For education only: this guide answers "what is Bitcoin?" and is not financial, investment, tax or legal advice.
What is Bitcoin? It's a type of digital money that exists only online and isn't run by any bank or government. If you've heard about Bitcoin, blockchain and Binance but never known what they mean, this guide explains all three in plain English, with no technical knowledge needed.
- For complete beginners
- Plain English
- The risks included
- Sources included
The short version: Bitcoin is the money, blockchain is the shared record that keeps track of it, and Binance is a company where people trade it.
the money/
Bitcoin
A digital currency that people can send to each other online without a bank in the middle.
the record/
Blockchain
A shared digital record book. It's the technology that makes Bitcoin work.
the marketplace/
Binance
One of the world's largest crypto exchanges. It's a business and doesn't own or control Bitcoin.
bitcoin/
What is Bitcoin?
Bitcoin is a digital currency, often called a cryptocurrency or "crypto". There are no notes or coins to hold. It exists as entries in a record kept by thousands of computers around the world.
With a bank, the bank keeps track of your balance and approves your payments. Bitcoin has no bank doing that job. The network of computers checks every payment instead, using rules that everyone's software follows.
Who created Bitcoin?
Bitcoin was described in a short paper published in 2008 under the name Satoshi Nakamoto, and the network started in January 2009. Nobody has publicly proved who Satoshi really is, or whether the name belongs to one person or a group.
How many Bitcoins are there?
Bitcoin's rules limit the total to just under 21 million, and more than 20 million already exist. You don't have to buy a whole one, as each Bitcoin can be split into 100 million tiny units called satoshis.
What makes Bitcoin different from pounds?
- No central bank or government issues it
- The total supply is limited by its rules
- Payments generally can't be reversed
- Its value can change sharply in a short time
- It isn't legal tender in the UK
- Most UK shops don't accept it
blockchain/
What is blockchain?
A blockchain is a digital record book that's shared between many computers. New entries are added in batches called blocks. Each block is linked to the one before it, which forms a chain, and that's where the name comes from.
Imagine a notebook that thousands of people each hold an identical copy of. When someone adds a new page, everyone checks it and updates their copy. If one person tried to change an old page, their copy wouldn't match everyone else's, so the change would be rejected.
That's the big idea: strangers can agree on one version of the record without needing a bank or anyone else in charge of it.
Is blockchain the same as Bitcoin?
No. Bitcoin is one use of blockchain technology. Bitcoin has its own blockchain, and other cryptocurrencies, such as Ethereum, run on their own. Blockchains can also record things other than money.
Does my business need a blockchain?
Probably not. A blockchain is useful when several parties who don't fully trust each other need to share one record, with nobody in charge. Most businesses control their own data, so an ordinary database is faster, cheaper and easier to correct. A bespoke business system built that way usually does the job better.
how it works/
How does Bitcoin work?
Here's what happens when one person sends Bitcoin to another:
You send a payment
Your wallet app signs the payment with your private key, a secret code that proves the Bitcoin is yours to spend.
The network checks it
Computers on the network check the signature and make sure you haven't already spent the same Bitcoin.
Miners add it to a block
Specialist computers called miners group waiting payments into a new block. On average, a new one is added about every 10 minutes.
The record is updated
The new block joins the chain and computers across the network update their copies. The more blocks that follow, the harder that payment is to undo.
What is Bitcoin mining?
Mining is how new blocks get added. Miners' computers race to solve a very hard number puzzle, and the winner adds the next block and earns new Bitcoin as a reward, plus payment fees. That reward has been 3.125 Bitcoin per block since April 2024, and it halves roughly every four years.
All that computing uses a lot of electricity. Researchers at Cambridge estimated about 95.5 terawatt-hours for 2022, while stressing that any such figure is only a rough approximation.
What is a crypto wallet?
A wallet is an app or small device that holds the private keys for your Bitcoin. Think of the key as the password to your money, except that there's no "forgotten password" button. If you lose the key, or someone else gets it, the Bitcoin can be gone for good.
binance/
What is Binance?
Binance is a cryptocurrency exchange: an online marketplace where people buy, sell and trade Bitcoin and other crypto. It was founded in 2017 by Changpeng Zhao and Yi He, and it says it has more than 323 million registered users worldwide.
A common mix-up is to think Binance and Bitcoin are connected. They aren't. Nobody owns Bitcoin, and Binance is simply one of many companies whose customers trade it.
Has Binance been in legal trouble?
Yes. In November 2023, Binance and Zhao pleaded guilty in the US to offences linked to anti-money laundering rules, in a settlement that cost the company about $4.3 billion. Zhao stepped down as chief executive and served four months in prison. He received a US presidential pardon in October 2025.
Can you use Binance in the UK?
It's restricted. The UK's Financial Conduct Authority (FCA) barred Binance's UK company from regulated activity in 2021, and Binance said in 2023 that it would stop taking on new UK customers. Press reports in August 2026 said it plans to apply for FCA authorisation under the new UK rules, and Binance declined to comment. This can change, so check the FCA Register for the latest position on any crypto firm.
spending it/
What can you buy with Bitcoin?
In theory, you can buy almost anything from a seller who agrees to take it. In practice, few UK businesses accept Bitcoin directly, so most people who spend it in the UK go through a service that changes it into pounds or vouchers.
Computers and technology
Some online retailers, including a few computer hardware sellers, accept it through payment services.
