What Is Bitcoin (BTC)?
Bitcoin is a decentralized cryptocurrency that was first described in a whitepaper in 2008 by an individual or group using the alias Satoshi Nakamoto. The currency itself launched shortly after, in January 2009.
It is an online peer-to-peer currency. This means that all transactions occur directly between independent participants on the network without the need for an intermediary to approve or facilitate them. According to Nakamoto's own words, Bitcoin was created to enable "online payments to be sent directly from one party to another without going through a financial institution."
There were some earlier concepts for a similar type of decentralized electronic currency, but Bitcoin was the very first cryptocurrency to see real-world adoption and use.
Who Are the Founders of Bitcoin?
The creator of Bitcoin is known only by the pseudonym Satoshi Nakamoto. To this day, their true identity remains one of the biggest mysteries in the technology and finance worlds.
Nakamoto was active in the early development of Bitcoin and communicated with other developers online until mid-2010. At that point, they handed over control of the source code repository and network alert key to a prominent developer and gradually stopped public communication.
Many individuals have been speculated to be Satoshi over the years, but no claim has been definitively proven. The importance of Satoshi's anonymity is often linked to Bitcoin's decentralized and permissionless nature—it belongs to no single person or entity.
What Makes Bitcoin Unique?
Bitcoin introduced several groundbreaking concepts that set it apart from previous attempts at digital money.
Its primary innovation is solving the double-spending problem for digital currency without requiring a trusted central authority. This is achieved through a public ledger called the blockchain and a consensus mechanism known as Proof-of-Work (PoW).
Miners use powerful computers to solve complex mathematical puzzles, validate transactions, and secure the network. In return, they are rewarded with newly minted bitcoin and transaction fees. This process ensures the integrity and chronological order of the blockchain.
Bitcoin is also unique due to its strictly limited supply. There will only ever be 21 million bitcoin created. This built-in scarcity is a key feature of its economic model and is often compared to precious metals like gold, leading to its nickname "digital gold."
How Much Bitcoin Is in Circulation?
As of now, over 19.5 million BTC have been mined and are in circulation. New bitcoin are created with each new block that is added to the blockchain, which occurs approximately every 10 minutes.
However, the creation of new bitcoin is not infinite. The Bitcoin halving is a pre-programmed event that occurs every 210,000 blocks (roughly every four years). When a halving happens, the reward that miners receive for adding a new block is cut in half. This process will continue until the maximum supply of 21 million BTC is reached, which is estimated to occur around the year 2140.
After this point, no new bitcoin will be created, and miners will be incentivized solely by transaction fees.
How Is the Bitcoin Network Secured?
The Bitcoin network is secured by a vast, decentralized network of miners. These miners compete to validate transactions and add new blocks to the blockchain by solving complex cryptographic puzzles.
This process, known as Proof-of-Work, makes it extremely computationally expensive and impractical to attack the network. To alter a transaction or take control of the blockchain, a malicious actor would need to control more than 51% of the total network's mining power—a feat that becomes more difficult and expensive as the network grows.
This decentralized security model, combined with cryptographic principles, ensures that transactions are immutable and the network remains resilient against fraud and censorship.
Where Can You Buy Bitcoin (BTC)?
Bitcoin is the most widely available cryptocurrency. It can be purchased on virtually every major centralized and decentralized cryptocurrency exchange.
To get started, you typically need to create an account on a trusted platform, complete any required identity verification processes, and then you can buy BTC using fiat currency (like USD or EUR) or other cryptocurrencies. It is crucial to then store your bitcoin securely, either in a reputable exchange's wallet or, for larger amounts, in a personal hardware or software wallet for which you control the private keys. 👉 Explore secure trading platforms
Frequently Asked Questions
What gives Bitcoin its value?
Bitcoin's value comes from a combination of factors. Its scarcity (capped supply of 21 million), its utility as a decentralized payment network, and market demand all contribute. Like any asset, its price is ultimately determined by what people are willing to pay for it based on its perceived value as a store of wealth and medium of exchange.
How do I start investing in Bitcoin?
Starting is relatively straightforward. First, educate yourself on how it works and the risks involved. Then, choose a well-established and regulated cryptocurrency exchange, create an account, and deposit funds. You can then place an order to buy bitcoin. Always remember the golden rule: only invest what you are willing to lose.
Is Bitcoin legal?
The legality of Bitcoin varies by country. In most parts of the world, including the United States, Japan, and much of Europe, owning and trading Bitcoin is perfectly legal. However, some countries have placed restrictions or outright bans on its use. It is essential to check the specific regulations in your jurisdiction.
Can Bitcoin transactions be traced?
Bitcoin transactions are not anonymous; they are pseudonymous. All transactions are permanently recorded on the public blockchain, which is viewable by anyone. While Bitcoin addresses are not directly linked to real-world identities, sophisticated analysis can sometimes be used to connect addresses to individuals.
What is the difference between Bitcoin and Ethereum?
While both are major cryptocurrencies, they have different primary purposes. Bitcoin was designed primarily as a decentralized digital currency and store of value. Ethereum is also a cryptocurrency, but its blockchain is designed as a decentralized computing platform that enables smart contracts and decentralized applications (dApps) to be built on top of it.
What happens when all 21 million Bitcoin are mined?
Once all 21 million BTC are mined, miners will no longer receive block rewards. Their incentive to continue securing the network will transition entirely to transaction fees. The economic model anticipates that by then, transaction volume and fees will be sufficient to maintain network security.