Bitcoin is a peer‐to‐peer electronic cash system secured by cryptography. Technically, it operates as a decentralized blockchain of timestamped transaction blocks. Each block contains a batch of transactions, a reference (hash) to the prior block, a timestamp, a Merkle root, and a nonce. Miners compete to solve a proof‐of‐work puzzle: they hash the block header (using the SHA-256 algorithm) with different nonces until they find a hash below a target threshold. This process ensures that adding a block requires substantial computation and energy, deterring tampering. When a miner finds a valid block, she broadcasts it; if a majority (51% or more) of other miners agree, her block becomes part of the longest chain and she claims the block reward. Crucially, altering any transaction data even slightly completely changes the block’s hash, so an attacker would have to redo the proof‐of‐work for that block and all subsequent blocks to reverse history. The Bitcoin protocol automatically adjusts difficulty every 2,016 blocks (roughly every two weeks) to maintain an average 10‐minute block time, regardless of changes in total network hash rate. Blocks were originally limited to 1 megabyte in byte‐size, but since the 2017 Segregated Witness (SegWit) upgrade blocks are limited by a “weight” metric of 4 million units (roughly a 4MB effective cap). This cap prevents runaway data growth so that ordinary users can continue running full nodes, a key security assumption of Bitcoin. Overall, Bitcoin’s security rests on the economic cost of mining and the distributed consensus rule, assuming no single actor controls a majority of hashing power.
Bitcoin’s monetary policy is fixed in code. Its supply schedule was published in Satoshi Nakamoto’s 2008 whitepaper and has been followed since the 2009 genesis block. New bitcoin are created as block rewards to miners, but this reward is cut in half every 210,000 blocks (about four years). For example, the reward was 50 BTC until 2012, then 25 #BTC until 2016, 12.5 BTC until 2020, and 6.25 BTC until April 2024. The April 2024 “halving” reduced the subsidy from 6.25 to 3.125 BTC per block. This halving mechanism guarantees a steadily declining issuance rate and caps the ultimate supply at 21 million coins. (By design, the last fraction of a Bitcoin will be mined around the year 2140.) As of mid-2025 roughly 19.9 million coins have been mined, leaving about 1.1 million yet to be generated. Because halvings dramatically cut the flow of new coins, Bitcoin’s inflation rate has dropped to low single digits; for example, pre-halving inflation was around 1.7% annualized. These dynamics lead some observers to model Bitcoin’s value via “stock-to-flow” scarcity measures, since the stock (circulating supply) grows slowly relative to the halved flows. However, like gold, Bitcoin’s supply is fully algorithmic and does not depend on human decisions, providing predictable scarcity.
Bitcoin’s development history reflects a series of software upgrades and community debates. After the 2008 whitepaper, the Bitcoin network launched in January 2009 with the mining of the genesis block. Satoshi stepped back by 2010, and since then an open community of developers (primarily Bitcoin Core) has managed the protocol through Bitcoin Improvement Proposals (BIPs). Two major soft-fork upgrades have expanded Bitcoin’s capabilities: SegWit in 2017 fixed transaction malleability and introduced a block weight limit, and Taproot in 2021 added Schnorr signature capability and more efficient multisignature and scripting (improving privacy and smart-contract flexibility). These were generally non-contentious, requiring miner signaling and community support before activation. However, there have also been contentious hard forks: most notably Bitcoin Cash (August 2017) and Bitcoin SV (November 2018) split off over block size and other disputes. Both later forks increased block sizes (e.g. Bitcoin Cash to 8MB) but remain separate networks. Off-chain innovations have also been deployed: the Lightning Network (first live in 2018) is a layer-2 payment channel system that allows near-instant, low-fee bitcoin transfers. By 2025 Lightning has grown substantially (global channel capacity on the order of thousands of BTC), enabling more everyday and cross-border transactions without burdening the main chain. In sum, Bitcoin’s governance remains decentralized (changes pass via rough consensus of nodes and miners), but the protocol continues to evolve through careful, backward-compatible upgrades.
Bitcoin’s market history has been dramatic. After languishing at a few cents in early 2010, it first reached $1,000 in late 2013. It then surged to around $20,000 by the end of 2017 before a deep bear market that bottomed near $3,000 in late 2018. Another major run-up occurred in 2020–2021: Bitcoin reached roughly $29,000 in late 2020 and broke above $60,000 in early 2021, peaking near $69,000 in November 2021. This boom, often driven by “fear-of-missing-out” and broad cryptocurrency mania, was followed by a sharp decline in 2022, during which Bitcoin fell as low as ~$16,000 by late 2022 (on macro headwinds and crypto sector turmoil). Historically, Bitcoin exhibits high volatility: from 2020–2024 its price swings were approximately three to four times larger than major stock indices on a realized volatility basis. (An analysis by Fidelity noted that Bitcoin’s annualized volatility frequently exceeded 100% in its early years, though it has declined as the market has grown.) By mid-2025 we are clearly in a new bull market: Bitcoin’s price recently reached new all-time highs. In early July 2025 it climbed above $120,000, bringing its market capitalization to roughly $2.4 trillion with about 19.9 million coins in circulation. (As of July 18, 2025, bitcoin was trading around $118,700, with a market cap of about $2.36 trillion.) Daily volatility remains significant (single-day moves of several percent are common), but on a multi-year basis volatility has moderated as institutional flows have increased. Notably, analysts report that the recent rally has been supported by accumulation from long-term holders and a shrinking supply available on exchanges – as one analyst put it, fewer liquid coins means “each new dollar of demand pushes price higher”. On-chain metrics (like rising MVRV ratios and declining exchange balances) suggest bullish sentiment among many stakeholders.
