What is Bitcoin?

The information provided on Inside Bitcoins is for educational and informational purposes only and should not be considered financial, investment, or trading advice. Cryptocurrency markets are highly volatile, and investing in digital assets carries significant risk. No profits are guaranteed, and you may lose some or all of your investment. Always invest responsibly and only with funds you can afford to lose.

On this Page:

Contents [show]

    Bitcoin is the first cryptocurrency ever invented. It enables holders to send and receive payment without a bank or middleman. Nobody has rights to it, and anybody on the planet can send or receive Bitcoin at any time.ย ย 

    No government regulates Bitcoin, and there is a limited supply, which makes it valuable, like gold on the internet.ย 

    If you’ve ever wondered why Bitcoin is worth so much, it’s because it completely changed the global financial landscape and ushered in a new era for financial transactionsโ€”one that is still unfolding today.

    Key Takeaways

    • Bitcoin is the first and most valuable cryptocurrency ever created.
    • Mining validates transactions and locks in the network.
    • Its value is based on scarcity (21 million cap), demand, and safety, not physical backing.

    What Exactly Is Bitcoin?

    A single individual (or possibly a group of individuals) named Satoshi Nakamoto created Bitcoin in 2008. We still do not even know who Satoshi is today. Before Bitcoin, there was no such thing as cryptocurrencyโ€”it paved the way for every other cryptocurrency that followed.

    • It is rare: There will only ever be 21 million BTC.
    • It’s digital and borderless: It’s fast and easy to send Bitcoin to anyone, anywhere in the world.
    • It’s open-source and decentralized: Bitcoin does not belong to a corporation but is governed by a public network powered by users.

    How Does Bitcoin Work?

    Unlike physical currency, Bitcoin does not have a central bank fund. It is peer-to-peer networked. People transfer BTC to one another directly, not via the middleman.

    The basis of Bitcoin is blockchain technology. In simple terms, blockchain is a ledger that records all the transactions made to ensure that it’s all transparent and no fraud is happening.

    Let’s say you wish to transfer Bitcoin to somebody else. The transaction is not instantly confirmed. Instead, miners – people running extremely fast and powerful computers – solve mathematical equations to validate your transaction. Once validated, the transaction is added to the blockchain. This secures the network and avoids double-spending.

    How Are New Bitcoins Created?

    Mining creates new bitcoins and verifies transactions. Miners use advanced computers to solve complex mathematical problems. When they do, a new Bitcoin is created or the block of transactions is added to the blockchain, and the miners are rewarded with Bitcoin and transaction fees.

    All of this is done using proof-of-work (PoW). This secures and speeds up Bitcoin. However, mining uses up a lot of power, so miners are turning to alternative energy sources in an attempt to solve the issue. Many join mining pools to share their power and, ultimately, split the reward.

    What is Bitcoin Halving, and Why Does it Matter?

    Bitcoin halvings happen every four years or so. With each halving, the amount of Bitcoins reward miners for their work is cut in half. This creates fewer bitcoins, which makes Bitcoin all the more valuable.

    Halvings in the past have caused the price of BTC to increase. As the supply decreases, demand increases.

    For example, after the 2012, 2016, and 2020 halving events, the price of Bitcoin saw some incredible spikes.ย 

    What Gives Bitcoin its Value?

    Bitcoin is different from fiat currency in that a government or physical commodity does not back it like gold. Instead, its value comes from three distinct origins: scarcity, demand, and security. Let’s define them for a moment.

    • Scarcity: There will ever only be 21 million bitcoins.
    • Demand: It’s wanted because it’s decentralized and secure.
    • Security: Its use of blockchain makes it nearly hack-proof.

    Bitcoin was originally described as “digital gold” since it’s an effective store of value. As with gold, you can hold onto it while other properties devalue.

