union these providers need a licence under the MiCA regulation. Signing up usually takes a few minutes but requires an ID document, because providers must follow anti-money-laundering rules. Fees, payment methods and minimum amounts differ widely; our overview of the best crypto exchanges sets them side by side and shows how many coins each platform lists. Which providers hold a MiCA licence is shown in our comparison of regulated crypto exchanges.

If you want to invest small amounts regularly, a bitcoin savings plan can start from a few euros a month. You can also get exposure without a wallet through a brokerage account: spot bitcoin ETFs have traded in the United States since 11 January 2024, after the US Securities and Exchange Commission approved them on 10 January 2024. Retail investors in Germany usually turn to exchange-traded notes on bitcoin instead. How these funds are built and what they cost is covered in our guide Bitcoin ETFs explained.

How to store Bitcoin safely: Exchange or your own wallet

After you buy, your bitcoin first sits with the exchange, which manages the private keys for you. That is convenient, but you are trusting the provider. The collapses of Mt.Gox in February 2014 and FTX in November 2022, when customers could not reach their funds for years, showed how costly that can be. Many investors therefore keep larger amounts in a wallet of their own.

A software wallet is an app on your phone or computer, free and quick to set up; our overview of software wallets compares the options. A hardware wallet stores the private key on a separate device that never connects to the internet directly; models and prices are listed in our hardware wallet comparison. Both types give you a recovery phrase of 12 or 24 words. It replaces the device in an emergency and belongs on paper or metal, never in a cloud drive, an email or a photo.

Paying with Bitcoin and accepting Bitcoin in your business

Paying with bitcoin works with a QR code: the recipient shows their address and the amount as a code, and the payer scans it with a wallet and confirms. On the blockchain itself the first confirmation takes ten minutes on average, and the fee depends on how busy the network is. On 22 October 2026, according to mempool.space, 5 satoshis per virtual byte were enough for the next block, so a simple transfer of about 140 bytes cost roughly 700 satoshis, or $0.59. For small everyday amounts there is the Lightning Network, which settles payments in seconds for a fraction of a cent.

A shop that wants to accept bitcoin needs three things: a wallet or a payment provider, a till or app that creates a QR code with the right amount for every purchase, and a visible sign for customers. Payment providers can convert incoming bitcoin into euros or dollars straight away, so price moves between sale and settlement do not matter. For bookkeeping, the sale remains ordinary revenue in your home currency, and you record the exchange rate at the time of payment.

Bitcoin tax in Germany: Holding period and reform status

In Germany, gains on bitcoin held privately are tax-free if more than a year passes between purchase and sale. This is set out in Section 23 of the Income Tax Act on private sales. If you sell earlier, the gain is taxed at your personal rate, unless all your private sale gains in a year stay below the exemption limit of €1,000. Swapping bitcoin for another cryptocurrency also counts as a sale.

A draft bill from the Federal Ministry of Finance dated 30 September 2026 would abolish the one-year period for coins acquired from 1 January 2027. It has not been adopted: the federal cabinet did not approve it on 14 October 2026, and no new date is known. We track the latest status in our article on the crypto holding period reform. The CryptoTicker tax calculator works out your gains and the tax due; it does not replace individual tax advice.

Bitcoin risks: Price swings, total loss and scams

The bitcoin price swings more than shares or gold. On 6 October 2025 bitcoin closed at $124,753, its highest daily close so far. By 30 June 2026 the price had fallen to $58,559, a drop of 53.1 percent; on 22 October 2026 it stood about 33 percent below the record. Bitcoin has fallen more than 50 percent seven times since 2011, and the deepest crash, in 2011, cost about 93 percent.

There are also risks that have nothing to do with the price: a lost key, a transfer to the wrong address that cannot be recalled, and scammers who use invented returns or fake support messages to get hold of recovery phrases. Unlike a bank account, bitcoin has no deposit insurance.

Our assessment: After almost 18 years of operation, with spot ETFs in the United States and a hash rate above 1,000 exahashes per second, bitcoin is no longer an experiment. That does not make it a safe asset. The 53.1 percent fall to June 2026 shows that even a mature market can lose half its value, and after the major crashes it has so far taken up to just over three years to go from one record to the next. Only invest money you can do without for a long time, and be prepared for a total loss.

Bitcoin since 2009: A scarce network with big price swings

Bitcoin is a capped digital currency with fixed rules: 21 million units, one block every ten minutes, a halving every four years, the next around April 2028. For investors in Germany three points matter: a provider with a MiCA licence, control of your own keys and the one-year holding period for as long as it applies. The price does not change the rules: even after the next halving the cap stays at 21 million bitcoin.

(As of 22 October 2026. This article is not investment advice. Prices and fee structures change; check the terms with the provider before you buy.)