Common beginner questions: 24 short answers

Short answers to the questions beginners ask most, each with a link to go deeper.

Basics

What is Bitcoin – and who invented it?

Bitcoin is digital money without a bank or a state: an open network of computers checks all payments against fixed rules and records them in a shared ledger, the blockchainGlossaryBlockchainBitcoin’s public ledger: a chain of blocks in which each block refers to its predecessor. Anyone wanting to change an old entry would have to recreate all the blocks that follow it.On the learning path: Stage 1 · Step 3 – How does Bitcoin work? →In the glossary →×. It was invented by a person or group using the pseudonym Satoshi Nakamoto; the whitepaper appeared on 31 October 2008.^[1] Who is behind it is still unknown.

Read more: What is Bitcoin? · The history of Bitcoin

Who controls Bitcoin?

Nobody on their own. There is no company and no board, and the software is open source. Every nodeGlossaryNodeA computer that runs Bitcoin software and exchanges transactions and blocks with other nodes. Together, the nodes form the Bitcoin network; full nodes check every rule themselves.On the learning path: Stage 1 · Step 3 – How does Bitcoin work? →In the glossary →× checks every payment and block for itself and rejects anything that breaks the rules – including blocks from miners.^[1] Anyone who wants to change the rules has to convince the vast majority to run new software voluntarily. Otherwise a separate chain splits off – a different currency, not Bitcoin.

Read more: Nodes & decentralisation · Forks & controversies

Why are there only 21 million bitcoin?

New bitcoin are created only as a reward for miners, and that reward halves every 210,000 blocks, roughly every four years (the halvingGlossaryHalvingEvery 210,000 blocks – roughly every four years – the number of new bitcoin per block is cut in half. The fourth halving, on 20 April 2024, reduced it from 6.25 to 3.125 BTC.On the learning path: Stage 2 · Step 2 – Halving & 21 million →In the glossary →×). So the total supply stays just under 21 million BTC; the last fractions are expected to be issued around 2140.^[2] So far, 20,093,887 BTC have been issued, 95.69% of the maximum. The rule could only change if the vast majority went along voluntarily – and many hold Bitcoin precisely because the supply is fixed.

Read more: The halving & the 21 million

Where does Bitcoin’s value come from?

Bitcoin pays no interest or dividends; its price comes from supply and demand. Supporters point to the properties of good money: scarce, divisible, easy to transfer, no issuer. Critics counter that a price without income rests mainly on expectations – one reason for the large price swings.

Read more: Digital scarcity · Money, inflation & trust

Buying

Do I have to buy a whole bitcoin?

No. 1 BTC is made up of 100 million satoshisGlossarySatoshi (sats)The smallest unit of Bitcoin: 1 satoshi (‘sat’ for short) equals 0.00000001 BTC, so one bitcoin consists of 100 million sats. The unit is named after Bitcoin’s creator, Satoshi Nakamoto.On the learning path: Stage 1 · Step 4 – Sats & units →In the glossary →×, or ‘sats’ for short.^[3] An example at an assumed $80,000 per BTC: $100 gets you 0.00125 BTC before fees, i.e. 125,000 sats. Right now, 1 BTC costs $85,533; $1 buys around 1,169 sats.

Read more: Sats, BTC & units · Sats converter

Where can I buy Bitcoin from a legitimate provider?

From a provider authorised in the EU under MiCAGlossaryMiCA (Markets in Crypto-Assets Regulation)The EU regulation on markets in crypto-assets. Since 30 December 2024, exchanges, brokers and custodians in the EU have needed authorisation; the last transitional period ended on 1 July 2026. MiCA regulates providers, not Bitcoin itself.On the learning path: Stage 4 · Step 2 – Choosing a provider →In the glossary →×; all transitional periods ended in July 2026. The register of the European securities regulator ESMA shows whether a provider is authorised.^[4] Never buy via links from chats, adverts featuring supposed celebrities or after unsolicited phone calls.^[5]

Read more: Choosing the right provider · Providers at a glance

What about other cryptocurrencies?

