What Bitcoin is and how it really works

Bitcoin is two things at once. It's a network: thousands of computers around the world that keep a copy of the same transaction record and check that everyone follows the rules. And it's the currency that moves across that network, the bitcoin (BTC), which you can send to anyone on the planet without asking a bank for permission.

No one controls it single-handedly. There's no company behind it that can change the rules, freeze your balance or create more coins whenever it suits them. The rules live in open-source software, and changing them means convincing a large share of the people who use the network. That's its greatest strength and, at the same time, the source of almost all its limitations.

Four numbers sum it up:

If you'd rather watch before you read, EP.01 of the Entiende Cripto series covers it from scratch, without jargon and without absurd promises (the video is in Spanish). Here are its chapters, in case you want to jump straight to one part:

• 01:21 The problem with the financial system
• 02:58 Who created Bitcoin and why
• 03:53 How Bitcoin really works
• 06:28 Why Bitcoin has real value
• 08:29 The stories that say it all
• 09:50 The real risks (unsweetened)
• 11:21 How to start investing, step by step
• 14:09 The mindset shift nobody tells you about

Qué es Bitcoin y por qué puede cambiarte la vida — Guía completa desde cero15:56

The series continues with Ethereum, Solana and the rest; you'll find the episodes in the cryptocurrencies section.

Bitcoin was born in the middle of the financial crisis. On August 18, 2008, the domain bitcoin.org was registered, and on October 31, 2008 someone signing as Satoshi Nakamoto posted a link to a nine-page document on a cryptography mailing list: Bitcoin: A Peer-to-Peer Electronic Cash System. That's the famous whitepaper. Its abstract opens like this:

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A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.

The problem it solves is called double spending. In the digital world copying is free, so someone has to certify that you don't spend the same money twice. Until then that job fell to a trusted middleman, usually a bank. Satoshi's proposal was to hand it to an open network, with a public record that nobody can rewrite without redoing an enormous amount of computing work.

On January 3, 2009, the first block was mined, the so-called genesis block. Embedded in it is a line of text that can still be read on the chain: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” It was that day's headline in The Times: Britain's finance minister on the verge of a second bank bailout. It works as a timestamp and, for many people, as a statement of intent too.

On January 9 the first version of the software was released, and on January 12 came the first transaction between two people: Satoshi sent 10 bitcoins to programmer Hal Finney, in block 170. Satoshi kept contributing to development until December 2010. In 2011 he wrote to another developer that he had “moved on to other things,” and nothing has been heard from him since. His identity remains a mystery.

Bitcoin's blockchain is a shared ledger. Transactions are grouped into blocks, and each block includes a digital fingerprint (a hash) of the previous one, so they're chained together. If someone altered an old transaction, the fingerprint of that block would change and break every block that comes after it.

Who adds the blocks? The miners: specialized machines competing to solve a math problem that can only be cracked by trial and error. That's proof of work. The first to find a valid solution publishes its block, the rest of the network checks in an instant that it's correct, and the winner collects a reward in newly created bitcoins plus the fees from the transactions it included.

The network targets one block every ten minutes on average. Because miners are constantly joining and leaving, every 2,016 blocks (about two weeks) the protocol recalculates the difficulty: if blocks came too fast, it raises it; if they came too slowly, it lowers it. That keeps the pace steady even when computing power swings wildly.

Security rests on a condition the whitepaper itself spells out: “The system is secure as long as honest nodes collectively control more CPU power than any cooperating group of attacker nodes.” Rewriting history would mean outpowering the entire honest network, and the deeper a transaction is buried under new blocks, the more expensive it gets to try.

What happens when you send bitcoin

1. 01

   You sign

   Your wallet signs the transaction with your private key. The signature proves the funds are yours without revealing the key.

2. 02

   It spreads

   The transaction travels across the network of nodes, which check that the signature is valid and that those coins haven't already been spent.

3. 03

   It waits its turn

   It stays pending until a miner puts it in a block. Pay a higher fee and it usually gets in sooner.

4. 04

   It's confirmed

   When that block is published, your transaction gets its first confirmation, and every new block added on top counts as another.

5. 05

   It's final

   After several confirmations, reversing it is practically impossible. If you get the address wrong, there's nobody to complain to.

The blockchain video explains it with the analogy of a shared notebook, including why it's so hard to hack and what its honest drawbacks are.

Qué es la Blockchain explicado para principiantes (sin tecnicismos)9:00

Bitcoin's issuance rules have been public since day one. Every block creates new bitcoins for the miner who finds it: at first, 50 per block. Every 210,000 blocks, roughly four years, that reward is cut in half. That's the halving. Because issuance keeps being divided by two, the total will never exceed 21 million, and the last fractions will be issued around the year 2140.

Do the math and you get a figure that explains the scarcity: the first four periods issued 19,687,500 bitcoins, more than 93% of the total. The 20 millionth bitcoin came out with block 939,999, mined on March 9, 2026. What's left, less than a million, will trickle out over more than a century.

