What Is Bitcoin? How It Works, Explained Simply
Bitcoin is the first and largest cryptocurrency — a form of digital money created in 2009 by the pseudonymous Satoshi Nakamoto. It lets people hold and send value over the internet without a bank in the middle, using a public ledger (the blockchain) that no single company or government controls. To many holders, its appeal is simple: a scarce, global, apolitical asset often described as “digital gold.”
How Bitcoin works
Every Bitcoin transaction is broadcast to a worldwide network and grouped into blocks that are permanently chained together — hence “blockchain.” Special computers called miners compete to add the next block by solving a hard mathematical puzzle; the winner is rewarded with newly created bitcoin plus transaction fees. This process, called proof of work, is what secures the network and makes rewriting past transactions practically impossible. For the underlying idea, see what a blockchain is.
You own bitcoin through cryptographic keys, not an account at a company. The golden rule — “not your keys, not your coins” — means that holding your own keys in a wallet you control is safer than leaving coins on an exchange.
The 21 million cap
Bitcoin’s supply is capped at 21 million coins, written into its code. New coins enter circulation through mining, but the reward halves roughly every four years in an event called the halving. This built-in scarcity — no central bank can print more — is central to the investment case its supporters make. You can watch the countdown to the next halving on our halving tool.
What drives the price
Bitcoin is volatile. Its price responds to supply-and-demand shifts, big investor and institutional flows, regulation, interest rates and plain market sentiment — you can gauge the mood with our Fear & Greed Index. Double-digit percentage moves in a day are normal, so only commit money you can afford to see fall.
How to buy and hold Bitcoin in Australia
To buy, you’ll use an AUSTRAC-registered exchange, verify your ID, deposit AUD (PayID is usually free and fast), and place an order — our step-by-step buying guide walks through it. Watch the fees and spread, and for anything beyond a small trading balance, move your coins to a hardware wallet. Compare Australian exchanges on our Trust Score ranking.
Tax note
In Australia, selling or swapping Bitcoin is generally a capital gains event, and holding for more than 12 months may qualify you for a 50% CGT discount. See our crypto tax guide for the details.
This is general information only, not financial advice. Bitcoin is volatile and high-risk — never invest more than you can afford to lose.
General information only — not financial or tax advice. Verified 2026-08-13; details can change.