If you find the concept of Bitcoin confusing, you are not alone. Bitcoin has been a constant source of controversy, but it is still not well understood. Are Bitcoins the pieces I see in the photos? No. These pieces are novelties that newspapers use in the photographs because they find nothing else to illustrate their news story about Bitcoin. A bitcoin is a digital token – without physical media – that can be sent electronically from one user to another, anywhere in the world. A bitcoin can be divided into eight decimal places, so you can send someone 0.00000001 bitcoins.
But what does it consist of? Bitcoin involves private keys that allow the cryptographic signing of transactions. Transactions determine how bitcoin values move, but only the transaction data itself is actually moved. Transactions have inputs and outputs. The inputs are the sources and the outputs are the destinations. There is therefore an initial transaction of coinbase type when mining a new block, which has the effect of crediting the miner a reward of 12.5 bitcoins. This value is set by the Bitcoin software and is predetermined so that it decreases over time until eventually there is no block reward and therefore no new bitcoin value at all. Nothing really moves anywhere except the transaction information, which is added to the distributed Bitcoin blockchain.