Bitcoin FAQ – 99+ Questions Answered

Bitcoin is a decentralized digital currency that allows users to send and receive money over the internet without the need for a central authority like a bank or government. It runs on a peer-to-peer network and uses blockchain technology for transparency and security.

Bitcoin was created by an anonymous person or group using the pseudonym Satoshi Nakamoto. The original Bitcoin whitepaper was published in 2008, and the network went live in January 2009.

Bitcoin uses a public ledger called the blockchain, where transactions are grouped into blocks and verified by miners. These blocks are linked chronologically to ensure security and transparency.

A blockchain is a decentralized, immutable ledger of transactions shared across a network. It allows users to verify and audit Bitcoin transactions without a central authority.

Bitcoin is not issued or controlled by any central authority. It is borderless, limited in supply, and resistant to censorship, unlike traditional fiat currencies.

You can buy Bitcoin using centralized exchanges, peer-to-peer platforms, Bitcoin ATMs, or apps like Revolut. Payment methods include bank transfers, credit cards, and PayPal.

Some platforms allow small purchases without ID, but most regulated exchanges require identity verification to comply with anti-money laundering laws.

A Bitcoin wallet is a tool that stores your private keys and lets you send and receive Bitcoin. Wallets can be digital (software) or physical (hardware).

Types include hardware wallets, mobile wallets, desktop wallets, paper wallets, and web wallets. Hardware wallets like Ledger and Trezor offer the highest security.

To send Bitcoin, enter the recipient's address, the amount, and confirm the transaction. To receive, provide your public wallet address or QR code to the sender.

Transaction fees go to miners and vary based on network traffic and transaction size. Higher fees result in faster confirmations.

Typically, a transaction is confirmed within 10 minutes, but times may vary based on network load and fee size.

No. Bitcoin is pseudonymous—all transactions are recorded on a public blockchain, but user identities are not directly tied to wallet addresses.

Use hardware wallets, enable 2FA on exchange accounts, and never share your private keys. Always back up your wallet and store your recovery phrase securely.

If you lose your private key without a backup, you lose access to your Bitcoin. Always store your seed phrase in a safe, offline location.

The Bitcoin network itself has never been hacked. However, users and exchanges can be compromised due to poor security practices.

Bitcoin has a maximum supply of 21 million coins, a number hardcoded into the protocol to ensure scarcity.

Mining is the process of verifying Bitcoin transactions and securing the network. Miners solve complex puzzles to add new blocks and earn rewards.

Bitcoin is legal in most countries, but regulations vary. Some countries ban its use, while others embrace it as an asset or currency.

Governments can restrict access to exchanges and use, but they cannot shut down the decentralized Bitcoin network itself.

Bitcoin is considered a high-risk, high-reward investment. Its long-term returns have been strong, but volatility makes it unsuitable for everyone.

Bitcoin is still maturing. Its limited supply, speculative interest, and lack of price controls lead to high volatility compared to traditional assets.

Yes. Like any investment, Bitcoin can decrease in value. You can also lose coins due to user error or wallet compromise.

A private key is a cryptographic code that gives access to your Bitcoin. If someone gains access to it, they control your funds.

A public key is derived from your private key and used to receive Bitcoin. It can be safely shared with others.

No. Bitcoin transactions are irreversible. If you send coins to a wrong or invalid address, they are likely lost forever.

A Bitcoin address is a string of letters and numbers used to send and receive BTC. It's derived from your public key.

You can use a blockchain explorer like Mempool.space or enter your wallet address in a wallet app to view your balance.

A confirmation means a transaction has been included in a block. More confirmations mean greater security against reversal.

A block contains a group of transactions. Blocks are added to the blockchain every 10 minutes on average.

Mining difficulty adjusts automatically to keep block times at ~10 minutes, even as more miners join the network.

A halving reduces the block reward given to miners by 50% every 210,000 blocks (about every 4 years), making BTC scarcer over time.

All 21 million Bitcoins are expected to be mined by the year 2140. Miners will then earn only from transaction fees.

