Bitcoin is a currency born into the digital age. When using Bitcoin for the first time people should get an idea of how it works. Digital money is different than the traditional finance world is used to. It offers three core values in which many currencies cannot attain: Decentralization, Open Source, and Peer-to-Peer networking.
What is Bitcoin?
Bitcoin is a distributed peer-to-peer digital currency that can be transferred instantly and securely between any two people in the world. It’s like electronic cash that you can use to pay friends or merchants.
What are bitcoins?
Bitcoins are the unit of currency of the Bitcoin system. A commonly used shorthand for this is “BTC” to refer to a price or amount (e.g. “100 BTC”). There are such things as physical bitcoins, but ultimately, a bitcoin is just a number associated with a Bitcoin Address. A physical bitcoin is simply an object, such as a coin, with the number carefully embedded inside.
How divisible are bitcoins?
A bitcoin can be divided down to 8 decimal places. Therefore, 0.00000001 BTC is the smallest amount that can be handled in a transaction. If necessary, the protocol and related software can be modified to handle even smaller amounts.
How long will it take to generate all the coins?
The last block that will generate coins will be block #6,929,999 which should be generated at or near the year 2140. The total number of coins in circulation will then remain static at 20,999,999.9769 BTC.
Even if the allowed precision is expanded from the current 8 decimals, the total BTC in circulation will always be slightly below 21 million (assuming everything else stays the same). For example, with 16 decimals of precision, the end total would be 20,999,999.999999999496 BTC.
What if someone bought up all the existing Bitcoins?
Bitcoin markets are competitive — meaning the price of a bitcoin will rise or fall depending on supply and demand at certain price levels. Only a fraction of bitcoins issued to date are found on the exchange markets for sale. So even though technically, a buyer with lots of money could buy all the bitcoins offered for sale, unless those holding the rest of the bitcoins offer them for sale as well, even the wealthiest, most determined buyer can’t get at them.
Additionally, new currency continues to be issued daily and will continue to do so for decades; though over time the rate at which they are issued declines to insignificant levels. Those who are mining aren’t obligated to sell their bitcoins so not all bitcoins will make it to the markets even.
This situation doesn’t suggest, however, that the markets aren’t vulnerable to price manipulation. It doesn’t take significant amounts of money to move the market price up or down, and thus Bitcoin remains a volatile asset.