Bitcoin is a decentralized digital currency that uses cryptography to secure transactions and control the supply of new coins. It operates on a peer-to-peer network, where every transaction is recorded on a public ledger called the blockchain. As the first digital currency to enable direct transfers of value without intermediaries, Bitcoin has pioneered a new approach to money. Today, it functions as both a medium of exchange and a store of value, influencing global finance and inspiring many other digital currencies.

Each bitcoin is made up of 100 million satoshis, making it divisible up to eight decimal places. This means that anyone can purchase a fraction of a bitcoin with as little as one U.S. dollar.

Bitcoin is managed by a decentralized, global community rather than a single organization. Its development and ongoing maintenance are the results of contributions from independent developers, miners, and node operators. During its early development, several notable figures joined the effort—among them cypherpunk Hal Finney, cryptographers Wei Dai and Nick Szabo, and software developer Gavin Andresen. Later, contributors such as Pieter Wuille and Peter Todd played key roles in building Bitcoin Core—the first client that allows anyone to run a node and connect to the blockchain.

Organizations have also contributed. In 2012, the American nonprofit Bitcoin Foundation was established to support the development and adoption of the protocol, although it later dissolved due to funding challenges. In 2014, Adam Back—the inventor of Hashcash, the cryptographic algorithm that inspired Bitcoin’s proof-of-work mechanism—co-founded Blockstream, a for-profit company that continues to develop infrastructure for Bitcoin, including the Lightning Network and sidechains.

Bitcoin’s management is a collaborative process. Developers propose changes through Bitcoin Improvement Proposals (BIPs) and build consensus within the community, while miners and node operators enforce the network’s rules. This collective approach ensures that no single entity controls Bitcoin, preserving its open and resilient nature.

Bitcoin and other cryptocurrencies are like the email of the financial world. The currency doesn’t exist in a physical form, and the coin is transacted directly between the sender and the receiver without banking intermediaries to facilitate the transaction. Everything is done publicly through a transparent, immutable, distributed ledger technology called blockchain.

Here are the main features of blockchain technology:

• Bitcoin transactions are recorded on a public, distributed ledger known as a “blockchain” that anyone can download and help maintain.
• Transactions are sent directly from the sender to the receiver without any intermediaries.
• Holders who store their own bitcoin have complete control over it. It cannot be accessed without the holder’s cryptographic key.
• Bitcoin doesn’t exist in a physical form.
• Bitcoin has a fixed supply of almost 21 million. No more bitcoin can be created and units of bitcoin cannot be destroyed.
• Bitcoin users send and receive coins over the network by inputting the public-key information attached to each person’s digital wallet.

A key element of this system is Bitcoin mining—the process that verifies transactions and adds them to the blockchain, ensuring the network's security and decentralization.

In order to incentivize the distributed network of people verifying bitcoin transactions miners, a fee is attached to each transaction. The fee is awarded to whichever miner adds the transaction to a new block. Fees work on a first-price auction system, where the higher the fee attached to the transaction, the more likely a miner will process that transaction first.

Every bitcoin transaction is permanently committed to the blockchain through a process called “mining.” Bitcoin mining refers to the process where miners compete using specialized computer equipment known as application-specific integrated circuit (ASIC) chips to unlock the next block in the chain.

Unlocking blocks works as follows:

• Crypto mining uses a system called cryptographic hashing. This function takes any input (messages, words or data of any kind) and turns it into a fixed-length alphanumeric code known as a “hash.”
• Each input creates a completely unique hash, and it’s almost impossible to predict which inputs will generate a specific hash. Even changing one character in the input produces a completely different fixed-length code.
• Each new block has a target hash value. To win the right to add the next block, miners need to produce a hash that is lower than or equal to this target value. Since hashes are random, it is a matter of trial and error until one miner is successful.

This proof-of-work system requires miners to use significant computational power and energy, deterring malicious agents from spamming or disrupting the network.

When a miner successfully adds a new block, they receive a set number of bitcoin as a block reward and earn the transaction fees included in that block. A new block is added roughly every 10 minutes.

Bitcoin’s block rewards decrease over time. Every 210,000 blocks—roughly every four years—the reward is halved to limit the number of bitcoin entering circulation. Until the 2024 halving, miners received 6.25 bitcoins per block. Following the 2024 halving, the reward dropped to 3.125 bitcoins per block, reducing the rate of new bitcoin supply and making new bitcoin more competitive to acquire.