We explain only Bitcoin; other crypto-assets follow different rules and carry different risks. Many exchangesTermExchange (crypto exchange)A trading platform where buyers and sellers trade bitcoin with each other via an order book.On the learning path: Stage 4 · Step 2 – Choosing a provider →In the glossary →AdLicensed providers with a paid linkProviders from our comparisonKrakenExchange · MiCA (Central Bank of Ireland)Visit Kraken* (paid link, opens in a new window)BitvavoExchange · MiCA (AFM, Netherlands)Visit Bitvavo* (paid link, opens in a new window)CoinbaseExchange · MiCA (CSSF, Luxembourg)Visit Coinbase* (paid link, opens in a new window)All 7 compared – including non-partners →*Paid link: if you sign up or buy through it, we earn a commission. Your price stays the same. How we make money →18+ · Crypto assets are highly volatile; you could lose all your money. No deposit protection.× offer them, but you can buy only Bitcoin there. Make sure you receive real bitcoin that you can withdraw to your own wallet – not just a financial product that tracks the price.

Read more: Bitcoin, not ‘crypto’

How much money should I put in?

We won’t give you a personal figure – that would be investment advice. The basic rule: only money you can do without, and only once your emergency fund is in place. Germany’s consumer advice centres (Verbraucherzentrale) recommend holding crypto-assets only as a small addition of 5% at most.^[6] An honest test: could you sit through a fall of 80% without selling in a panic?

Read more: Bitcoin as a small portfolio allocation · Financial foundations first

Savings plan or everything at once?

A savings planTermSavings plan (Bitcoin savings plan)Automatically buying bitcoin at fixed intervals with a fixed amount, for example $50 a month.On the learning path: Stage 4 · Step 4 – Setting up a savings plan →In the glossary →AdLicensed providers with a paid linkProviders from our comparison21bitcoinBitcoin app · MiCA (FMA, Austria)No paid link for your country · Profile →RelaiBitcoin app · MiCA (AMF, France)No paid link for your country · Profile →BISONExchange · MiCA (BaFin, Germany)No paid link for your country · Profile →All 11 compared – including non-partners →*Paid link: if you sign up or buy through it, we earn a commission. Your price stays the same. How we make money →18+ · Crypto assets are highly volatile; you could lose all your money. No deposit protection.× buys regularly for a fixed amount. It spares you the hunt for the ‘right moment’ and suits a regular income. If the money is already there, it brings no return advantage on average: in a Vanguard study on shares and bonds, investing a lump sum straight away came out ahead in around two out of three cases.^[7] Its value lies in sparing your nerves.

Read more: Savings plan or lump sum? · DCA calculator

Isn’t it far too late to get started?

Nobody can seriously predict whether the price will rise or fall. Your goal and your time horizon matter more than timing: with an amount you can afford to lose and plenty of patience, you don’t need to find the perfect moment.

Read more: Bitcoin returns & risk · Holding for the long term

What does buying bitcoin cost?

More than just the price. Depending on the provider, you pay:

• a trading fee,
• a mark-up hidden in the price, the spreadGlossarySpread (bid-ask spread)The difference between the buy and sell price. With many apps, the spread is the real fee – it just doesn’t appear as a separate item on your statement.On the learning path: Stage 4 · Step 2 – Choosing a provider →In the glossary →×,
• often a surcharge when paying by card,
• a withdrawal or network feeGlossaryTransaction fee (network fee)The amount a Bitcoin transaction pays to the miner. It depends on the transaction’s size in vbytes and the fee rate offered – not on the amount you send.On the learning path: Stage 5 · Step 4 – First withdrawal →In the glossary →× when you transfer to your own wallet.

So compare how much of your amount actually arrives as bitcoin.

Read more: Understanding fees · Fee calculator

Custody & security

Do I need a wallet?

Not straight away. If you buy from a provider, it holds your bitcoin for you – convenient, but you are trusting a company. Your own wallet gives you control over the keys, and therefore over your money. Many people practise self-custody with small amounts first.

