Bitcoin Explained Simply
Everything you need to know about the first cryptocurrency.
Historical Context
Simple Analogy
Think of Bitcoin like digital gold:
- • Scarce: Only 21 million will ever exist (like gold's limited supply)
- • Mined: New Bitcoin is created through computational work (like mining gold)
- • Divisible: Can be split into tiny pieces (satoshis = 0.00000001 BTC)
- • Durable: Cannot be destroyed or counterfeited
- • Portable: Can be sent anywhere instantly (unlike physical gold)
How It Works
Bitcoin Mining Process
Key Features
Fixed Supply
Maximum 21 million BTC will ever exist. About 19.5 million have been mined. The last Bitcoin will be mined around year 2140.
Halving Events
Mining rewards cut in half every ~4 years (210,000 blocks). This reduces new supply over time, creating scarcity.
Decentralized
No company, government, or individual controls Bitcoin. Thousands of nodes worldwide maintain the network.
Transparent
All transactions are publicly visible. Anyone can audit the entire history of every Bitcoin ever moved.
Bitcoin's Role Today
Store of Value
Often called "digital gold" — used as a hedge against inflation and currency devaluation.
Settlement Layer
Large value transfers between institutions and countries.
Reserve Asset
Some corporations and countries hold Bitcoin as part of their treasury.
- Extreme volatility: Price has dropped 80%+ multiple times in history
- Regulatory risk: Governments could restrict or ban usage
- Technical risk: Potential (though unlikely) vulnerabilities could be discovered
- Competition: Other cryptocurrencies or technologies could reduce relevance
- Environmental concerns: Proof of Work mining uses significant energy
- Bitcoin was the first cryptocurrency and remains the largest by market cap
- Its fixed supply is a key feature that differentiates it from traditional currencies
- Bitcoin is primarily used as a store of value, not everyday payments
- You don't have to buy a whole Bitcoin — you can buy fractions (satoshis)