Frequently Asked Questions About Bitcoin

Bitcoin (BTC) has fascinated people since its inception. Here are all the questions we are frequently asked about and Bitcoin spin-off subjects.

How is Bitcoin run?

Bitcoin (also known as BTC) was the first digital asset to be built on a blockchain, which means that every transaction that takes place using BTC is recorded on that blockchain. These transactions can be viewed by the public at any time. While we can’t know who is using the BTC to make these transactions, it is still a public ledger that is viewable by anyone.

How are Blockchain and Bitcoin related?

By using a blockchain, it means that transactions are checked as they happen. Because the blockchain is made up of a huge network of computers across the globe, and they all have to agree with one another when a transaction takes place, it means that it is probably impossible to cheat the system.

This means that trust in the system is built in, so people using Bitcoin don’t need the bank or the government to act as an intermediary.

How many Bitcoin exist?

There will only ever be 21 million Bitcoin in circulation, but they have not all been “released” yet. At the time of writing, 19.6 million have been mined so far. When 21 million Bitcoin have been mined, that’s the end of the road for new Bitcoin. It’s still a long way off yet and is predicted to happen in 2140.

What is mining?

To mine a Bitcoin, miners use hugely complex computers to compete with each other to solve cryptographic problems. The winner is rewarded with a Bitcoin, but more importantly, the winner adds a new “block” of transactions onto the blockchain, keeping the network healthy.

This process is called a Proof-of-Work consensus mechanism. The mining life isn’t always easy. For example, every four years, the Bitcoin network hits the “Halving” time.

The Halving is a time when the reward given to miners literally gets cut in half. This means that some miners will bow out of the race to mine Bitcoin, as the reward won’t be worth their efforts. The Halving is designed to make Bitcoin more scarce and subsequently put upwards pressure on its price.

What are trading pairs?

Bitcoin is often used as a trading pair for other cryptocurrencies. Crypto enthusiasts use trading pairs to exchange one cryptocurrency for another, and they can do this without having to use normal money.

What is a Bitcoin fork?

A Bitcoin ‘fork’ is when a new cryptocurrency is created using new rules, while Bitcoin still follows the old rules. They split away the main blockchain and are then known as independent cryptocurrencies. Examples are Bitcoin Cash (BCH), Bitcoin Satoshi’s Vision (BSV), Bitcoin Diamond (BTCD) and Bitcoin Gold (BTCG).

Can I buy less than 1 Bitcoin?

Yes, you can buy less than 1 Bitcoin. Bitcoin is denominated to 8 decimal places, with the smallest denomination being known as a ‘satoshi’ or sat. On CoinJar you can start buying Bitcoin with as little as 20 Pounds.

How is the price of Bitcoin determined?

The price of Bitcoin is determined by the international Bitcoin market – basically, the price to be found on cryptocurrency exchanges in the UK and all around the world. These prices tend to be the same (or very close) because any differences are smoothed out by arbitrage traders that buy at one exchange and sell at another.

What are Bitcoin Forks?

Bitcoin forks occur when a group of miners decide to split from the main chain by adopting a particular change to the network and causing a new blockchain to come into existence.

There are a number of Bitcoin forks that split off the main chain and became independent currencies. These include Bitcoin Cash (BCH), Bitcoin Satoshi’s Vision (BSV), Bitcoin Diamond (BTCD) and Bitcoin Gold (BTCG). Always make sure when you’re buying Bitcoin, you’re buying coins on the original chain.

Why is Bitcoin the most popular cryptocurrency?

Bitcoin is popular both because it was the first crypto in existence (so it’s had more time to develop market share) and also because it’s considered the purest cryptocurrency – no fundamental changes to its code have ever been made and no central body controls it.

Why is Bitcoin considered ‘digital gold’?

Some people argue that Bitcoin shares traits with gold – it’s a tradeable asset defined by its scarcity, finite supply and the difficulty of creating it.

However, while gold is quite difficult to trade and own due to its weight and the need to physically transport it, Bitcoin can be traded and transported anywhere in the world at the click of a button.

How has Bitcoin performed over the past decade?

Bitcoin is the best performing asset over the last decade, growing by more than 300,000%. While the price of Bitcoin is famously volatile and capable of going up and down rapidly, the long-term uptrend has been remarkably stable.

However past performance isn't an indicator of future performance.

What is the minimum deposit for CoinJar?

You can start trading on CoinJar with as little as 20 Pounds. The maximum amount depends on your CoinJar's account limits and the transfer limits set by your bank. However, if you want to deposit millions, high roller, you can (with CoinJar’s compliance team approval).