Institutional adoption has been a major driver of recent demand. In early 2023 U.S. regulators approved a suite of spot Bitcoin exchange-traded funds (ETFs), and by 2025 these ETF products account for massive flows. The largest is BlackRock’s iShares Bitcoin Trust (ticker IBIT), which by mid-2025 had amassed over $76–80 billion in assets under management, representing some 700,000+ BTC (about 3.5% of all bitcoins). This pace of institutional investment is unprecedented; one report noted IBIT reached these levels faster than any traditional ETF in history. IBIT now holds over half of all U.S. spot Bitcoin ETF assets, far more than Fidelity’s FBTC (~203,000 BTC) or Grayscale’s GBTC (~184,000 BTC). Altogether, these funds have introduced hundreds of thousands of new buyers of Bitcoin from pension funds, endowments, and wealthy individuals. ETF providers like Grayscale (GBTC), Ark 21Shares, Bitwise and others also contribute; flows have been volatile (for example, January 2025 saw inflows, while some months saw redemptions), but net demand remains strong given the rise to new highs.
Public companies have also added Bitcoin to their treasuries. The best-known is MicroStrategy, which as of July 2025 held roughly 601,550 BTC (about $71.2 billion at current prices) on its balance sheet, with an average cost around $66,000 per coin. This vast holding (far more than any other public company) gives MicroStrategy about $35.6 billion in cost basis for its Bitcoin. Tesla remains a smaller holder; its Q1 2025 report confirmed it held 11,509 BTC (bought at an average ~$30,000), worth about $951 million at end-Q1 prices. Tesla did not sell any of its bitcoin in Q1 2025, and as prices rose above $93,000 by mid-July the value of Tesla’s stash briefly topped $1 billion. Other companies with meaningful Bitcoin exposure include Square (Block, Inc.) and various smaller firms, though no one else approaches MicroStrategy’s scale. Some governments have also experimented with Bitcoin reserves. El Salvador, which adopted bitcoin as legal tender in 2021, has been accumulating it (reportedly over 6,200 BTC held, ~$738 million as of mid-2025). (However, the IMF has urged caution, noting El Salvador’s increases have sometimes reflected internal consolidation rather than new buys.) The Central African Republic (CAR), which made bitcoin legal tender in 2022, has since repealed that status due to regional pressure. Notably, in 2025 Texas became the first large U.S. state to create a Strategic Bitcoin Reserve: a bill (SB21) passed the Texas legislature (101–42 in the House) to allow the state comptroller to invest some general funds in bitcoin (and potentially other large-cap crypto). A similar law was just signed in New Hampshire (May 2025) and dozens of other states have considered such measures. Meanwhile at the federal level, Senator Cynthia Lummis (R-WY) and others introduced the BITCOIN Act of 2025 (S.954) in March 2025 to establish a national strategic Bitcoin reserve and policy framework. These initiatives reflect growing mainstream acceptance of Bitcoin as a treasury asset.
Regulators worldwide have been evolving their stance on Bitcoin and crypto. In the European Union, the MiCA regulation (Markets in Crypto-Assets) was adopted in 2023 and is being implemented across member states; it provides the first comprehensive EU-wide rules for crypto markets and service providers, increasing legal clarity (though it is mostly focused on stablecoins and service licenses, not bitcoin per se). In the U.S., policy is shifting from hostility toward legitimacy: the SEC’s approval of spot Bitcoin ETFs in 2023 was a watershed, and federal agencies have begun to roll back some crypto-specific rules. For example, in July 2025 the U.S. Treasury and IRS formally repealed a previously proposed “broker rule” that would have required exchanges and decentralized platforms to report user transaction data to tax authorities, a move praised by industry as preserving user privacy and liquidity. Congress has held hearings on crypto market structure (including Bitcoin ETFs and stablecoins) and has paused or delayed broader crypto bills (such as GENIUS and CLARITY). At the same time, some state and federal legislators are crafting Bitcoin-friendly policies as noted above. Across the globe, a few countries have endorsed Bitcoin: El Salvador remains the only country with legal tender status, while others (Bhutan, Ukraine) have discussed forming central reserves of Bitcoin (often linked to mining projects). In contrast, China’s outright bans on trading and mining remain in place; yet even in China there is unofficial interest in digital assets, with government entities recently discussing policies for regulated stablecoins tied to the yuan. Other large economies have been cautious: India is debating its own crypto legislation with tight regulations, while the EU is pushing a common rulebook.
