Questions
Frequently asked questions
Why is Bitcoin revolutionary?
Before Bitcoin, sending money online always needed a trusted middleman, such as a bank or payment company, to stop people spending the same digital money twice. The white paper (2008) solved this double-spend problem with a public ledger secured by proof-of-work, so people can pay each other directly with no trusted third party. No central bank or company can print more: issuance follows a fixed schedule capped at 21 million (Bitcoin Core validation.cpp). No single party can freeze an account or block a valid payment, because thousands of independent nodes check the rules and any miner can include it. And you can hold it yourself: whoever controls the private keys controls the coins, so with self-custody you don't need anyone's permission to keep or send it. Go deeper: the white paper, summarized.
Why will there only ever be 21 million bitcoin?
The block subsidy started at 50 BTC and halves every 210,000 blocks (Bitcoin Core GetBlockSubsidy, validation.cpp; interval set in chainparams.cpp), a geometric series that sums to about 21 million. Every full node enforces this and rejects any block that pays its miner more than the subsidy plus fees, so changing it would need nearly everyone to voluntarily run different software (white paper, sections 5-6). Because rewards are whole satoshis and each halving rounds down, the true maximum is 20,999,999.9769 BTC, with the last subsidy paid around 2140. Go deeper: supply schedule · course module: Issuance and the halving.
Can I buy a fraction of a bitcoin?
Yes. One bitcoin is divided into 100,000,000 satoshis, or sats, the smallest unit in the protocol (Bitcoin Core, COIN constant in amount.h). Most exchanges let you buy small dollar amounts, often a few dollars at a time. Many people buy a small fixed amount every week or month, called dollar-cost averaging (DCA); try our DCA calculator, and see how to buy when you're ready.
Is Bitcoin for criminals?
Some criminals use it, but far more crime runs through ordinary money. Chainalysis estimates that illicit addresses received at least $154 billion in crypto in 2025, yet that was still below 1% of all attributed crypto transaction volume (Chainalysis 2026 Crypto Crime Report). By comparison, the UN Office on Drugs and Crime estimates that 2 to 5% of global GDP, or $800 billion to $2 trillion, is laundered each year (UNODC). The US Treasury's 2022 risk assessment found that the use of virtual assets for money laundering "remains far below that of fiat currency and more traditional methods" (Treasury, 2022 National Money Laundering Risk Assessment). Banks are not immune: in 2024 TD Bank pleaded guilty to Bank Secrecy Act and money-laundering conspiracy charges and agreed to pay about $1.8 billion in penalties (DOJ). The misuse of crypto is real, including ransomware, scams and sanctions evasion, and the same report covers it. But Bitcoin's ledger is public, which helps investigators: in 2022 US agents seized more than 94,000 bitcoin stolen in the 2016 Bitfinex hack (DOJ). Most people use Bitcoin to save, send money across borders, or hold an asset no one can print. See also: Is Bitcoin anonymous?
Is Bitcoin anonymous?
No, it is pseudonymous. Every transaction is recorded on a public ledger forever, and addresses are not names, but they can be linked to you. The white paper's Privacy section (section 10) says privacy comes from keeping public keys anonymous, and warns that some linking of addresses is unavoidable. If you buy on an exchange that checks your ID (KYC), it can tie your identity to the addresses you withdraw to, and chain analysis firms such as Chainalysis use patterns like which addresses are spent together to trace flows (Bitcoin Wiki: Privacy). Basic habits help: use a new receive address every time, run your own node (for example on a Start9 server) so your wallet doesn't reveal your addresses to someone else's server, and use coin control in Sparrow to choose which coins you spend together. Lightning payments are not recorded on the public chain one by one, which helps a little, but it is not full anonymity. Some privacy tools have drawn legal action: in 2025 the founders of the Samourai Wallet mixing service were sentenced for operating an unlicensed money transmitting business (DOJ). See also: Is Bitcoin for criminals? and What is Chainalysis?
Are Bitcoin transactions traceable?
Often, yes. Every transaction publicly lists the addresses it spends from and pays to, plus the amounts, so anyone can follow coins from address to address with a block explorer (see our mempool page). Analysts then use patterns, such as addresses spent together in one transaction or spotting which output is change, to group addresses that likely share an owner (Bitcoin Wiki: Privacy). That is how US agents followed and later seized more than 94,000 bitcoin stolen in the 2016 Bitfinex hack (DOJ). Good habits make tracing harder but not impossible: a new address for every payment, coin control in Sparrow, and your own node on a Start9 server. See also: What is Chainalysis?
What is Chainalysis?
Chainalysis is a blockchain analytics company, co-founded in 2014 (Chainalysis). Its software groups addresses that likely belong to the same owner and links them to real-world entities such as exchanges and services, using on-chain patterns plus data such as exchange records. Its customers include government agencies, exchanges, financial institutions and cybersecurity companies (Chainalysis), and it publishes an annual Crypto Crime Report (2026 edition). It is one of several such firms, alongside Elliptic and TRM Labs. Its links between addresses and people are probabilistic estimates built on assumptions that are not always correct, not proof on their own (Bitcoin Wiki: Privacy).
Is the Bitcoin ledger private?
No, it is public by design. The white paper's Privacy section (section 10) explains that banks keep transactions private by limiting who can see them, but Bitcoin must announce every transaction publicly, so that approach is not possible (white paper). Instead, privacy depends on keeping the link between your addresses and your identity hidden: the public can see that an amount moved between addresses, but the ledger does not store names. Anyone can download and check the full ledger by running a node, for example on a Start9 server. See also: Is Bitcoin anonymous? and Are Bitcoin transactions traceable?
What is bitcoin self-custody?
Holding the private keys to your bitcoin yourself, usually with a hardware wallet and a seed phrase backup, instead of leaving coins with an exchange.
Is it safe to keep bitcoin on an exchange?
It means trusting the exchange to stay solvent, secure and willing to process withdrawals. Mt. Gox's 2014 collapse is the classic example of what can go wrong. Self-custody removes that counterparty but makes you responsible for backups.
Which hardware wallet should I buy?
See our dated verdicts on the Security Status page. As of October 17, 2026 we recommend BitBox02, Blockstream Jade and Trezor Safe models on current firmware and COLDCARD for advanced users with new seeds only. Ledger is rated Caution: we don't recommend it for bitcoin-only self-custody right now.
Can I store my seed phrase in a password manager or take a photo of it?
No. Never photograph, screenshot, type or cloud-store your seed. Write it by hand, move it to metal, and keep it offline.
Does a firmware update fix a weak seed?
No. Updates fix the device, not seeds already generated. In the 2026 COLDCARD incident, affected users had to create new seeds on fixed firmware and move funds.
What is a passphrase (25th word)?
An optional extra secret that creates a different wallet from the same seed. It protects against someone who finds only the seed, but if you lose it the funds are unrecoverable, so back it up separately.
Should I use multisig?
For larger balances, a 2-of-3 multisig across different vendors and locations removes single points of failure. Learn single-sig first, and always back up the wallet descriptor.
Will Cold Hard Sats ever contact me or offer a call?
We email you only if you subscribe to the brief, or if you send a question on Reader questions and leave your email for a reply. We do not offer calls, never ask for seed words, and never send firmware. Anyone claiming to be us and asking for these is a scammer.
Is any of this financial advice?
No. Everything here is educational. Do your own research and consult qualified professionals for legal, tax or estate questions.
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