Bitcoin (abbreviated BTC) is a form of digital money that enables secure peer-to-peer online transactions without needing a third-party intermediary like a bank. It was created by an open-source community, partly in response to banks' actions during the Great Financial Crisis of 2008, which saw governments printing money and bailing out the financial institutions responsible for the crash.

Bitcoin allows users to “be their own bank,” eliminating the need to seek permission from a company to complete transactions. There are no restrictions on who users can send money to and how much they can send, and transactions operate 24/7.

Bitcoin also aims to “bank the unbanked,” providing financial services to over two billion individuals worldwide who currently lack access due to the costs associated with traditional banking.

Bitcoin serves as both a store of value and a medium of exchange existing solely in the digital domain. Any individual or company does not own it and is accessible to anyone with an internet connection.

Uses of Bitcoin

• Making Purchases: Accepted by many companies like Starbucks and Virgin Galactic.
• Transferring Funds: These are more efficient and cheaper than traditional methods due to the absence of third-party intermediaries.
• Store of Value: Often referred to as ‘digital gold,’ Bitcoin is limited in supply and has appreciated significantly since its inception.

Acquiring Bitcoin

• Buying with Fiat Currency: Through brokerages or exchanges like Blockchain.com.
• Selling Goods/Services: Accepting Bitcoin as payment.
• Mining: Using specialized computer equipment to validate transactions and earn Bitcoin.

Fractional Bitcoin

Bitcoin can be bought in fractions. For example, if Bitcoin’s price is $20,000, you can purchase 0.1 Bitcoin for $2,000. The smallest unit of Bitcoin is called a satoshi (or sats), with 100 million satoshis in one Bitcoin.

Creation of Bitcoin

Bitcoin was introduced in a whitepaper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” by the pseudonymous Satoshi Nakamoto on October 31, 2008. The software was released publicly in 2009, and Nakamoto continued contributing until 2010. Bitcoin is maintained as open-source software with contributions from developers worldwide.

Bitcoin Terminology

• Bitcoin (with uppercase B): Refers to the Bitcoin network and protocol.
• bitcoin (with lowercase b): Refers to the cryptocurrency itself.
• BTC: The abbreviated version of bitcoin, used similarly to a stock ticker symbol.

How Bitcoin Works

The Bitcoin blockchain can be accessed and managed globally. The network ensures data (bitcoins) are scarce and valuable by limiting the total supply to 21 million bitcoins. Transactions are recorded in a public list called the blockchain, which is chronological and tamper-resistant. Bitcoin transactions are confirmed and validated through “mining,” where miners solve complex mathematical problems.

Bitcoin Mining

Mining involves:

1. Verifying new transactions.
2. Introducing new bitcoins into circulation.

Transactions are bundled into blocks and added to the blockchain roughly every ten minutes by the miner who solves a cryptographic puzzle fastest. Miners are rewarded with new bitcoins and transaction fees.

Cryptocurrency vs. Bitcoin vs. Blockchain

• Bitcoin: A specific cryptocurrency.
• Cryptocurrency: Digital money run on a blockchain.
• Blockchain: The technology underpinning cryptocurrencies, ensuring security and transparency.

Characteristics of Bitcoin

Bitcoin shares many characteristics with traditional money, such as limited supply, durability, divisibility, portability, fungibility, and acceptability.

Is Bitcoin Safe?

Bitcoin uses cryptographic technology to secure information, but it has risks:

• Loss of Crypto Keys: Losing keys can result in losing access to funds.
• 51% Attack: Theoretically possible if a single miner or group gains majority blockchain control.
• Irreversible Actions: Transactions cannot be undone.
• Unclear Regulation: Potential for future stricter regulations.

The Future of Bitcoin

The collective belief in its worth drives Bitcoin’s value. As money has evolved from physical objects to digital forms, Bitcoin may represent the next iteration of money. Influential figures like Elon Musk have praised Bitcoin’s structure and potential as a superior transfer of value.