Read more: Understanding custody · Types of wallet

What is a seed phrase – and what if I lose it?

The seed phraseGlossarySeed phrase (recovery phrase)A sequence of usually 12 or 24 words from which your wallet derives all its private keys. Anyone who knows the words has full access to your bitcoin – so they belong in an offline backup and never in anyone else’s hands.On the learning path: Stage 5 · Step 3 – Backing up your seed phrase →In the glossary →× is a list of usually 12 or 24 words from which your wallet derives all its keys. With it, you can restore your bitcoin on a new device – and so can anyone else who knows it. If you lose both the device and the seed phrase, your bitcoin are gone for good.^[6] If only the seed phrase is missing, promptly move your funds to a new wallet with a new, securely written-down seed phrase. Write it down on paper or metal – never in a cloud, a photo or an email.

Read more: Backing up your seed phrase · Testing recovery & lost access

What happens if my exchange goes bust?

There is no deposit guarantee for bitcoin as there is for money in a bank account.^[6] Under MiCA, however, authorised custodians must keep your bitcoin legally separate from their own assets, so the provider’s creditors cannot touch them in an insolvency.^[8] With custodians authorised in Germany, they also expressly count as yours – unless you have allowed the provider to dispose of them.^[9] Insolvency proceedings can still take time, and if bitcoin have vanished through a hack or fraud, segregation doesn’t help. That’s why many people leave with a provider only what they need for trading.

Read more: Understanding custody

Do I need a hardware wallet?

A hardware walletGlossaryHardware walletA small dedicated device that keeps your private keys offline and signs transactions internally. The key never leaves the device, so malware on your computer can’t get at it.On the learning path: Stage 6 · Step 1 – Hardware wallets compared →In the glossary →× is a small device that keeps your keys offline and signs payments internally. For small amounts, a wallet app is often enough; the bigger your holdings, the more worthwhile such a device becomes. Three rules:

• Only buy it from the manufacturer or an authorised reseller.
• Never use a seed phrase that came with the device – the device must generate it itself.
• Keep the firmware up to date, installing updates only through the manufacturer’s official software.

Read more: Hardware wallets compared · Setting up a hardware wallet

How do I spot a scam?

The European financial supervisors name typical warning signs: unsolicited offers, promises that sound too good, time pressure and any request for your seed phrase. Also typical are investment websites or apps that show profits you can never withdraw. After a loss, supposed authorities or helpers often get in touch offering to ‘recover’ your money for a fee – usually the next scam.^[5] Legitimate providers never ask for your seed phrase, and a Bitcoin payment cannot be reversed.

Read more: Spotting & avoiding scams

Can Bitcoin be hacked?

The network itself, hardly. To manipulate the blockchain, an attacker would need more computing power than all honest miners combined – and even then, according to the whitepaper, playing by the rules should be more profitable.^[1] The network’s total computing power, the hashrateGlossaryHashrate (computing power)How many hash attempts per second a mining device or the whole network makes. The network hashrate shows how much computing work secures Bitcoin.In the glossary →×, currently stands at 969 EH/s (EH/s: quintillions of attempts per second). In practice, attackers go after exchanges, devices and email accounts – and people who give away their seed phrase.

Read more: The big security checklist · Security check

Tax & law

Is Bitcoin legal in Germany?

Yes. Buying, holding, gifting, selling and keeping bitcoin in your own wallet are all permitted. Supervision applies to providers: anyone offering crypto services in the EU needs authorisation under MiCA.^[4]

Read more: MiCA & regulation simply explained

Do I have to pay tax on gains?