And not every coin issued can be used. In 2020 the analytics firm Chainalysis estimated that around 20% of existing bitcoins hadn't moved in five years or more and counted them as lost, mostly to misplaced keys. It's an estimate, not a count: a coin that sits still may simply belong to someone who doesn't sell.

The smallest unit is the satoshi: one bitcoin equals 100,000,000 satoshis (sats). That's why you don't need to buy a whole bitcoin; you can buy whatever fraction you like, starting from the minimum each platform sets.

And the price? In my halving video I call it “el reloj que mueve TODO el mercado” (the clock that moves the entire market), because the big rallies and the big crashes of past cycles revolved around it. But the nuances matter: each halving cuts an issuance that's already small next to everything in existence, the market knows the dates years in advance, and there's now institutional money that wasn't there before. We go deeper in cycles and the halving.

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Historical patterns do not guarantee future results.

Qué es el halving de Bitcoin: el reloj que mueve TODO el mercado7:16

In Bitcoin there are no accounts with names attached: there are keys. The private key is a secret number that lets you sign transactions; from it you derive a public key and, from that, the addresses people can send funds to. You can share an address without fear. The private key, never.

Today's wallets generate all your keys from a seed phrase: a list of words, usually 12 or 24, drawn from a standard dictionary of 2,048, that lets you recover your funds in any other compatible wallet. That phrase is the money. If you lose it and your device breaks, there's no customer service desk that can give it back; if someone copies it, they can empty your wallet from the other side of the world.

When you buy on an exchange and leave the bitcoins there, the platform controls the keys. It's convenient, and an authorized platform gives you certain safeguards, but you depend on it. History has painful examples: Mt. Gox, which in early 2014 handled most of the world's bitcoin transactions, went bankrupt in February of that year with hundreds of thousands of its customers' bitcoins missing. FTX filed for bankruptcy on November 11, 2022, with a hole of about $8 billion. Hence the industry's most repeated saying: not your keys, not your coins.

Self-custody has its own costs: you have to avoid mistakes when copying the phrase, transfers to the wrong address and devices bought from third parties, like the tampered Ledger devices an Asian reseller was selling in October 2026. The hot vs cold wallet guide explains when each option makes sense depending on how much money you have and how you use it.

Wallet vs Exchange: dónde guardar tus criptos DE VERDAD (y no perderlas)12:15

Bitcoin isn't backed by a state, a central bank or a company's profits. Its defenders point to three properties that no other asset fully combines:

• Verifiable scarcity. Anyone can check how many bitcoins exist and how many will be created, and no political decision can change that schedule.
• Decentralization. There's no headquarters to shut down and no board of directors to pressure. It's a protocol, not a company, and the network has been running since January 2009.
• Censorship resistance. Nobody can block a valid payment. In December 2010, PayPal suspended WikiLeaks' account and Visa and Mastercard stopped processing its donations; in June 2011, the organization started accepting bitcoin.

It's also easy to divide, to verify and to carry: all you need is to remember a few words. Even so, bitcoin.org itself says it plainly: as with any currency, bitcoin's value comes only from people being willing to accept it as payment. In other words, from trust and adoption, like any other form of money, but with nobody standing behind it.

The critical view carries weight too. When the SEC approved spot bitcoin ETFs, its chair wrote that bitcoin is “primarily a speculative, volatile asset” that's also used for illicit activity. And in 2021 Spain's CNMV and Banco de España pointed out that nobody is obliged to accept it as a means of payment, something MiCA doesn't change.

In the video comparing Bitcoin with the S&P 500 I frame it like this: the index is the steady bet, and Bitcoin is the best-performing asset of the past decade, but far more volatile. I go through the good and the bad of each with real data, without selling either one as a cure-all.

Bitcoin vs S&P 500: ¿dónde invertir en 2026 y 2027?9:24

If someone talks to you about Bitcoin without talking about risks, be suspicious. These are the main ones:

Volatility cuts both ways. In January 2022, bitcoin was trading almost 50% below the high it had set barely three months earlier, and it didn't set a new all-time high until March 2024. In December 2024 it topped $100,000 for the first time. Anyone who bought at the 2021 peak needed more than two years and a strong stomach; anyone who panic-sold in 2022 missed the rally that followed. The most recent cycle proves it again: from a high of $126,272 on October 6, 2025, it fell to $57,735 on July 1, 2026, a 54% drop according to Bitstamp's daily data.

That's why, in my video on trading versus investing, I cover both sides of the same risk: why most traders lose money, and the trap that long-term investors fall into.

Trading vs Invertir en Bitcoin: ¿Qué Es Mejor de Verdad?9:10

Regulation protects you more than before, but not as much as you might think. In the EU, MiCA has been fully applicable since December 30, 2024, and in Spain the transitional period ended on June 30, 2026: since July 1, only authorized providers can operate, and brands as big as Binance and Bitget are out because they lack a MiCA license. Even so, crypto-assets aren't covered by guarantee schemes if your provider goes bust, unlike bank deposits.

