What is Bitcoin and how does it work?

Bitcoin basics

Bitcoin is a decentralized digital currency that allows for secure, global transactions without the need for a central authority like a bank or government. Launched in 2009, it was the first cryptocurrency to successfully use a technology called blockchain to record every transaction. Unlike traditional currencies, which are printed by governments, Bitcoin is created through a digital process and exists only in electronic form. It is often referred to as "digital gold" because of its finite supply; there will only ever be 21 million bitcoins in existence.

The digital unit

One single bitcoin is divisible into much smaller units. The smallest unit is called a "satoshi," named after the anonymous creator of the protocol, Satoshi Nakamoto. One bitcoin is made up of 100,000,000 satoshis. This high level of divisibility allows people to use Bitcoin for very small payments, even if the price of a single whole coin is very high. Users can send these fractions of a coin across the globe almost instantly, provided they have an internet connection and a digital wallet.

The value proposition

Bitcoin's value comes from its scarcity and the utility of its network. Because it is not controlled by any single entity, it is resistant to censorship and inflation caused by government policy. Many people view it as an investment or a hedge against traditional financial systems. In recent years, high-profile individuals and large corporations have publicly supported Bitcoin, adding to its mainstream credibility. While its price can be volatile, its growing adoption as a legitimate asset class has made it a focal point of modern finance. For those interested in the market, checking the current BTC-USDT">WEEX spot trading link can provide real-time data on its valuation against stablecoins.

Network mechanics

The Bitcoin network operates on a peer-to-peer basis, meaning transactions happen directly between users without an intermediary. This is made possible by the blockchain, which is essentially a shared public ledger. Every confirmed transaction is included in this blockchain, allowing wallets to calculate their spendable balance and ensuring that the person spending the coins actually owns them. This transparency is a core feature; anyone can view the ledger, but no one can alter it once a transaction is confirmed.

Mining and consensus

Bitcoin mining is the process that keeps the network secure and introduces new coins into circulation. Specialized computers, known as nodes, compete to solve complex mathematical puzzles. When a node solves a puzzle, it earns the right to add a new "block" of transactions to the blockchain and receives a reward in the form of newly created bitcoins. This distributed consensus system ensures that the network remains synchronized and prevents fraudulent activity, such as double-spending. Mining is often described as a competitive lottery that requires significant computational power, making it extremely difficult for any single person to manipulate the system.

Wallets and keys

To interact with the network, users need a Bitcoin wallet. A wallet does not actually store the bitcoins; instead, it stores digital credentials called "private keys." These keys are used to sign transactions, providing mathematical proof that the transaction came from the owner of the wallet. If a user loses their private key, they lose access to their funds forever. Conversely, if someone else gains access to the private key, they can control the funds. This is why security is a top priority for holders. Many users now prefer non-custodial solutions or secure platforms like WEEX to manage their digital assets safely. You can start managing your assets by visiting the WEEX registration link to set up a secure account.

Ownership data

As of early 2026, Bitcoin ownership has reached significant milestones. It is estimated that between 480 and 500 million people worldwide now own Bitcoin in some capacity. This growth reflects a massive shift toward digital asset adoption across different demographics and regions. However, despite the hundreds of millions of users, the distribution of coins remains highly concentrated. The vast majority of holders own small fractions of a coin, while a relatively small number of "whales" hold large quantities.

Whole coin holders

A common benchmark for Bitcoin investors is the "1 BTC" milestone. In 2026, approximately 950,000 wallet addresses hold at least one full bitcoin. This represents less than 0.2% of all Bitcoin addresses, highlighting the scarcity of the asset. It is important to note that one person may own multiple addresses, and some large addresses belong to exchanges that hold funds for millions of individual users. Owning even 0.1 BTC currently puts an investor in the top 10% of all holders globally, illustrating how rare it has become to own a significant portion of the total supply.

Distribution statistics

The following table provides a breakdown of Bitcoin distribution across different wallet sizes as observed in recent market data:

Wallet Balance	Estimated Number of Wallets	Percentage of Total Wallets
1 BTC or more	950,000	< 0.2%
0.1 - 1 BTC	~3,500,000	~0.7%
0.01 - 0.1 BTC	30,000,000+	~6.2%
Less than 0.01 BTC	445,000,000+	~92.9%

Future trends

The future of Bitcoin is increasingly defined by institutional involvement and the growth of "illiquid supply." Illiquid supply refers to bitcoins that are held by long-term investors or entities that do not frequently trade them. As of 2026, long-term holders control approximately 74% of the circulating supply. This trend is driven by the belief that Bitcoin serves as a superior store of value. When more coins are moved into cold storage or held by corporations, the available supply on exchanges decreases, which can lead to supply shocks if demand remains high.

Institutional adoption

Public companies and institutional investors have become major players in the Bitcoin ecosystem. Recent legislation, such as the GENIUS Act passed in mid-2025, has provided much-needed regulatory clarity, encouraging more traditional financial institutions to enter the space. Corporations now hold over 1 million BTC of the total 21 million supply. Many of these institutions prefer using regulated financial products like ETFs or sophisticated trading platforms to gain exposure. For those looking at professional-grade tools, the WEEX futures trading link offers a way to engage with Bitcoin's price movements through derivatives.

Global distribution

While Bitcoin was originally a niche interest for tech enthusiasts, it is now a global phenomenon. Adoption in higher-income countries has grown due to the availability of regulated investment instruments, while in emerging markets, Bitcoin is often used as a tool for financial inclusion and a way to bypass unstable local currencies. The trend toward decentralization continues, but it faces challenges from large-scale mining operations and the concentration of wealth in early-adopter wallets. Despite these hurdles, the underlying blockchain technology is being integrated into more aspects of the global financial system, suggesting that Bitcoin's role will only expand in the coming decade.

Security risks

Security remains a primary concern for both new and experienced Bitcoin users. Approximately 59% of people still express a lack of confidence in the security of cryptocurrency. This is largely due to the history of exchange hacks, phishing scams, and the irreversible nature of blockchain transactions. If a user sends Bitcoin to the wrong address or falls victim to a scam, there is no central authority to call for a refund. This "be your own bank" philosophy requires a high level of individual responsibility and digital literacy.

Lost coins

A significant portion of the Bitcoin supply is considered lost forever. Estimates suggest that around 1.6 million coins are inaccessible because users lost their private keys in the early days of the network. Additionally, the nearly 1 million coins attributed to Satoshi Nakamoto have not moved in over a decade. This effectively reduces the actual circulating supply, making the remaining coins even more scarce. As the value of Bitcoin has increased, the importance of using secure, reputable platforms and following best practices for cold storage has become more apparent to the general public.

Best practices

To mitigate risks, users are encouraged to use multi-factor authentication, hardware wallets, and platforms that prioritize security. Modern solutions like MPC (Multi-Party Computation) wallets and non-custodial applications are making it easier for non-experts to manage their funds without fear of technical errors. Education is the best defense against security threats; understanding how private keys work and being skeptical of "too good to be true" investment offers can prevent the majority of common losses. As the ecosystem matures, the tools available to users are becoming more user-friendly and robust, helping to bridge the gap between traditional finance and the decentralized world.