How Bitcoin works

What makes Bitcoin work ?

Bitcoin is essentially a public ledger anyone can view at any time. When you "send" bitcoin you are not sending anything, you are just altering the public ledger. View real time transactions here
You need your private keys to "send" Bitcoin.
There will only ever be 21,000,000 Bitcoin.
Each Bitcoin is divisible into 100,000,000 Satoshi's (so you do not have to own a full bitcoin)
There are currently about 19Million BTC in existence, leaving about 2M too be mined.
New ones are created every 10 minuets as a reward for mining (processing transactions) and validating the blockchain.
Instead of Banks - MACHINES AKA NODES process transactions a process known as mining and are rewarded for doing so.
The Machines are run by solo miners or mining pools.
Mining Pools will have may have many miners working for them that could be spread over several countries / world.
A miner has 1 or more bitcoin mining rigs and just maintains the hard ware for which they get a reward in Bitcoin.
If you want to send 52.234 BTC to someone in another country it may cost a fee of 100,000 satoshi ($1.50) which goes to the Mining Pool and is subsequently divided up amongst the Miners.
New coins are also bought into existence buy the Mining process. At the moment this is 6.25 coins roughly every 10 minutes. The reward is halved every 4 years (The Halvening) so the next Halvening will reduce the reward to 3.125 BTC per block.
The Halvening happens every 4 years.
The Halvening causes the mining reward to half every 4 years. EG
25 ( ? ? 2014 )
12.5 ( ? ? 2016 )
6.25 ( 6 May 2020 )
3.125 ( ? ? 2024 )
The Halvening causes the supply to ultimately dry up completely by about the year 2100. Leaving Miners with transaction fees only.
Whichever Mining Pool solves the puzzle - wins the reward / gets the New coins + the transaction fees. EG 6.25 + 0.5123 = 6.2623 BTC

Bitcoins Limitations

Bitcoin by its self can only handle 4 transactions a second or 300,000 per day. If Bitcoin were to be used as the only world currency it would need to perform 10,000s of transactions per second.
In 2017 Bitcoin experienced Scaling Problems. Transactions got slow (up to a day) and expensive because the mempool was very full. So a second layer has been built called The Lightening Network this is designed to solve all scaling issues.

Don't worry to much about scaling as Gold cannot "scale" but is still an excellent store of value.

Satoshi Nakamoto

Creator proposition the Bitcoin White Paper . To this day remains anonymous.

There will only ever be
21,000,000 Bitcoins.
19,000,000 have been mined so far.
an estimated 3,000,000 have been lost.
2,000,000 to be mined over a period of the next 100 years.
21,000,000 bitcoins divided by 7,000,000,000 people = 0.003 Bitcoin each! or 300,000 Satoshi each
Buy now whilst you can !

Useful links

A deep dive into Bitcoin stats here More Stats

See block formation in this great real time with this infographic.

Private keys -
Your key to your wallet NEVER TO BE SHOWN eg -
3ykeICiXpSLqD09hL7Jk9intRNXUgjRoH9sjXaf53hagSd4Dha

This has been made easier for humans and computers to read in the form of a 12 or 24 word seed phrase or QR code.

This can also be in the form of a QR code. The most popular way. Easily read by smart phone.

Public Keys -
A bit like a email address.
The wallet address you want people to send money too can be represented in 3 ways.

Its purest original form. Very tricky for humans to read.
- 3FtenCiXpSLqD8L49intRiXUgjRoH9sjXa

A 12 or 24 word seed eg
- cradle squeeze wrap web speed bottom laptop response blanket glance silk usefull

The 7 Network Effects of Bitcoin

The 7 network effects of Bitcoin are as follows:

Speculation - As a novel, cryptographically-backed asset class with the potential for appreciation and high volatility, Bitcoin is perfect for speculators with a high tolerance for risk. HODL!!!
Merchant Adoption - Merchants will increasingly accept Bitcoin because they can increase their profit margins by avoiding credit card fees and chargebacks.
Consumer Adoption - Consumers can use Bitcoin to save money at certain vendors. For example, getting a 20% discount on Amazon by spending Bitcoin through Purse. Additionally, consumers can buy things with Bitcoin that they cannot buy (easily) in any other way. Consider: An American can buy Persian rugs or Cuban cigars online despite trade embargoes. Bitcoin increases the efficiency of the economy, particularly in niche areas such as these.
Security - Merchant, consumer, and speculator adoption lead to a higher price and thus incentivise more miners to participate and secure the system. The decentralised, immutable transaction ledger also serves as a form of Triple Entry Bookkeeping, wherein Debits plus Credits plus the Network Confirmations of transactions increase trust and accountability across the system.
Developer Mindshare - Bitcoin is a dumb and predictable network with simple rules and a publicly-auditable codebase. It is fertile ground for the development of complicated algorithms, machine-to-machine payment protocols, smart contracts, and other tools. Its decentralised nature allows for innovation without permission. Altcoins (such as Litecoin and Ethereum) pose little threat as Bitcoin is already dominant as a store of value and as a medium of exchange in the cryptocurrency space. If you harbour doubts about the importance of this currency network effect — or worry about altcoins overtaking Bitcoin in some other way; I would point you to Daniel Krawisz with an insightful and though-provoking article on the subject: The Coming Demise of Altcoins. Ultimately, developers will continue to flock to Bitcoin.
Financialization - Bitcoin will eat up progressively more of the market share of legacy banking institutions in areas such as remittances, micro-payments, peer-to-peer lending, and the exchange of stocks and securities. This process has already begun (consider NASDAQ's support of Open Assets/Coloured Coins for the transfer of securities, NYSE's investment in Coinbase, etc.). Old money risks dying out lest it embrace new protocols such as Bitcoin.
Adoption as a World Reserve Currency - Eventually all transactions will be settled on the blockchain, including house titles, stock purchases, car titles, and other monetary instruments and currencies. Network effects one through six culminate in this final network effect. Any newcomer in the realm of cryptocurrency or traditional currency, for that matter; would need to beat Bitcoin in all seven of these areas. This is unlikely considering the pace of development in Bitcoin Core, the level of investment in Bitcoin companies around the world, the growth in Bitcoin's user base, and on and on; Further price increases will only accelerate the process. Finally, a speculative attack could dramatically boost the value of Bitcoin almost overnight.

Where can I use Bitcoin ?

Find businesses that accepts Bitcoin on this map

Ordinals

The latest thing in Bitcoin are Ordinals (pictures inscribed into the Blockchain). These can be bought or sold etc. They were never meant to be part of Bitcoin but have become possible almost by chance. My own personal view is :-
No real people use or want them. They're somewhere in between another speculative pump and dump scheme & a government sponsored attack on the block chain. Most ordinal fees ends up indirectly funding the large government cooptable mining pools, where the fees are converted back to fiat to buy more ASICS. Hence not pushing the BTC price up but clogging up the Bitcoin Blockchain. This also pushes small miners out. Ordinals are thus a win win for governments. The sooner we get this off the blockchain and get back to sound money the better.