    Latest Bitcoin News

    Bitcoin Price Prediction: Congressman Says USA Will Buy 1M BTC Soon While Investors Turn To This New Meme Coin ICO Offering Free Bitcoin

    Bitcoin Price Prediction: GameStop Hints At Future BTC Purchases As Investors Rush To Buy This Meme Coin ICO For Free Bitcoin

    GameStop To Add Bitcoin To Treasury As T. Rowe Price Says Buy Bitcoin

    BlackRock To Launch Bitcoin ETP In Europe Today As US Spot Bitcoin ETFs Extend Inflow Streak To 7 Days

    Bitcoinโ€™s History and Major Milestones

    Bitcoin has hit several milestones since 2008, when it all started.

    • 2008: The Bitcoin whitepaper was published.
    • 2009: The first Bitcoin was mined, and the network launched.
    • 2010: The first real-world transaction took place when Laszlo Hanyecz purchased two pizzas for 10,000 BTC.
    • 2017: Bitcoin reached its very first major high, at close to $20,000.
    • 2021: Bitcoin reached a higher high, an all-time high of over $68,000.
    • 2023: New platforms like Ordinals (Bitcoin NFTs) and Runes (new token standard) made the coin more useful.
    • 2024: Bitcoin ETFs were approved during the same year and paved the way for retail investors to enter. Bitcoin surpassed $100K in value for the first time.ย 

    Since its founding, Bitcoin has faced numerous challenges. But notwithstanding all that, it’s gaining acceptance from big institutions and enterprises. It truly has traveled a long way from being an internet experiment to becoming an asset worldwide.

    What Is Bitcoin Worth Today?

    Bitcoin is currently priced at $81,976.00 with a market cap of $1,625,451,469,521 and circulating supply of approximately 20 million. Over the past 24 hours, the price of Bitcoin has changed by -1.2%.

    Bitcoin Price Chart

    (BTC)
    $81,976.00
    24h change -1.15%

    Numerous influences over the price of Bitcoin exist, ranging from supply and demand and market sentiment to regulation, news, technological progress, and even market manipulation. Its lack of centralization and the absence of traditional assets make it highly susceptible to these and open to its much-hyped volatility.

    What Happens If You Invest in Bitcoin Today?

    Nobody can predict the future of Bitcoin, and past performance is no guarantee of future results. However, a look at its Bitcoin’s previous performance can shed some light on what could happen next.

    • If you had invested $100 in 2017 (when Bitcoin was around $1,000), your investment would have been worth over $6,000 at Bitcoin’s high in 2021 ($68,000).
    • If you had invested $100 in 2020 (when Bitcoin was at approximately $7,000), your investment would have reached more than $900 at the peak of Bitcoin in 2021.
    • If you had invested $100 in 2023 (when Bitcoin was at approximately $20,000), your investment would have reached more than $300 at its 2024 peak ($68,000).

    Remember that like all other cryptocurrencies, Bitcoin is highly volatile. Prices can change with extreme rapidity and fall as hard as they rise. Investing in Bitcoin comes at great risk – invest only what you are prepared to lose.

    Can Bitcoin Be Converted to Cash?

    Like with all the other cryptocurrencies, you can exchange your crypto for cash. Hereโ€™s how you can do that:

    • Exchanges: You can trade your Bitcoin on exchanges like Coinbase, Binance, or Kraken and get the cash deposited into your bank account.
    • Bitcoin ATMs: Bitcoin ATMs are where you can trade your Bitcoin for cash.
    • Peer-to-peer trading: Some websites permit you to trade with buyers directly and sell your Bitcoin to them in exchange for cash.
    • Spend directly: Some merchants will take Bitcoin as payment for goods or services.

    Is Bitcoin 100% Safe? Risks and Considerations

    While Bitcoin’s blockchain is safe and virtually impossible to hack, there are some risks that you must be conscious of when investing in any other form of cryptocurrency, not necessarily Bitcoin.

    • Hacking: Anything is hackable, including wallets or exchanges.
    • Scams: Phishing scams or imitation websites are used by other hackers to steal your Bitcoin.
    • Volatility: Prices can change randomly in a very short period of time.
    • Lost keys: this is actually very significant! If you lose your private keys, your Bitcoin is gone.