Mining economics have been affected by the April 2024 halving and seasonal factors. The total hash rate (network computing power) initially dipped in spring 2025 as the lower reward squeezed marginal miners, but rebounded by summer. Recent data showed the seven-day average hash rate back above 900 exahashes per second (EH/s), recovering from a mid-2025 low during U.S. summer heatwaves. As miners reactivated, difficulty – which had fallen ~7.5% in early May – was projected to rise about 6% in the next adjustment. Even with Bitcoin’s price near $108,000, miner revenues per unit of hashpower (“hashprice”) have fallen; estimates show revenue around $55 per PH/s (petahash/s) down from about $58/PH/s pre-halving. This squeeze has led some publicly traded miners to change strategy: Bit Digital announced selling all Bitcoin holdings and shifting to Ethereum mining, and Core Scientific (now being acquired by CoreWeave) has indicated it will wind down its public Bitcoin mining operation.
The geography and energy mix of mining continue to evolve. As of 2024–2025, North America dominates reported mining activity (with the U.S. alone roughly 36–38% of global hash rate), followed by Russia (~16%) and China (~14%). Significant mining also occurs in Canada, Norway, Paraguay, the Middle East, and elsewhere. Notably, China retains ~14% of hashing power despite its 2021 crackdown – this is believed to come from underground and hydropower projects in Sichuan and other regions. Other emerging hubs are Russia (hydropower, natural gas in Siberia) and regions like the Middle East/Africa (e.g. Ethiopia, which holds ~1.5% share). Miners continue to seek cheap energy: many use stranded natural gas in the U.S. and Argentina, or hydroelectric dams in Canada and Brazil. According to the Cambridge Bitcoin Electricity Consumption Index, Bitcoin’s total electricity use in 2024 was on the order of 138 terawatt-hours (roughly 0.5% of global electricity). Importantly, Cambridge’s latest study finds that about 52.4% of mining energy now comes from sustainable sources (42.6% renewable like hydro/wind, and 9.8% nuclear), while natural gas constitutes 38% and coal only about 9%. North America is estimated to account for over 82% of reported mining energy (U.S. ~75%, Canada ~7%). Debate over Bitcoin’s carbon footprint continues: proponents cite the rising use of renewables and the ability to integrate with intermittent power, while critics point to significant emissions (roughly 39.8 million metric tons CO₂e in 2024) and resources used.
Globally, Bitcoin’s relevance is especially high in regions facing inflation or capital controls. Research indicates that lower- and middle-income countries dominate cryptocurrency usage because of real-world needs like remittances, banking the unbanked, and hedging local currency inflation. For example, Turkey’s high inflation and strict currency controls have spurred retail interest, as have similar conditions in Latin America (e.g. Argentina) and parts of Africa. Bitcoin’s relatively censorship-resistant, borderless nature allows people to move value outside their national currency systems. Additionally, mobile and peer-to-peer trading apps are thriving in Asia and Africa, often pegged to stablecoins for everyday transactions. One analyst report notes that African innovators are leading the way on Lightning payments: Nigeria is cited as a top adopter metric in the region, with companies like Bitnob using Lightning channels for low-fee remittances and payments. In many emerging markets, Bitcoin is colloquially viewed as “digital gold” – a store of value against inflation and as a means of global financial access. Even in developed countries, Bitcoin’s geopolitical role is highlighted by discussions of national reserves: an emerging “America-first” stance proposes a federal Bitcoin reserve (as in the BITCOIN Act) to hedge against dollar debasement, and analysts have noted legislative proposals in Russia, Vietnam, and elsewhere to hold crypto as a defense against sanctions or monetary instability.
In sum, as of July 19, 2025, Bitcoin stands at a historic juncture: its technical foundations remain intact and secure, its monetary policy fixed and understood, and its ecosystem mature yet still innovating. Recent price strength has been underpinned by institutional flows (especially from ETFs) and macroeconomic liquidity, even as volatility and speculative swings persist. Regulatory actions – from European MiCA to U.S. ETF approvals to strategic reserve legislation – are bringing Bitcoin further into mainstream finance. At the same time, mining trends, energy considerations, and global adoption show Bitcoin’s complex interplay with economics and geopolitics. Authoritative data and official reports underscore these facts: for instance, Cambridge’s research on energy use, official Bitcoin holdings trackers for companies and countries, and analytics on ETF inflows all paint a coherent picture. Overall, Bitcoin in mid-2025 is a vastly different, more mature asset than at its inception, yet it continues to evolve with each technological upgrade, market cycle, and regulatory shift – all while remaining true to its core principles of fixed supply, decentralized consensus, and cryptographic security.
