Bitcoin Explained for Absolute Beginners
Everything you need to know about Bitcoin: what it is, who created it, how it works, and how to think about it as an investment.
Bitcoin is the world’s first cryptocurrency and, by most measures, still the most important. Understanding Bitcoin is the foundation for understanding everything else in the crypto space.
Who created Bitcoin?
Bitcoin was invented in 2008 by a person or group using the pseudonym Satoshi Nakamoto. They published a nine-page document called the Bitcoin whitepaper, outlining a system for “peer-to-peer electronic cash” that did not require a trusted third party.
In January 2009, the first Bitcoin block was mined. Satoshi Nakamoto has never been publicly identified and disappeared from public forums in 2010.
What makes Bitcoin different from regular money?
Several things set Bitcoin apart from traditional currencies:
Decentralisation: No central bank, government, or company controls Bitcoin. It runs on a network of computers spread across the globe, none of which has special authority over the others.
Fixed supply: There will only ever be 21 million Bitcoin. This is written into the software’s rules and cannot be changed without the agreement of the overwhelming majority of network participants. Compare this with traditional currencies, where governments can print more money.
Transparency: Every Bitcoin transaction in history is publicly visible on the blockchain. You cannot see who owns an address, but you can see every transaction it has ever made.
Self-custody: You can hold Bitcoin yourself, without a bank. Your Bitcoin is controlled by a private key that only you possess. No one can freeze it or confiscate it without that key.
How does Bitcoin have value?
Bitcoin is scarce, durable, portable, and divisible. These are properties shared by gold, which is why many people refer to Bitcoin as “digital gold.”
More practically, its value is a function of supply and demand. As more people, companies, and countries want to hold Bitcoin, and as the supply grows ever more slowly due to halving events, the price has tended to rise over long time periods.
What is a Bitcoin halving?
Every four years (approximately), the reward that miners receive for adding new blocks to the Bitcoin blockchain is cut in half. This event, called the halving, reduces the rate at which new Bitcoin enters circulation.
The most recent halving took place in April 2024, reducing the block reward from 6.25 BTC to 3.125 BTC. Previous halvings in 2012, 2016, and 2020 each preceded significant price increases, though past performance is not a guide to future results.
How do I get some?
The easiest way is to buy Bitcoin through a cryptocurrency exchange. You will need to create an account, verify your identity, deposit funds, and then make a purchase.
Our step-by-step guide to buying Bitcoin as a beginner walks you through the whole process.