Frequently Asked Questions (FAQ)

The most important questions about Bitcoin, answered clearly and based on facts. For a deeper dive, check our Bitcoin Info section, and see our Glossary for term explanations.

What is Bitcoin?

Bitcoin is scarce, digital money with no central authority. No bank or government issues or controls it: instead, thousands of independent computers worldwide (nodes) agree on an open rule set about who owns what. The total supply is capped at 21 million units and has run unchanged since 2009.

How does Bitcoin work technically?

Every transaction is checked by a worldwide network of independent nodes and recorded on the blockchain, a chain of cryptographically linked blocks. Miners bundle new transactions into blocks and secure the network through proof-of-work. Nobody can alter a past transaction or double-spend Bitcoin without the rest of the network noticing and rejecting it.

How do I buy Bitcoin safely?

Through a regulated exchange or broker that requires identity verification (KYC) and is supervised in the EU or your home jurisdiction. Key criteria are regulation, fee structure, and the ability to withdraw the Bitcoin you bought to your own wallet. See our comparison page for an independent overview of recommended providers.

Where should I store my Bitcoin?

For smaller amounts you actively trade with, a wallet on the exchange is fine. For larger amounts held long-term, a self-custody wallet where you control the private key is recommended, most securely with a hardware wallet that keeps the keys offline. The rule of thumb: "Not your keys, not your coins". Without your own private key, you don't truly control your Bitcoin.

What happens if I lose my private key or seed phrase?

Without the private key or its matching seed phrase (recovery phrase), the associated Bitcoin is irrecoverably lost. There is no central authority that can reset a password or restore access. That's why it's essential to store the seed phrase offline, in more than one place, and securely (e.g. on paper or metal) when you first set up a wallet.

Do I have to pay tax on Bitcoin gains?

Tax treatment varies by country. In Germany, for example, Bitcoin is treated as a private asset: gains are generally tax-free if you held it for more than a year before selling, while gains within a year can be taxable above a small exemption threshold. Bitcoin21st.de does not provide tax advice. This is general orientation, not an assessment of your individual situation, and since the exact treatment depends on your specific case and country, you should always consult a qualified tax advisor for concrete questions. See our Bitcoin & Tax section for more detail.

Is Bitcoin safe, or can Bitcoin be hacked?

The Bitcoin network itself has never been successfully hacked since it launched in 2009: an attacker would need more computing power than the rest of the global network combined (a 51% attack), which is practically unrealistic. The real risks almost always sit with the user or a third party: hacked exchanges, phishing, malware, or a poorly stored private key.

Why does the Bitcoin price fluctuate so much?

Bitcoin is still a comparatively young, globally traded market with limited supply and lower liquidity than established markets like stocks or gold, so news, regulation, and large buy or sell orders move the price more sharply. As the market has grown and adoption has increased, volatility has historically trended down over time, even though it remains clearly visible.

How many Bitcoin will there ever be?

The total supply is hard-capped in the protocol at 21 million Bitcoin and cannot be changed by anyone without the entire network agreeing to it. Roughly every four years, an event called the halving cuts the number of new Bitcoin created per block in half; based on current estimates, the last Bitcoin will be mined around the year 2140.

Is Bitcoin mainly used by criminals or for money laundering?

No: analyses from Chainalysis and other blockchain-analytics firms consistently find that only a small single-digit percentage of transaction volume is tied to illicit activity, far less than with traditional cash. Since every Bitcoin transaction is permanently and publicly traceable on the blockchain, it is actually comparatively poorly suited to large-scale money laundering.

What sets Bitcoin apart from other cryptocurrencies ("altcoins")?

Bitcoin was the first cryptocurrency, has by far the longest operating history without a successful attack on its protocol, and has the most decentralized, most widely distributed network of nodes and miners. Many altcoins, by contrast, are controlled by a company, a foundation, or a small group of people who can change the supply or rules far more easily, which is why Bitcoin21st.de deliberately distinguishes between Bitcoin and the broader crypto market.

Are the recommendations on Bitcoin21st.de independent?

All content on Bitcoin21st.de is free and based on our own research; on some links we earn a commission if you use them, but this has no influence on which providers we select or how we rate them. None of this constitutes investment, tax, or legal advice; it reflects our own fact-based assessment.

Can the Bitcoin price fall to zero?

Never entirely impossible in theory, but in practice that would require the entire decentralized network of tens of thousands of nodes and miners worldwide to be abandoned simultaneously, a scenario that hasn't happened since 2009 despite many "Bitcoin is dead" predictions. As with any investment, a total-loss risk remains, which is why you should only invest capital you can afford to lose.