The Lightning Network is a second-layer protocol that allows instant, low-fee Bitcoin transactions via off-chain payment channels.

A fork is a change to Bitcoin’s software. Hard forks create new coins (e.g. Bitcoin Cash), while soft forks maintain compatibility.

Segregated Witness (SegWit) separates transaction data to make blocks more efficient, lowering fees and enabling upgrades like Lightning.

Taproot is a 2021 Bitcoin upgrade that enhances privacy, smart contract capabilities, and signature efficiency using Schnorr signatures.

Smart contracts are scripts that run when specific conditions are met. Bitcoin supports basic scripts; Ethereum supports complex ones.

A node is a computer running Bitcoin software that validates transactions and blocks, helping secure the network.

The mempool is where unconfirmed transactions wait to be included in a block. When full, transaction fees rise.

Bitcoin has value because of its limited supply, decentralized nature, and growing demand as both a currency and a store of value.

Bitcoin’s price is determined by supply and demand on global markets. Factors include adoption, news, investor sentiment, and regulation.

Market cap = current price × circulating supply. It’s a key indicator of Bitcoin’s total value compared to other assets.

The 21 million cap was coded by Satoshi Nakamoto to create digital scarcity and prevent inflation like fiat currencies.

Some believe Bitcoin is speculative, but others see it as a maturing asset class. Bubbles may form, but BTC has survived multiple crashes.

No. Bitcoin has no central operator, doesn’t promise guaranteed returns, and is open-source and decentralized.

In theory, yes, if demand disappears completely. In reality, growing adoption and decentralization make this unlikely.

Yes. Due to the fixed supply and decreasing issuance through halving events, Bitcoin is considered deflationary over time.

Adoption is driven by economic instability, desire for financial freedom, digital innovation, and institutional interest.

Yes. Bitcoin is often called “digital gold” due to its scarcity, durability, and function as a store of value.

Legality varies. Most countries allow Bitcoin, but a few ban or restrict it. Check your local laws before using BTC.

Governments can restrict access to services or regulate exchanges, but they cannot stop Bitcoin’s decentralized protocol.

In most countries, Bitcoin is taxed as capital gains or income. You may owe taxes on profits when selling or trading BTC.

Yes, in many jurisdictions you must report BTC income, gains, or holdings. Non-disclosure can result in penalties.

KYC (Know Your Customer) and AML (Anti-Money Laundering) are laws that require exchanges to verify users and prevent illegal activity.

Bitcoin has been used in illicit activity, but it’s traceable. Law enforcement uses blockchain analysis to catch criminals.

Bitcoin is pseudonymous. Wallets aren’t tied to identities by default, but transactions are permanently public on the blockchain.

Yes. Bitcoin enables fast, low-cost cross-border payments, making it useful for sending money to family abroad.

Yes. Bitcoin is digital and borderless. You can access your funds anywhere using your seed phrase or wallet device.

Only if they have access to your private keys or wallet provider. Self-custodied BTC is hard to seize without user cooperation.

A full node downloads and verifies the entire Bitcoin blockchain, enforcing network rules and helping keep the system decentralized.

SPV wallets verify transactions using simplified payment verification without downloading the full blockchain.

UTXO (Unspent Transaction Output) is Bitcoin’s accounting model, representing the output from previous transactions that can be spent.

Confirmations indicate how many blocks have been added after your transaction. More confirmations mean greater security.

If a transaction has zero confirmations, it’s still pending and may be delayed or dropped if fees are too low.

A double-spend is an attempt to send the same Bitcoin to two places. The network rejects the second attempt once a block is confirmed.

A block explorer is a tool that lets you view Bitcoin addresses, transactions, block details, and other on-chain data.

Bitcoin Script is a simple programming language used to define conditions under which coins can be spent (e.g., multisig, timelock).

Bech32 is a modern Bitcoin address format starting with bc1. It reduces fees and is more secure against typos.