Travel
A few specialist travel websites let you pay for flights and hotels with crypto, though prices and booking terms vary.
Everyday shopping
Gift card services sell vouchers for well-known shops and restaurants. You pay the service in Bitcoin, then spend the voucher as normal.
Local businesses
A small number of independent shops, cafes and restaurants accept it. Online lists can go out of date, so check with the business first.
How do you spend Bitcoin?
There are three main ways, and it's worth checking the fees and exchange rate for each one first:
Pay from a wallet
At checkout, the seller shows a payment address or QR code. You scan it in your wallet app, check the amount and confirm.
Use a crypto card
Some crypto firms offer payment cards. The firm sells your crypto when you pay, so the shop receives normal money.
Buy a gift card
You pay a gift card service in Bitcoin and receive a voucher code to use in that shop.
Small payments may use the Lightning Network, a separate layer built on top of Bitcoin. It's designed for quicker payments with very low fees, but your wallet and the seller both need to support it.
What to know before you spend it
- Spending can trigger tax. HMRC treats spending crypto as a disposal, so Capital Gains Tax may apply.
- Payments generally can't be reversed. Check the address and amount carefully, as a payment sent in error may be gone for good.
- Refunds work differently. Ask how a refund would be paid, and how much it would be worth, before you buy.
- Be suspicious of pressure. Treat anyone who insists you pay in Bitcoin, especially urgently, as a possible scammer.
the risks/
Is Bitcoin safe?
The technology has run for years, but that doesn't make Bitcoin a safe place for your money. The FCA says crypto is largely unregulated in the UK, and that anyone who invests should be prepared to lose all their money.
Prices can fall sharply
Bitcoin reached almost $69,000 in late 2021, then fell below $16,000 a year later. That's a fall of more than three quarters.
Protection is limited
The FCA warns that it's highly unlikely you'd be covered by the Financial Services Compensation Scheme if things go wrong.
Crypto firms can fail
The FCA points to the crypto lender Celsius, which went bankrupt in 2022 owing users $4.7 billion. Many of them got nothing back.
Scams are common
Be wary of promised returns, free gifts, referral bonuses and "experts" who contact you out of the blue. If it sounds too good to be true, it probably is.
Rules are changing, too. The FCA has started taking applications from crypto firms for a new UK regime, which comes into force on 25 October 2027 and will bring greater consumer protections.
quick answers/
Bitcoin and blockchain: quick answers
Is Bitcoin real money?
It's real in the sense that people trade it and some businesses accept it, but it isn't legal tender in the UK. Most people treat it as something to hold rather than something to spend.
Is Bitcoin legal in the UK?
Yes, it's legal to own. Firms that market or provide crypto services in the UK have rules to follow, and using it for crime is still illegal.
Is Bitcoin anonymous?
Not really. Payments appear on a public record under long strings of letters and numbers rather than names, but they can often be traced back to a person.
Do you pay tax on Bitcoin in the UK?
You may. Capital Gains Tax can apply when you sell, swap, spend or give away crypto, with some exceptions for gifts. HMRC's guidance has the details.
Can Bitcoin be hacked?
The Bitcoin network has proved very hard to attack, but exchanges, wallets and their users can be hacked or tricked. Most thefts happen there rather than on the blockchain itself.
What's the difference between Bitcoin and crypto?
Crypto is the general term for digital currencies that use this kind of technology. Bitcoin was the first and is the best known, but there are many others.
talk to us/
Prefer technology explained in plain English?
Cirrus Design Studio builds websites and bespoke business software, and we're happy to explain how it all works without the jargon. You might also like our guide to how the internet works.
scam warning/
Warning: how to spot Bitcoin scams
Be very careful. Bitcoin payments generally can't be reversed, so money sent to a scammer may be gone for good. Scammers can seem professional and friendly, and anyone can be caught out.
Fake celebrity adverts
Scam adverts on social media and websites often use fake celebrity endorsements and pictures of luxury goods. They can lead to very professional-looking websites.
Promises of easy money
Be wary of guaranteed or high returns, pressure to act quickly, and requests to recruit other people. If it sounds too good to be true, it probably is.
New online friends
Some scammers spend weeks building a friendship or romance online before suggesting an investment. Be suspicious if someone you've never met brings up Bitcoin.
Offers to get your money back
People who've already lost money are often targeted again. Scammers may pretend to be from the FCA, which says it will never ask you to transfer money to it.
How to protect yourself
- Ignore unexpected contact about Bitcoin or investments, whether it's a call, message, email or advert.
- Never share your private key or wallet recovery words with anyone, and don't let anyone control your computer or phone remotely.
- Don't rely on a firm's own claims. Check the FCA Register and be aware that scammers can copy the details of real firms.
- Take your time. Talk to someone you trust, and read MoneyHelper's guide on how to spot an investment scam.
If you think you've been scammed
- Stop sending money, even if you're told that a payment will release your funds.
- Contact your bank straight away if you paid from a bank account or card.
- Report it. In England, Wales and Northern Ireland, use Report Fraud or call 0300 123 2040. In Scotland, call Police Scotland on 101.
Cirrus Design Studio has no involvement with crypto. We will never contact you about buying, selling or recovering Bitcoin, so anyone claiming to do so in our name is not from us.
This article is for education only. It isn't financial, investment, tax or legal advice, or a recommendation to buy, sell or use any cryptoasset. Cirrus Design Studio has no involvement with crypto. Facts were checked on 1 November 2026.
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