Bitcoin’s design includes a built-in mechanism known as “halving” that reduces the number of new bitcoins created with each mined block. This process is built into the code to ensure that the total supply of bitcoin never exceeds 21 million coins. Every 210,000 blocks—roughly every four years—the reward given to miners is cut in half, which slows the rate at which new bitcoins enter circulation and maintains scarcity.

Here is a timeline of Bitcoin’s halving events:

• First Halving (November 28, 2012):
  The block reward was reduced from 50 BTC to 25 BTC.
• Second Halving (July 9, 2016):
  The block reward was reduced from 25 BTC to 12.5 BTC.
• Third Halving (May 11, 2020):
  The block reward was reduced from 12.5 BTC to 6.25 BTC.
• Fourth Halving (April 19, 2024):
  The block reward was reduced from 6.25 BTC to 3.125 BTC.

Halving events are significant because they limit the supply of new bitcoins. This built-in scarcity mechanism can influence Bitcoin’s price and miner profitability. Historically, Bitcoin’s price has tended to increase after previous halvings, as the reduction in supply creates upward pressure on demand. For example, leading up to the 2024 halving, Bitcoin experienced significant volatility with increased institutional interest and speculative trading. After the event, new all-time highs were reached, driven by the reduced supply and rising adoption. However, these events also impact miners, as the reduced rewards can make mining less profitable for operations with high costs, prompting a focus on efficiency and sustainability.

Bitcoin’s value is driven by a balance of supply and demand factors. One of the most critical factors is its limited supply—there will never be more than 21 million bitcoins. This scarcity, reinforced by regular halving events that reduce the introduction of new bitcoins, creates upward pressure on price when demand is steady or growing.

In addition to supply constraints, growing adoption plays a significant role. As more individuals, businesses, and institutions use Bitcoin for transactions, savings, or as an investment, its perceived utility increases. This broader acceptance helps drive demand and, in turn, supports higher prices.

Market sentiment and macroeconomic factors also contribute. In times of economic uncertainty or when traditional currencies lose value, investors may view Bitcoin as an alternative store of value. This shift in investor behavior, combined with Bitcoin’s inherent scarcity and growing adoption, leads to appreciation in its value over time.

Bitcoin’s price history reflects dramatic shifts since its inception. In 2009, the genesis block was mined by Satoshi Nakamoto, releasing 50 BTC with no market value. By October 2010, bitcoin’s price was generally in the range of US$ 0.10 to US$ 0.20. One famous early transaction—10,000 BTC for two pizzas—serves as a well-known example of how low the value of bitcoin was at the time.

In 2011, bitcoin reached parity with the US dollar and peaked near US$ 30 before a sharp downturn saw prices drop to about US$ 5 by year’s end. In 2013, the price began at roughly US$ 13, crossed US$ 100 by April, and surged past US$ 1,000 in November. However, the subsequent hack of Mt. Gox, once the world's largest bitcoin exchange handling over 70% of global transactions, along with increasing regulatory pressures, ushered in a prolonged market slump.

From 2016 to 2020, bitcoin’s price gradually recovered. By the end of 2016, it traded above US$ 900. In 2017, after breaking US$ 2,000 mid-year, it soared to nearly US$ 19,200 in December. The crypto winter of 2018 and sporadic rallies in 2019 kept prices volatile, but the pandemic in 2020 spurred a strong rebound, with prices closing near US$ 29,000.

In 2021, bitcoin surpassed US$ 40,000 in January and reached about US$ 65,000 by April, only to correct sharply in the following months. Early 2022 saw prices dip below US$ 30,000, but a gradual recovery in 2023 lifted the year’s close to around US$ 42,000.

2024 brought further changes. Early-year approvals of Bitcoin investment products pushed prices to highs near US$ 74,000. On April 19, Bitcoin’s halving reduced the block reward from 6.25 BTC to 3.25 BTC, with prices settling around US$ 64,000. Later, a U.S. Federal Reserve rate cut in September spurred a rally, and by November, bitcoin broke multiple records—crossing US$ 80,000, reaching US$ 91,000, and nearing US$ 100,000 on some exchanges.

In early 2025, after MicroStrategy’s announcement of a US$ 1.1 billion BTC purchase on January 21, bitcoin hit a high of about US$ 110,000 before stabilizing around US$ 107,000.

