What Is Bitcoin: The Original Cryptocurrency Explained

Bitcoin is not just another online payment system. It’s the first digital money that works without banks, governments, or middlemen. Launched in 2009, it was built to let anyone send money to anyone else, anywhere in the world, with no permission needed. No approval. No fees set by a bank. No delays. Just direct, peer-to-peer transfers recorded on a public ledger everyone can see.

How Bitcoin Actually Works

Bitcoin runs on something called a blockchain. Think of it like a digital notebook that’s copied across thousands of computers worldwide. Every time someone sends Bitcoin, the transaction gets added to a block. Once a block is full, it’s locked and chained to the previous one. That’s why it’s called a blockchain.

These blocks are added roughly every 10 minutes. Each one holds up to 1MB of transactions. That’s why Bitcoin can only handle about 7 transactions per second-far slower than Visa, which processes over 65,000. But speed isn’t the point. Security is.

Transactions are verified by miners. These are people or companies running powerful computers that solve complex math puzzles. The first one to solve it gets to add the next block and is rewarded with newly created Bitcoin. This process is called mining. It’s how new Bitcoin enters circulation.

There’s a hard limit: only 21 million Bitcoin will ever exist. As of 2025, about 19.7 million have been mined. That scarcity is intentional. Unlike dollars or euros, which central banks can print more of, Bitcoin’s supply is fixed. That’s why many call it “digital gold.”

Where Does Bitcoin Get Its Value?

Bitcoin has no government backing. It’s not tied to gold, oil, or any physical asset. Its value comes from one thing: what people are willing to pay for it.

In 2010, someone paid 10,000 Bitcoin for two pizzas. That’s $0.0003 per coin. By November 2021, one Bitcoin hit nearly $69,000. In 2025, it trades around $58,000. That kind of volatility isn’t a bug-it’s a feature. People buy it hoping it will go up. Others see it as a hedge against inflation or unstable currencies.

El Salvador made Bitcoin legal tender in 2021, but reversed that decision in 2025 after public backlash and technical issues. Meanwhile, countries like China banned it outright. The European Union introduced strict rules for exchanges in 2023. In the U.S., the SEC approved Bitcoin ETFs in early 2024, letting regular investors buy Bitcoin through traditional stock accounts. That’s a big deal-it brought Bitcoin into mainstream finance.

Hot Wallets vs Cold Wallets

To hold Bitcoin, you need a wallet. But not like your phone’s digital wallet. Bitcoin wallets store something called a private key-a long string of letters and numbers that proves you own the coins. If you lose it, the Bitcoin is gone forever.

There are two main types:

• Hot wallets: Connected to the internet. Easy to use for small amounts or frequent trading. Examples: Coinbase, Blockchain.com, Exodus.
• Cold wallets: Offline. Usually a physical device like a Ledger or Trezor. Used for storing large amounts. If your computer gets hacked, your cold wallet stays safe.

According to Chainalysis, around 4 million Bitcoin-worth over $200 billion at today’s prices-are permanently lost because people forgot their passwords or threw away their hardware wallets. That’s not a typo. It’s real. If you’re serious about holding Bitcoin, use a cold wallet. Don’t keep your life savings on an app.

Bitcoin vs Other Cryptocurrencies

There are over 25,000 cryptocurrencies now. Ethereum, Solana, Cardano-they all have their own features. But Bitcoin still dominates.

As of 2025, Bitcoin makes up about 40% of the entire cryptocurrency market. Why?

• Network effect: More users, more miners, more security.
• Proven track record: It’s been running for 16 years without being hacked.
• Brand recognition: When people say “crypto,” they usually mean Bitcoin.

But Bitcoin isn’t perfect. Ethereum lets you build apps on top of it-like loans, insurance, or games. Bitcoin can’t do that natively. Bitcoin transactions are slower and cost more. During peak times, fees can hit $50. Litecoin or Bitcoin Cash are cheaper for small payments. But if you want the most secure, most trusted digital asset? Bitcoin still leads.

The Lightning Network: Bitcoin’s Speed Upgrade

The slow speed of Bitcoin is its biggest weakness for everyday use. That’s why the Lightning Network was created. It’s a second layer on top of Bitcoin that lets you send payments instantly and for pennies.

Instead of recording every tiny transaction on the main blockchain, Lightning creates private payment channels between users. Only the opening and closing of these channels go on-chain. In 2025, the Lightning Network processes over $200 million in transactions daily. It’s not mainstream yet, but it’s growing fast.