A seed phrase is a list of 12–24 words that back up your wallet. Anyone with the phrase can recover your funds.

BIP-39 defines how seed phrases are created and converted into private keys, standardizing wallet backups.

Yes, if you import the same seed phrase. Be cautious—this increases exposure and potential security risks.

A multisig wallet requires multiple private keys to authorize a transaction, e.g., 2 of 3 keys. It’s ideal for businesses or joint accounts.

The Lightning Network is a layer-2 solution for instant, low-fee Bitcoin payments via off-chain channels.

You open a channel by locking BTC on-chain with a peer. Once opened, you can transact instantly until it’s closed.

Channels may close unilaterally after a timeout. Backup strategies like watchtowers can help prevent fund loss.

Bitcoin focuses on secure, sound money. Ethereum emphasizes programmable smart contracts. Each has a different design philosophy.

Yes. Many websites accept BTC directly or through payment processors like BitPay or BTCPay Server.

Yes. Many nonprofits accept Bitcoin donations for lower fees, global access, and transparency.

Bitcoin can provide financial access, hedge against inflation, and enable borderless payments in underbanked regions.

Bitcoin is highly volatile, unregulated in some regions, and prone to user error or cyberattacks if not stored securely.

Only use trusted platforms, enable 2FA, avoid “get-rich-quick” schemes, and never share your private keys or seed phrase.

If your coins were stored on the exchange and they don’t cover the loss, you may never recover them. Use self-custody for safety.

Not usually. Bitcoin is irreversible. If your keys are stolen, your coins are likely lost unless law enforcement intervenes quickly.

Some custodial platforms offer limited insurance. Self-custodied Bitcoin is not insured—you’re responsible for its security.

Yes. Bitcoin is open-source and evolves through community consensus. Major upgrades include SegWit and Taproot.

Bitcoin scales via Layer 2 (like Lightning), SegWit, batching transactions, and potential future solutions like sidechains.

It was a disagreement over how to scale Bitcoin—larger blocks (Bitcoin Cash) vs. smaller blocks + Lightning (Bitcoin Core).

Bitcoin uses significant energy for mining, but a large portion comes from renewable sources. Efficiency continues to improve.

Mining profitability depends on electricity costs, BTC price, and hardware efficiency. It gets harder over time due to halving.

Yes. Once all coins are mined, miners will then earn only from transaction fees. This shift is expected to happen gradually by 2140.

Yes. You can earn BTC by working freelance, joining affiliate programs, accepting payments, or using BTC cashback apps.

Yes! Explore Bitcoin.org, books by Andreas Antonopoulos, YouTube channels, and forums like r/Bitcoin or Stack Exchange.

“Bitcoin is money you control yourself. It’s like digital cash that works globally and can’t be printed or censored.”

No. Modern wallets are user-friendly. Anyone can use Bitcoin with a smartphone and basic knowledge of how to back up a seed phrase.

You can create and sign transactions offline, but you’ll need internet access eventually to broadcast them to the network.

It’s the belief that Bitcoin is the only truly decentralized, secure, and sound digital asset—and that others are inferior.

Adoption is growing. With better tools, education, and regulatory clarity, Bitcoin is steadily moving toward mass acceptance.

Bitcoin’s future may include global financial integration, digital gold status, scalable payments via Lightning, and broad adoption as digital money.

Donating Bitcoin is a powerful way to support open-source development, independent platforms, and privacy-respecting tools in the crypto space. Since Bitcoin is a decentralized currency, your donation doesn’t require a bank or intermediary—just a wallet and a few clicks. BTC donations are borderless, censorship-resistant, and transparent.
Many websites, developers, and educators—including btcnow.io—accept BTC donations to stay independent and ad-free. When you donate BTC, you’re directly fueling innovation and keeping valuable tools accessible for everyone.
If you're not sure how to get started, check out our step-by-step guide on how to donate Bitcoin. It walks you through copying an address or scanning a QR code using your preferred wallet. Supporting crypto doesn't get simpler than that.