You can buy bitcoin through cryptocurrency exchanges, online brokerages, and Bitcoin ATMs. The steps typically involve:

• Choosing an Exchange: Platforms like Coinbase, Binance, and Kraken allow you to buy bitcoin with a credit card, bank transfer, or other cryptocurrencies. Additionally, reputable non-U.S. exchanges such as Bitstamp, OKX, and Huobi offer global trading options with varying levels of liquidity, fees, and regulatory compliance. Each platform has different fees, features, and security measures, so research is essential before choosing one.
• Creating an Account: Most exchanges require ID verification to comply with regulations, such as Know Your Customer (KYC) and Anti-Money Laundering (AML) rules.
• Depositing Funds: You can fund your account with fiat currency (e.g., USD, EUR) or other cryptocurrencies. Some exchanges accept PayPal or credit cards, but these may come with higher fees.
• Making a Purchase: Choose the amount of bitcoin you want to buy and confirm the transaction. Some platforms allow recurring purchases to help with dollar-cost averaging (DCA), a strategy for reducing volatility risk.
• Storing Your Bitcoin: You can keep bitcoin in an exchange wallet or transfer it to a private wallet for better security. Using a hardware or cold storage wallet is recommended for long-term holdings to reduce exposure to hacking risks.

Bitcoin is stored in digital wallets, which serve as secure storage solutions for private keys that grant access to bitcoin holdings. A private key is a cryptographic string of characters that acts as a password, allowing the owner to access and control their bitcoin. These keys must be kept secure, as anyone with access to a private key can transfer the associated bitcoin. Wallets generate public addresses from private keys, enabling users to receive funds without revealing their private keys. There are two main types of wallets:

• Hot Wallets: These are online wallets connected to the internet, such as mobile wallets, desktop wallets, and web wallets. They offer convenience and easy access to funds, making them suitable for frequent transactions. However, because they are connected to the internet, they are more vulnerable to hacking, phishing attacks, and malware.
• Cold Wallets: These are offline wallets, such as hardware wallets, paper wallets, and air-gapped computers, which store bitcoin keys away from the internet. Cold wallets provide enhanced security by reducing exposure to cyber threats, making them ideal for long-term storage of bitcoin. While they offer greater protection, they may require additional steps for transactions, such as connecting to a computer to access funds.

When choosing a wallet, users should consider security, accessibility, and personal needs. For active traders, hot wallets provide quick access, while long-term investors often prefer cold storage to safeguard their holdings from unauthorized access.

Bitcoin’s security and decentralized design rely on a proof-of-work system that requires miners to solve complex puzzles using specialized equipment. This process uses energy. Recent estimates suggest that the Bitcoin network consumes roughly 90 to 100 terawatt hours (TWh) of electricity per year—an amount comparable to the annual energy use of some mid-sized nations.

While these figures are measurable, Bitcoin mining usually accounts for only a small portion of a country’s total energy consumption. Unlike traditional financial systems—which operate through a range of physical and digital infrastructures—Bitcoin’s energy use is directly tied to its mining activities and is tracked closely.

Several initiatives, including the Crypto Climate Accord and the Bitcoin Mining Council, are working to promote the use of renewable energy in mining operations and to reduce the network’s carbon footprint.

A Bitcoin ETF (Exchange-Traded Fund) allows investors to gain exposure to bitcoin’s price without directly owning the cryptocurrency. These ETFs trade on stock exchanges like regular stocks, making it easier for traditional investors to participate in the bitcoin market.

The first U.S. Bitcoin ETFs were approved in 2024, with spot Bitcoin ETFs gaining regulatory approval for the first time. These ETFs offer a regulated investment option for institutions and retail investors. Bitcoin ETFs can be categorized into two types: spot ETFs, which directly hold bitcoin, and futures ETFs, which track bitcoin prices through derivative contracts.

Investing in a Bitcoin ETF is similar to buying stocks:

• Choose a Brokerage: Use platforms like Fidelity, Schwab, or Robinhood. Each brokerage has different fees and available ETFs.
• Select a Bitcoin ETF: Options include funds from BlackRock, Grayscale, and Fidelity. Compare management fees, liquidity, and fund structure.
• Place an Order: Decide how many shares to buy and execute the trade. Market and limit orders can be used depending on investment strategy.
• Monitor Performance: Bitcoin ETFs track bitcoin’s price but may have management fees that slightly impact returns. Keeping an eye on macroeconomic factors and crypto regulations can help manage investment risks.