For more information, check out our support article on account limits.

What is a crypto wallet?

A crypto wallet is essential for securely storing and managing your Bitcoin. You can read more here.

What is Bitcoin?

Bitcoin is a cryptocurrency, a completely digital form of money that operates on a decentralised peer-to-peer network. Unlike traditional currencies, it is not controlled by any central authority or middlemen. Think of it as virtual/digital cash for the internet.

Who created Bitcoin?

Bitcoin was thrown out into the world in 2009 by an anonymous coder (or group of developers) and they used the name Satoshi Nakamoto. The true identity of Nakamoto remains a mystery, adding to the intrigue around Bitcoin’s origins.

How does Bitcoin work?

Bitcoin is thought of as digital money for the internet. Behind the scenes, the Bitcoin network shares a public ledger called the blockchain, which contains every transaction ever processed. Digital signatures protect the authenticity of each transaction, allowing users full control over their Bitcoin addresses.

Is Bitcoin worth anything?

Yes, Bitcoin has value. Its price can be volatile, but it has gained recognition as a store of value and a hedge against inflation. Its scarcity and decentralised nature contribute to its perceived worth.

The performance of most cryptocurrency can be highly volatile, with their value dropping as quickly as it can rise. You should be prepared to lose all the money you invest in cryptoassets.

How can I get Bitcoin?

You can acquire Bitcoin through various cryptocurrency exchanges. Create a wallet, purchase Bitcoin, and securely store it.

What’s the history behind Bitcoin?

Bitcoin’s journey began with the publication of a white paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” by Satoshi Nakamoto. The first Bitcoin block was mined in 2009, marking its official launch.

Why is Bitcoin so popular?

Bitcoin’s popularity stems from being the world’s largest cryptocurrency by market capitalisation. This means that more money has been spent on it by its users than any other cryptocurrency. Its decentralised nature, secured by proof-of-work consensus, appeals to those seeking financial independence.

What is the price of Bitcoin?

The price of Bitcoin is highly dynamic and can fluctuate significantly within short time frames. It is influenced by market demand, investor sentiment, macroeconomic factors, and regulatory developments.

To find the current price, check this page on CoinJar, which will give you the price 24/7. The performance of most cryptoassets can be highly volatile, with their value dropping as quickly as it can rise. You should be prepared to lose all the money you invest in cryptoassets.

How do I buy Bitcoin on CoinJar?

If you want to buy Bitcoin on CoinJar, you can follow these steps:

Download the CoinJar App

First, download the CoinJar app on your iOS or Android device. You can find it on app stores.

Create an Account

Sign up for a CoinJar account within the app. Verify your identity. UK residents are required to complete an assessment to show they understand the risks associated with what crypto/investment they are about to buy, in accordance with local legislation.

Additionally, they must wait for a 24-hour “cooling off” period, before their account is active, due to local regulations.

Payment method

After your ID has been accepted, you can then create an account on the exchange. After this is done, you can move normal everyday money like Pounds (fiat) via your chosen payment method into your crypto account.

Make a Purchase

Once your account is set up and verified, you’re ready to buy Bitcoin. Use your card, or a bank transfer to deposit sterling to your account in order to make the purchase. CoinJar supports various payment methods, so choose the one that suits your investment risk appetite.

Remember, don’t put all your eggs in one basket. Putting all your money into a single type of investment is risky. A good rule of thumb is not to invest more than 10% of your money in cryptocurrency.

Congratulations! You’re now part of CoinJar, which has been in operation since 2013. Explore the app, research before you invest, manage your portfolio, and keep an eye on your Bitcoin investment.

Protected Storage: Once purchased, transfer your Bitcoin to a protected wallet.

How do I store Bitcoin once I buy it on CoinJar?

After buying Bitcoin on CoinJar, consider these storage options:

CoinJar Wallet: CoinJar provides its own wallet service. It is convenient, however it is an online wallet, so there is a risk that it may be a victim of a cyberattack. Online wallets are also called “hot wallets”.

External Wallets: If you want to hold on to your Bitcoin for a while, you can transfer your Bitcoin to an external wallet. Hardware wallets are also known as “cold wallets” (like Ledger or Trezor) and these are best for long-term storage as they are offline and seriously difficult to hack.

CoinJar has been operating since 2013. CoinJar keep the vast majority of customer assets in cold storage or private multi-sig wallets and maintain full currency reserves at all times.

Why is buying Bitcoin a good idea?

Buying Bitcoin has its pros and cons.

-Bitcoin adds diversity to your investment portfolio beyond traditional assets like stocks and bonds.

