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Bitcoin is a decentralized digital currency that enables encrypted, peer-to-peer transactions without the need for a central bank or government. It was created by the pseudonymous developer (or group) known as Satoshi Nakamoto, who published a white paper in 2008 outlining the concept. The first Bitcoin software was released in 2009.

How Bitcoin Works

No Physical Form: Bitcoin exists only digitally. Units are traded over a global computer network—there are no physical coins.

Decentralization: Bitcoin is operated by thousands of computers worldwide (known as nodes), each maintaining an independent copy of its public distributed ledger (the blockchain). No single entity owns or controls it.

Blockchain Technology: All Bitcoin transactions are publicly recorded on a distributed ledger called the blockchain, which keeps track of every transaction ever made and is accessible to anyone in the network. This makes it nearly impossible to alter historical records or double-spend coins.

Mining and Supply: New bitcoins are generated through a process called mining, which involves solving complex mathematical problems to validate transactions and add them to the blockchain. The supply is capped at 21 million bitcoins.

Uses and Properties

Medium of Exchange and Store of Value: Bitcoin can function as an investment vehicle, a method for transferring value globally, or a store of value much like gold.

Divisibility: Bitcoin can be divided into smaller units, with a hundred millionth of a bitcoin known as a “satoshi”.

Legal Status: In some countries, bitcoin can be used, held, and traded legally. For example, El Salvador adopted it as legal tender in 2021, but it has also been banned by some governments.

Key Features

Peer-to-Peer Network: Transactions happen directly between users, removing intermediaries like banks or payment processors.

Cryptography: Ownership and transfer of bitcoins rely on cryptographic principles. A private key is required to authorize transactions from a bitcoin wallet.
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