Companies like Strike and Cash App now use Lightning to let users send Bitcoin to friends like a text message. It’s not perfect-some channels can get blocked, and not all wallets support it-but it’s the most promising fix for Bitcoin’s scalability problem.

Is Bitcoin Safe? The Risks

Bitcoin itself-the protocol-has never been hacked. The network runs on over 300 exahashes of computing power. That’s more than the top 1,000 supercomputers in the world combined. Breaking it would cost trillions.

But you? You’re the weak link.

• Scams: Fake websites, phishing emails, impersonators on social media.
• Exchanges getting hacked: Remember Mt. Gox? Over 850,000 Bitcoin stolen in 2014.
• Lost keys: One wrong click, one corrupted USB, and your Bitcoin is gone forever.
• Price swings: You could lose half your investment in a week.

Most people who lose Bitcoin don’t get robbed. They just forget where they put it. That’s why experts say: “Never invest more than you can afford to lose.”

Who Uses Bitcoin Today?

It’s not just tech bros and criminals anymore.

• Investors: 67% of Bitcoin holders treat it like a stock or gold-buy and hold.
• Companies: MicroStrategy holds 130,000 Bitcoin. Tesla, Tesla’s CEO Elon Musk, and others have bought or sold Bitcoin at various times.
• Developers: Over 500 people contribute to Bitcoin Core’s code on GitHub. The community is active, technical, and fiercely protective of Bitcoin’s original design.
• People in unstable economies: In Argentina, Nigeria, and Lebanon, Bitcoin is used to protect savings from inflation or capital controls.

Only about 2,300 merchants worldwide accept Bitcoin directly for goods. But that number is growing slowly. Most people use Bitcoin as a store of value-not as money to buy coffee.

The Environmental Debate

Bitcoin mining uses a lot of electricity. In 2025, it consumes about 110 terawatt-hours per year. That’s more than the entire country of Belgium.

But here’s the nuance: the Bitcoin Mining Council says 59% of that energy comes from renewables. The University of Cambridge estimates it’s closer to 39%. Either way, it’s a lot.

Most mining happens where electricity is cheap and underused-like in Texas, where excess wind power is wasted, or in hydro-rich regions of Canada and Scandinavia. Some miners even capture flared gas from oil fields.

Is it sustainable? Critics say no. Supporters argue Bitcoin incentivizes clean energy innovation. Either way, it’s not going away. The energy use is baked into its security model. If you want proof that a network can’t be tampered with, you pay for it in power.

What’s Next for Bitcoin?

The next big event is the Bitcoin halving-scheduled for April 2024. Every four years, the reward for mining a block gets cut in half. In 2024, it dropped from 6.25 to 3.125 Bitcoin per block. That means fewer new coins enter the market. Historically, halvings have been followed by price surges-8,900% after 2012, 2,200% after 2016, 600% after 2020.

Other developments:

• Taproot upgrade (2021): Made transactions more private and enabled smarter contracts.
• Bitcoin ETFs (2024): Made it easier for retirement accounts and mutual funds to invest.
• Fedimints: A new privacy-focused project in development that could let users mix Bitcoin without trusting third parties.

Some analysts, like ARK Invest, predict Bitcoin could hit $1.5 million by 2030. Others, like JPMorgan, think $35,000 is more realistic. One thing’s certain: Bitcoin is no longer a fringe experiment. It’s a global asset class.

Getting Started With Bitcoin

If you want to try Bitcoin, here’s how:

1. Download a wallet. For beginners, try Exodus or Trust Wallet. For security, get a Ledger Nano S Plus.
2. Buy Bitcoin. Use a regulated exchange like Coinbase, Kraken, or Binance.US. You can buy as little as $10 worth.
3. Transfer it to your wallet. Never leave large amounts on an exchange.
4. Write down your recovery phrase. Keep it in a safe place-like a fireproof safe or engraved on metal. Never store it digitally.
5. Learn. Read Andreas Antonopoulos’ “Mastering Bitcoin.” Watch videos from the Bitcoin Education Project. Spend 10 hours learning before you invest more than $500.

Don’t rush. Bitcoin isn’t a get-rich-quick scheme. It’s a new kind of money. And like any new system, it takes time to understand.

If you’re curious about Bitcoin, start small. Learn. Watch. Don’t rush in. It’s not about getting rich overnight. It’s about understanding a new way to own and transfer value-without asking anyone’s permission.