If more than a year passes between buying and selling, the gain is tax-free in Germany under current law. If you sell earlier at a profit, that is a private disposal and taxable – unless all such gains in the calendar year add up to less than €1,000. This is an exemption limitGlossaryExemption limit (€1,000 Freigrenze)In Germany, gains from private disposal transactions stay tax-free if they total less than €1,000 in a calendar year. From €1,000, the entire gain is taxable.On the learning path: Stage 6 · Step 3 – Bitcoin & tax →In the glossary →×, not an allowance: once you reach it, the entire gain is taxable.^[10] Abolishing the holding periodGlossaryHolding period (speculation period)In Germany, the gain from selling privately held bitcoin is tax-free if more than one year passes between purchase and sale (§ 23 EStG, as of September 2026). Each purchase has its own holding period.On the learning path: Stage 6 · Step 3 – Bitcoin & tax →In the glossary →× is under discussion but has not been decided (as of September 2026); our reform tracker follows it. This is not tax advice.

Read more: Bitcoin & tax in Germany · Holding period calculator

Does the tax office find out about my bitcoin?

About purchases and sales through providers: yes. Under the Crypto-Asset Tax Transparency Act (KStTG), Germany’s implementation of the EU directive DAC8GlossaryDAC8 (EU reporting rules for crypto-assets)EU directive that has required crypto providers to report customer data and transactions to the tax authorities since 1 January 2026. In Germany, the KStTG implements it; the first report, for 2026, is due by 31 July 2027.On the learning path: Stage 6 · Step 3 – Bitcoin & tax →In the glossary →×, providers have been recording their customers’ name, address and tax ID, among other things, since 2026, along with purchases, sales and transfers. They report this every year by 31 July to the Federal Central Tax Office (Bundeszentralamt für Steuern), for the first time in 2027; from there, the data goes to your local tax office.^[11] The same tax rules apply to bitcoin in your own wallet.

Read more: DAC8 & reporting obligations

Criticism & the future

Does Bitcoin use too much energy?

Mining uses a lot of electricity: on 28 September 2026, the Cambridge index CBECI estimated around 153 TWh a year, with a range of 79 to 295 TWh.^[12] A 2025 survey-based report by the Cambridge Centre for Alternative Finance put it at around 138 TWh, about 0.5% of global electricity consumption. The mining companies surveyed reported 52.4% from renewables and nuclear power; the largest single source was natural gas at 38.2%.^[13] These are self-reported figures from firms with just under half of the computing power. Whether the benefit justifies the consumption is a matter of judgement.

Read more: Bitcoin, energy & the environment

Is Bitcoin mainly used by criminals?

No, even though there is misuse. The analytics firm Chainalysis estimates that illicit addresses received at least $154 billion in crypto-assets in 2025 – less than 1% of attributable transaction volume, 84% of it in stablecoinsGlossaryStablecoinA crypto-asset whose value is meant to be pegged to a currency such as the US dollar or the euro. Unlike bitcoin, a stablecoin has an issuer – its value depends on the issuer keeping its reserves and remaining solvent.In the glossary →×.^[14] On top of that, the Bitcoin blockchain is public: every payment remains traceable, including for investigators.

Read more: Criticism & risks, honestly explained · Myths & facts

Can Bitcoin be banned?

States can make access harder, for example through rules for exchanges, banks or advertising. The network itself runs on independent computers in many countries and can hardly be switched off. So far, the EU has opted for rules rather than bans, above all with MiCA.^[4] Rules on tax, reporting and privacy can change, though.

Read more: Criticism & risks, honestly explained · What’s changing right now

Are quantum computers a threat to Bitcoin?

A serious long-term issue, not an acute one. A sufficiently powerful quantum computer could work out the private key from a public key once it is publicly visible. One proposed countermeasure is BIP-360, a better-protected address type – so far only a draft (as of September 2026).^[15] What helps today: don’t reuse addresses – common wallets generate a new one for every payment you receive anyway. With addresses starting with ‘1’, ‘3’ or ‘bc1q’, the public key only becomes visible when you spend; with TaprootGlossaryTaprootA soft fork from November 2021 that introduced Schnorr signatures and more flexible spending conditions. Complex arrangements such as multisig can look like a simple payment. Taproot addresses start with bc1p.In the glossary →× addresses (‘bc1p’), it is visible as soon as you receive.^[15]

Read more: Criticism & risks, honestly explained

Where next?