    It’s imperative that you maintain a secure wallet. There are different kinds of such wallets. You can either have hardware wallets with your private keys offline in a physical space or software wallets with your keys online, which are easy to access but quite easy to hack.

    There are custodial and non-custodial wallets too. In custodial wallets, the third party retains your keys, while non-custodial wallets simply retain your keys but grant you full access and control.

    Can Bitcoin Go to Zero?

    Technically, yes, but it is extremely unlikely since it has weathered a lotโ€”from crashes to regulatory troubles to competitionโ€”because of its robust network, rarity, and growing usage.

    But yet, threats like overregulation, loss of faith, or better cryptocurrency could threaten its existence.

    At various points in history, Bitcoin has survived crashes due to its decentralization, strong community, and scarcity. If it survived past crashes, there is a likelihood that it would survive future crashes.

    What Is a Bitcoin ETF?

    A Bitcoin exchange-traded fund, or ETF, is an investment fund that mirrors the price of Bitcoin. It’s traded on regular stock exchanges to inform investors about Bitcoin without having to invest in it or buy it outright.

    When Bitcoin ETFs were sanctioned in 2024, they brought mainstream adoption and institutional investors into the fold, further legitimizing Bitcoin as an investment vehicle.

    What’s Next for Bitcoin?

    Bitcoin’s future is shaped by ongoing adoption, technological advancements, and regulatory developments. Key areas to watch include:

    • Institutional Adoption: More companies, hedge funds, and even governments are integrating Bitcoin into their portfolios, reinforcing its role as a legitimate asset class.
    • Layer 2 Scaling Solutions: Innovations like the Lightning Network are improving Bitcoinโ€™s scalability, enabling faster and cheaper transactions.
    • Regulatory Landscape: Governments worldwide are refining their approach to Bitcoin, with some embracing it as legal tender while others impose restrictions.
    • Halving Events & Supply Shock: The next Bitcoin halving will further reduce mining rewards, potentially driving scarcity and impacting price dynamics.
    • Mainstream Payment Integration: More merchants and financial platforms are adopting Bitcoin payments, increasing its real-world utility.
    • Security & Decentralization Improvements: Ongoing developments in multi-signature wallets, Taproot upgrades, and privacy solutions will enhance Bitcoinโ€™s resilience.

    While Bitcoin remains volatile, its long-term trajectory suggests continued growth as a global asset, digital gold, and financial revolution.

    Final Thoughts on Bitcoin

    Bitcoin has established itself as the leading cryptocurrency, revolutionizing digital finance and decentralized transactions. As a scarce, secure, and censorship-resistant asset, it serves as both a store of value and a medium of exchange. While volatility remains a key challenge, Bitcoin’s increasing adoption by individuals, institutions, and even governments signals long-term potential.

    Investors should carefully consider security, regulatory developments, and market trends before diving in. Whether as a hedge against inflation, a payment method, or a long-term investment, Bitcoin continues to shape the future of finance.

    FAQs

    What are Bitcoin wallets?

    Bitcoin wallets store your private keys in order to be able to send, receive, and own your Bitcoin. They are found in hardware, software, and custodial or non-custodial versions.

    How long do Bitcoin transactions take?

    Bitcoin transactions are about 10 minutes to one hour, depending on network congestion and the price you're paying for them.

    Can Bitcoin be used for everyday purchases?

    Yes, but adoption-restricted. Some retailers already take Bitcoin, and some permit you to exchange Bitcoin for fiat to use.

    What are Bitcoin forks?

    Bitcoin forks are modifications to Bitcoin's software that lead to new versions of the blockchain, e.g., Bitcoin Cash or Bitcoin SV.

    What is Bitcoin Cash?

    Bitcoin Cash is a 2017 Bitcoin fork that attempted to make transactions faster and cheaper through block size increases.