Bitcoin is the first and best-known blockchain, a public ledger of payments that no single company runs. This article explains who made it, how blocks and fees work, what the different address formats mean, and how to watch the network live.
If you are new to the idea of a shared ledger, read what is a blockchain first. Here we focus on Bitcoin itself.
What Bitcoin is and who built it
Bitcoin was described in a 2008 white paper published under the name Satoshi Nakamoto, and the network started in 2009. The real identity of Nakamoto is not known. Nobody owns the network. It is run by thousands of independent computers called nodes, and its software is open source and maintained by many volunteer and company-paid contributors.
The problem Bitcoin set out to solve is digital cash without a bank. Before it, any digital money needed a trusted party to stop people from spending the same coin twice. Bitcoin replaces that party with a shared ledger that everyone can check.
Today people use Bitcoin mainly to hold and transfer value across borders, and as a settlement layer. It is deliberately simple. It does not run general programs the way Ethereum does, and that simplicity is part of its design.
How blocks work: proof of work
Bitcoin uses proof of work. Miners are computers that repeatedly guess numbers until the hash (a fixed-size fingerprint) of a candidate block falls below a target. The first miner to find one publishes the block, and the others check it in a fraction of a second and build on top of it.
A new block is found about every 10 minutes on average. The timing is random, so two blocks can arrive within a minute and a gap of an hour is possible. To keep the average steady, the network adjusts the difficulty every 2,016 blocks, roughly every two weeks. More mining power makes the target harder, less mining power makes it easier.
The winning miner collects the block subsidy (newly created bitcoin) plus the fees of the transactions inside. The subsidy is cut in half about every four years in an event called the halving. This is why the total supply is capped at 21 million coins and why new issuance slows over time. Fees are expected to matter more as the subsidy shrinks.
UTXOs, not accounts
Ethereum keeps a balance per account. Bitcoin works like cash in a wallet. Your balance is a set of unspent transaction outputs, or UTXOs. Each UTXO is a coin of a specific size that you can spend once.
When you pay 0.003 BTC using a UTXO worth 0.005 BTC, the transaction consumes the whole UTXO and creates two new ones: 0.003 for the receiver and about 0.002 back to you as "change", minus the fee. Your wallet handles this for you. It matters because the number of inputs changes the size of the transaction, and size is what you pay for.
Fees, weight units and the mempool
Bitcoin fees are not based on the amount you send. They are based on how much space your transaction takes in a block. A block can hold at most 4,000,000 weight units, which equals 1,000,000 virtual bytes (vB). Fees are quoted as satoshis per virtual byte (sat/vB). One satoshi is one hundred-millionth of a bitcoin.
A simple payment of one input and two outputs is on the order of 140 vB for a modern SegWit address, so at 10 sat/vB it would cost about 1,400 satoshis. The exact size depends on the address type and the number of inputs.
When you send, your transaction first goes to the mempool, the waiting room of unconfirmed transactions held by each node. Miners pick the highest fee rates first. If blocks are full, a low-fee transaction waits, sometimes for hours or days. Many wallets let you speed it up later with a higher fee. Read Bitcoin mempool and fees for the details, and gas and fees for how this compares with other chains.
What raises fees: a burst of demand, such as a popular token launch or market panic, fills blocks, and senders then outbid each other.
Address types
Bitcoin has its own address formats, unrelated to the 0x addresses of Ethereum and other EVM chains. The prefix tells you the type:
| Prefix | Name | Notes |
|---|---|---|
1... |
Legacy (P2PKH) | Oldest format, largest transactions |
3... |
P2SH | Wraps other scripts, often multisig or wrapped SegWit |
bc1q... |
Native SegWit | Smaller transactions, lower fees |
bc1p... |
Taproot | Newer, more flexible scripts, similar fee level |
Newer formats usually cost less to spend from because their transactions are smaller. All of them are valid and can pay each other. A wallet generates the addresses for you from a secret key, see wallets and keys.
Confirmations and finality
A transaction with one confirmation is in the newest block. Each later block on top adds one more. Bitcoin has probabilistic finality: the deeper a transaction is buried, the less likely it is to be reversed. Six confirmations, about an hour, is the long-standing rule of thumb for larger amounts, and fewer are common for small payments. See finality and confirmations.
Lightning in one paragraph
The Lightning Network is a payment network built on top of Bitcoin, a layer 2. Two parties lock funds in a channel and then exchange many small payments off-chain, settling to the main chain only when they open or close the channel. It is useful for small, fast payments. It has its own wallets and its own risks, and this article does not cover it further. See layer 1, layer 2 and layer 3.
How Bitcoin compares
| Bitcoin | Ethereum | Solana | |
|---|---|---|---|
| Consensus | Proof of work | Proof of stake | Proof of stake |
| Block time | About 10 minutes | 12 seconds | About 0.4 seconds |
| Smart contracts | Very limited | Full | Full |
| Account model | UTXO | Accounts | Accounts |
| Fee unit | sat/vB | gwei | lamports |
Bitcoin is slower and simpler on purpose. It trades speed and features for a long record of security and a very conservative upgrade culture. See why fees differ between chains.
What to watch out for
- Wrong network. A bc1 address only works on Bitcoin. Sending bitcoin to an address meant for another network usually loses it. Check the first characters.
- Typos and clipboard malware. Always compare the start and end of an address before sending. Transactions cannot be reversed.
- Low fees. A transaction with too low a fee can sit unconfirmed. Do not send a duplicate without checking, you may pay twice.
- Wrapped bitcoin elsewhere. Tokens called "wrapped BTC" on other chains are not bitcoin. They depend on whoever holds the real coins. See bridges and their risks.
- Scams. Anyone who promises to multiply your coins is lying. Nobody legitimate asks for your seed phrase.
Follow Bitcoin live on ChainMonitor
- Live blocks and mempool: each block is a tile showing how full it is and the fee rates paid, next to the transactions waiting.
- Recent blocks list: open any block to see its transactions.
- Gas tracker: the cost of a Bitcoin payment now, next to the other six chains.
The header search takes a block number, transaction hash or address. Bitcoin has no RPC health page on ChainMonitor.
Frequently asked questions
Who owns Bitcoin?
Nobody. The network is run by independent nodes and miners, and the software is open source. No company or government controls the ledger or can change its rules alone. Changes require wide agreement among users and node operators.
Why does a Bitcoin transaction take so long?
Blocks are found about every 10 minutes, and your transaction must be picked by a miner. If your fee rate is low compared with others waiting in the mempool, it waits longer. Paying a higher sat/vB gets it in sooner.
What is the difference between a 1, 3, bc1q and bc1p address?
They are different address formats. 1 is legacy, 3 is P2SH, bc1q is native SegWit and bc1p is Taproot. Newer formats make smaller transactions, so spending from them is cheaper. All can send to and receive from each other.
How many confirmations do I need?
One confirmation means the transaction is in a block. For small payments one to three is common. For large amounts, six confirmations, about an hour, is the usual rule of thumb.
What is the halving?
About every four years the block subsidy that miners receive is cut in half. It reduces the rate at which new bitcoin is created and is built into the protocol, so it needs no decision from anyone.
Is Bitcoin the same as Ethereum?
No. Bitcoin is a simple payment ledger using proof of work and UTXOs. Ethereum is a general smart-contract platform using proof of stake. They have different addresses, fees and tokens. Read the Ethereum guide.