What is Bitcoin?
Bitcoin is the first and best-known cryptocurrency — a form of digital money that runs on a public, decentralized network rather than through any bank or government. It lets people send value directly to one another, anywhere in the world, without a middleman approving the transaction.
What makes Bitcoin distinctive is its fixed supply: there will only ever be 21 million bitcoins. That built-in scarcity is why many people compare it to gold and treat it as a long-term store of value.
Who created it & why
Bitcoin was described in a 2008 white paper and launched in 2009 by a person or group using the pseudonym Satoshi Nakamoto. Their real identity remains unknown to this day. The motivation was to create "peer-to-peer electronic cash" — money that doesn't depend on trusting a central institution, that can't be inflated at will, and that anyone can verify.
Because no single company runs Bitcoin, no one can quietly change its rules. That independence is the whole point.
How Bitcoin works
Bitcoin records every transaction on a blockchain — a shared public ledger maintained by thousands of computers. A few ideas keep it secure and predictable:
Proof of work & mining
"Miners" compete to add the next block of transactions by solving a hard computational puzzle. Doing so requires real electricity and hardware, which makes attacking the network extremely expensive. The winning miner earns newly issued bitcoin as a reward.
The capped supply & halving
New bitcoin enters circulation through mining rewards — but roughly every four years that reward is cut in half, an event called the halving. This steadily slows new issuance until the 21 million cap is reached, making Bitcoin increasingly scarce over time.
Self-custody
You hold bitcoin using a wallet and a private key. Whoever controls the key controls the coins, so keeping it safe is essential — see our security guide.
What it's used for
- Store of value: the most common use today — holding it long-term as "digital gold."
- Payments & transfers: sending value peer-to-peer, including across borders, without a bank.
- A reserve asset: some individuals and institutions hold it to diversify.
Strengths & trade-offs
Strengths
- Fixed, predictable supply (21 million cap)
- The most secure and battle-tested network
- Highly decentralized — no single point of control
- Deep liquidity and worldwide recognition
Trade-offs
- Highly volatile price
- Proof of work uses significant energy
- Limited built-in programmability vs. newer chains
- Lost keys mean permanently lost coins
Key takeaways
- Bitcoin is the first cryptocurrency and the foundation of the whole industry.
- Its supply is capped at 21 million, creating built-in scarcity.
- It's secured by proof of work, with issuance slowed by periodic halvings.
- Today it's used mainly as a store of value, plus peer-to-peer transfers.
- It's secure but volatile — and you're responsible for protecting your keys.
Frequently asked questions
What is Bitcoin in simple terms?
It's the first cryptocurrency: digital money that runs on a public, decentralized network instead of through a bank, with a fixed maximum supply of 21 million coins.
Who created Bitcoin?
It was introduced in 2008 and launched in 2009 by a person or group using the pseudonym Satoshi Nakamoto, whose real identity is still unknown.
Why is Bitcoin called "digital gold"?
Because its supply is capped and predictable, many people treat it as a scarce store of value — similar to the role gold has played historically.
Can you buy part of a Bitcoin?
Yes. Each bitcoin divides into 100 million units called satoshis, so you can buy a small fraction instead of a whole coin.