The energy debate

Proof of work uses a lot of electricity, and that's the most common criticism. The most complete data comes from the Cambridge Centre for Alternative Finance at the University of Cambridge. Its 2025 report on mining puts the network's annual consumption at about 138 TWh, close to 0.54% of the world's electricity, with emissions of 39.8 million metric tons of CO₂ equivalent, around 0.08% of the global total.

Both camps find arguments in that same report. According to the survey of miners, 52.4% of their electricity comes from sustainable sources (renewables plus nuclear), although with the location-based method behind Cambridge's index that share drops to 37.6%. Natural gas is the largest single source (38.2%) and coal still contributes 8.9%. In mining's favor, respondents reported curtailing 888 GWh of consumption in 2023, evidence that they can switch off flexibly. Against it, the survey covers companies that add up to just under half of the network's computing power and is heavily concentrated in the United States. The honest reading: it uses a lot, more than half its energy may already be sustainable according to the miners themselves, and the figures depend heavily on the method.

On January 10, 2024, the SEC (the US securities regulator) approved the listing of several spot bitcoin exchange-traded funds, and the first eleven began trading that same month. An ETF of this kind buys real bitcoins and sells shares on the stock exchange: whoever buys them gets exposure to the price without worrying about keys or wallets.

It has advantages, such as convenience, professional custody or access from an ordinary brokerage account, and costs too: you pay an annual fee, you can't send those bitcoins to anyone and you depend on the fund manager and the custodian. The statement by the SEC chair at the time is worth reading: approving those products, he wrote, did not mean approving the asset itself, because “we did not approve or endorse bitcoin.”

If you live in Spain, there's an important catch. According to the CNMV, a packaged investment product can't be sold to an EU retail investor without first handing over its key information document (KID), even if it comes from outside the Union, and an ETF managed outside the EU also needs express authorization from the CNMV to be marketed to retail investors in Spain. If the fund doesn't meet those requirements, your broker shouldn't sell it to you. On European exchanges such as Xetra (Frankfurt), other crypto-linked products trade, such as ETNs, which aren't the same thing: read their KID, check who holds the bitcoins and what happens if the issuer runs into trouble.

And one more thing: buying an ETF means investing in bitcoin's price, not using Bitcoin. You won't have keys, you won't be able to pay with it and you'll depend on stock market hours. For some people that's exactly what they want. For others, it misses the point.

The arrival of that institutional money is, in fact, one of the three reasons I give in my video on investing in bitcoin in 2027: the second chapter is called “los grandes acaban de llegar” (the big players have just arrived). The last one is about risks, which is where you should pause before deciding anything.

3 Motivos que Nadie te Cuenta para Invertir en Bitcoin en 20278:28

Buying bitcoin today is easy. Doing it well takes five steps and a bit of patience. The steps assume you live in Spain; elsewhere in the EU the logic is the same, but check your own country's regulator and tax rules:

1. 01

   Learn before you buy

   Finish this guide, go through the glossary and decide how much you could lose without it changing your life. That figure is your budget, not whatever your gut asks for on a day when prices are climbing.

2. 02

   Choose an authorized platform

   Since July 1, 2026, only providers authorized by the CNMV or another European authority can operate in Spain. Check it on the CNMV's MiCA page (in Spanish), which links to its register and to its list of unauthorized entities. We cover it in detail in exchanges and MiCA. Watch out for big names: neither Binance nor Bitget has a MiCA license.

3. 03

   Start small and with a method

   Make a small first purchase to learn the process and, if you decide to keep going, use a recurring plan such as bitcoin DCA instead of impulse buys.

4. 04

   Decide where your coins will live

   For small amounts, an authorized platform may be enough at first; when the figure starts to matter to you, consider self-custody. Before moving anything, test with a minimal transfer.

5. 05

   Record every transaction

   Selling bitcoin or swapping it for another crypto creates a gain or loss that you report on your Spanish income tax return (IRPF). Note dates, amounts and fees from day one; the details are in crypto taxes in Spain.

Where to buy

So where do I buy? The exchange I use is OKX, through its European subsidiary, which holds a MiCA license from Malta and has been passported to operate in Spain since November 2025. If you want to use it, you can open your OKX account; it's an affiliate link, so I earn a commission at no extra cost to you. It isn't the only option: as of October 2026, Bit2Me, Kraken, Coinbase, Bitpanda and Bitvavo, among others, also had a license and a passport for Spain. The full step-by-step, including what each route costs, is in how to buy bitcoin, and the platform comparison is in the exchanges section.

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Always verify platforms in the official registers (CNMV, ESMA) and consult a professional for your specific case. Buy hardware wallets ONLY from the manufacturer's official website.

One last line of defense: scammers love newcomers. Offers that expire in a few hours, so-called account managers messaging you on WhatsApp, cloned apps. Before your first purchase, read the crypto scams guide and, if you want the complete step-by-step, the one on how to start in crypto.

The video on starting from zero walks through your first purchase step by step, where to keep what you buy and the security mistakes that cost beginners the most money.

Cómo empezar a invertir en criptomonedas desde CERO (guía honesta 2026)12:06