-Some view Bitcoin as a hedge against fiat currency devaluation due to its limited supply (only 21 million will ever exist).

-Historically, Bitcoin has delivered substantial returns, although it comes with higher volatility. That doesn’t guarantee future performance, however.

-Prices of all cryptocurrencies are volatile. It’s within the realm of imagination that Bitcoin could fall to zero on day, for whatever reason. No one has a crystal ball to see the future! So only invest what you can afford to lose.

Is Bitcoin a good investment?

The suitability of Bitcoin as an investment depends on your risk tolerance, financial goals, and understanding of the crypto market. While it has the potential for significant gains, it also carries risks.

Research thoroughly and consider professional advice before investing.The performance of most cryptocurrency can be highly volatile, with their value dropping as quickly as it can rise. You should be prepared to lose all the money you invest in cryptoassets.

Can I use my Bitcoin to pay for things?

Yes, you can use Bitcoin for transactions. Some online retailers, travel agencies, and even local businesses accept Bitcoin as payment. However, widespread adoption is still evolving, and transaction fees can be high.

So be sure to work out what fee you need to pay before buying. Ensure the recipient accepts Bitcoin before attempting to use it for purchases.

What is the correct way to write Bitcoin?

While asking “What is a Bitcoin?” you might find some unusual spellings of the cryptocurrency!

There are some wild interpretations out there including bit coin, Betcoin, Bitcoin cryptocurrency, and Bitcoin crypto, and Bitcoins. However the correct spelling is Bitcoin, and the plural is generally agreed to also be Bitcoin. Bitcoin is also written as BTC, which is correct too.

What is Bitcoin Mining?

Bitcoin mining is like a digital treasure hunt where miners use powerful computers to compete against other miners to solve tricky math puzzles.

These puzzles verify Bitcoin transactions and add them to a shared record called the blockchain. When a miner adds a block to the blockchain, and everyone agrees it’s legit, this keeps the Bitcoin network working properly.

When the miners succeed, they earn new Bitcoin as a reward.

How much is $1 Bitcoin in US dollars? How much is £1 Bitcoin?

At the time of writing, (Jan 2024) one US dollar is 0.000023BTC. And, one Pound Sterling is 0.000029BTC.

In the same way that dollars can be broken down into cents, a Bitcoin is made up of Satoshis.

How many Satoshis are in a Bitcoin?

There are 100 million Satoshis in a Bitcoin. You can think of a Satoshi as a tiny fraction of a whole Bitcoin.

Sometimes, expressing prices of goods and services in Satoshis instead of BTC is more convenient. For example, imagine you’re buying a coffee that costs $4.

At current exchange rates, this translates to 0.0001410 BTC, which is an awkward number for everyday use. If we express the price in Satoshis, it becomes 14,100 Satoshis, which is definitely more human-friendly. Satoshis are also commonly used by Bitcoin wallets to calculate transaction fees.

What are other Bitcoin denominations?

Besides Satoshis, there are other denominations of Bitcoin. MilliBitcoin (mBTC): 1 mBTC equals one thousandth of a Bitcoin. It’s a nice middle ground between the Satoshi and Bitcoin. CentiBitcoin (cBTC): 0.01 BTC MicroBitcoin (uBTC): 0.000001 BTC Satoshi: 0.00000001 BTC

Is Bitcoin actual money? Is Bitcoin just money?

The debate over whether Bitcoin is “real” money continues. But Bitcoin challenges the traditional definition of money. Like traditional money, Bitcoin can be used to buy goods and services.

Some businesses accept it as payment. Many people view Bitcoin as a store of value, similar to gold. Its scarcity (limited supply) contributes to this perception.

Unlike government-issued fiat currencies (such as the US dollar), Bitcoin is not legal tender everywhere. And, of course, Bitcoin’s price can swing wildly, making it riskier than stable fiat currencies.

However, Bitcoin and some other cryptocurrencies do fit the definition of money.

What is a crypto wallet?

A crypto wallet is essential for securely storing and managing your Bitcoin. You can read more here. CoinJar provides its own wallet service. It is convenient, however being an online wallet there is a risk that it may be a victim of a cyberattack. Online wallets are also called “hot wallets”.

External Wallets: If you want to hold on to your crypto for a while, you can transfer your crypto to an external wallet. Hardware wallets are also known as “cold wallets” (like Ledger or Trezor) and these are effective for long-term storage as they are offline and seriously difficult to hack.

CoinJar has been operating since 2013. CoinJar keep the vast majority of customer assets in cold storage or private multi-sig wallets and maintain full currency reserves at all times.