Bitcoin

Bitcoin is the first cryptocurrency and the first widely used decentralized digital payment system.

It was introduced in 2009 as an alternative way to transfer value without relying on banks or central authorities.

Why Bitcoin was created

Bitcoin was designed to address limitations in traditional financial systems, such as reliance on intermediaries and centralized control.

Its design allows people to send value directly to one another using software rules rather than trusting a single organization to manage transactions.

Who created Bitcoin?

Bitcoin was introduced in 2009 through a white paper published under the name Satoshi Nakamoto.

Satoshi Nakamoto is a pseudonym used by the person or group who designed Bitcoin and its original software. The true identity behind the name has never been confirmed.

After launching Bitcoin and communicating with early developers, Satoshi gradually withdrew from public involvement. Since then, Bitcoin has continued to operate without a central owner or controlling authority.

This absence of a central creator is intentional. Bitcoin’s design allows it to function through open-source software and distributed consensus rather than trust in any individual or organization.

Understanding Bitcoin’s origins helps explain why decentralization, transparency, and fixed supply are core parts of its design.

How Bitcoin works

Bitcoin transactions are recorded on a public blockchain that anyone can view.

The network is maintained by participants who verify transactions and add them to the blockchain according to predefined rules. Ownership is represented by cryptographic keys rather than names or accounts.

Decentralization in Bitcoin

Bitcoin does not rely on a central authority to issue or validate transactions.

Instead, the network is distributed across many independent participants. This design reduces reliance on any single entity and makes the system more resistant to outages or centralized control.

Bitcoin supply

Bitcoin has a fixed maximum supply defined by its software rules.

New bitcoin is introduced gradually through a process tied to transaction validation. This supply structure is transparent and predictable, though it does not guarantee stability or value.

How Bitcoin is used

Bitcoin is used in different ways depending on user needs.

Common uses include transferring value across borders, holding digital assets independently of banks, and interacting with services that accept bitcoin as payment.

How Bitcoin is used can vary significantly by region and context.

Bitcoin and wallets

Bitcoin is controlled through private keys stored in wallets.

Wallets can be software-based (hot wallets) or hardware-based (cold wallets). The choice of wallet affects convenience, security, and how users interact with the network.

Common misunderstandings

Bitcoin is often misunderstood as anonymous, instant, or risk-free.

While transactions are recorded publicly, user identities are not inherently verified. Transaction times and costs can vary, and using Bitcoin safely requires understanding wallets and private keys.

Key takeaway

Bitcoin is a decentralized digital system designed to transfer value without relying on traditional intermediaries.

Understanding how Bitcoin works provides a foundation for understanding other cryptocurrencies and blockchain-based systems.

Related concepts

• Distributed ledgers
• Proof of work
• Mining
• Private keys

Next concept

Bitcoin introduced the idea of decentralized digital money, but it was designed with a limited set of functions.

To understand how blockchains evolved to support more complex applications, the next concept to explore is Ethereum.

Read: Ethereum →