What Is Bitcoin? Blocks, Mining and the 21 Million Cap

Only 21 million bitcoins can ever exist. By 6 October 2026, 95.7% of them had been created.

Bitcoin is a digital currency with no central bank or company behind it. A fixed set of rules decides how payments are recorded and how new coins are made. Here is how those rules work, with the price record since 2014 and its worst falls.

Bitcoin started on 3 January 2009. Its creator used the name Satoshi Nakamoto.

Nakamoto's white paper, a short document setting out the design, describes "a purely peer-to-peer version of electronic cash". Peer-to-peer means a payment goes straight from one user to another, with no bank in the middle.

Without a bank, something else has to keep the accounts. Bitcoin uses a ledger: a list of every payment ever made. Computers around the world, called nodes, each hold a full copy. Each node checks every new payment against the rules.

Payments are grouped into blocks. Each block carries a code, called a hash, that is built partly from the block before it. So the blocks form a chain, which gives the blockchain its name.

Changing an old payment would change its block's hash. Every block after it would then have to be rebuilt. That makes the record very hard to rewrite.

Bitcoin is one cryptocurrency among many. Crypto, a shortening of cryptocurrency, is the whole group of digital tokens that run on blockchains. Bitcoin was the first and is the largest.

CoinGecko, a crypto data site, tracked 22,028 active cryptocurrencies on 7 October 2026. Their combined market value was $2.84 trillion. Bitcoin made up 58.8% of it.

Ether, the coin of the Ethereum network, came second at 11.0%. We explain what Ethereum adds in What Is Ethereum? Two stablecoins, tokens built to hold a steady value of one dollar, made up 9.1% between them.

Mining is how new blocks are added. Miners are computers that bundle waiting payments into a block. To add it, a miner must find a number that gives the block a hash starting with a long run of zeros.

There is no shortcut to that number. Miners can only guess, over and over, until one gets it right. This is called proof of work. The answer is hard to find but quick for any node to check.

The winning miner earns a reward of new coins, plus the fees attached to the payments in the block. That reward is the only way new bitcoins are created.

The puzzle gets harder or easier every 2,016 blocks, about every two weeks. That keeps blocks coming about every 10 minutes, however much computing power joins. From the first block to the April 2024 halving, the mean gap between blocks was 9.57 minutes.

The reward started at 50 new bitcoins a block. Every 210,000 blocks, the rules cut it in half. This is called the halving. At about 10 minutes a block, 210,000 blocks take roughly four years.

The chart shows the number of bitcoins in existence. The orange marks show the four halvings so far: 28 November 2012, 9 July 2016, 11 May 2020 and 20 April 2024. The reward is now 3.125 bitcoins a block, or about 450 a day.

Each halving period adds half as many coins as the one before. Half of all bitcoins had been created by November 2012. By 6 October 2026, 20.09 million existed, which leaves about 905,000 still to come.

The next halving is due at block 1,050,000. At 10 minutes a block, that falls around April 2028.

The reward reaches zero after 33 halvings, around the year 2140. The total then stops just under 21 million coins.

The next chart uses a log scale. On a log scale, equal distances on the axis show equal % changes. Each gridline is ten times the one below. So a doubling looks the same size at $1,000 as at $50,000.

On 1 January 2014, the first day in our data, one bitcoin cost $732. On 6 October 2026, it cost $85,550, about 117 times as much. The price peaked at $124,720 on 6 October 2025.

Over calendar years, the path was far from smooth. Bitcoin rose 1,217% in 2017. It then lost 69.7% in 2018. It fell 64.2% in 2022, then rose 155.7% in 2023.

A drawdown is how far a price stands below its previous high. We explain it in What Is a Drawdown?

The chart shows how far Bitcoin stood below its highest close so far, on every day since January 2014. Bitcoin has fallen more than 75% three times. The falls were 81.4% to January 2015, 83.4% to December 2018 and 76.7% to November 2022.

These falls run from each peak to its low. So they are deeper than the calendar-year losses above. On 41.9% of days since January 2014, Bitcoin stood more than 50% below its previous high.

Our data starts on 1 January 2014, after a high in late 2013. So the first fall is measured from the highest close in our data, on 7 January 2014.

Each time, Bitcoin later went on to a new high. That took about three years after the 2014 and 2017 peaks. After the 2021 peak, it took about two years and four months.

Source: YX Insights

The latest fall began after the 6 October 2025 high. On 30 June 2026, Bitcoin stood 53.1% below that high, its deepest point so far. On 6 October 2026, it was still 31.4% below.

The 2022 fall came as the Federal Reserve raised interest rates 11 times from March 2022 to July 2023. FTX, a large crypto exchange, filed for bankruptcy on 11 November 2022. Bitcoin hit its low ten days later.

Bitcoin also lost value while inflation surged in 2022. We test that in Is Bitcoin an Inflation Hedge?

Can Bitcoin go to zero? Nothing in its rules sets a floor under the price. Bitcoin pays no interest or dividends, so its price is whatever the next buyer will pay.

A few practical points:

Bitcoin is a digital currency run by fixed rules, with no central bank. Miners add a block of payments about every 10 minutes, while the halving slows new supply towards a cap of 21 million.

Its price has fallen more than 75% three times since 2014. Each time, it later reached a new high. Nothing in its rules sets a floor.

This explainer is part of the YX Insights Academy. Each one takes a single idea and checks it against real data.

The same approach runs through everything else we publish:

Good places to start on the website:

Nothing in Bitcoin's rules stops its price from falling to zero, because the price is only what buyers will pay. The record so far shows deep falls followed by recoveries. Since 2014, Bitcoin has fallen more than 75% from a high three times. Each time, it later went on to a new high.

Bitcoin pays no income, so its price rests on demand alone. When buyers pull back, nothing in its rules slows the fall. Its 2022 fall came as the Federal Reserve raised interest rates and as the crypto exchange FTX went bankrupt. On 6 October 2026, Bitcoin was 31.4% below its October 2025 high.

No. Crypto is the whole group of digital tokens that run on blockchains, while Bitcoin is the first and the largest. CoinGecko tracked 22,028 active cryptocurrencies on 7 October 2026. Bitcoin made up 58.8% of their combined market value of $2.84 trillion. Ether was second, at 11.0%.

About 905,000 bitcoins were left to mine on 6 October 2026, out of a cap of 21 million. Miners now earn 3.125 new coins a block, about 450 a day. The reward halves every 210,000 blocks, so the last fraction of a coin is due around the year 2140.

Once the last bitcoin is created, around 2140, miners will earn only the fees attached to payments. Bitcoin's white paper planned for this. It says that once a set number of coins is in circulation, the reward can move entirely to fees. No new coins will be created after that.

DISCLAIMER: This article is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.