What is Bitcoin (BTC) and how does it work?

What is Bitcoin (BTC)?

Bitcoin is a decentralised digital currency that allows people to send and receive money over the internet, but without the need for a bank or central authority like the Federal Reserve. Created in 2009 by an anonymous individual or group under the pseudonym Satoshi Nakamoto, Bitcoin pioneered the concept of a peer-to-peer financial system powered by blockchain technology.

Unlike traditional currencies like the Canadian dollar, Bitcoin is entirely digital, existing only as computer code. Instead of relying on intermediaries to validate its transactions, Bitcoin uses a decentralised network of computers (called nodes) that work together to verify and record every transaction on a public ledger, known as the blockchain.

As Bitcoin is decentralised, no single entity controls the network, making it resistant to censorship, interference or manipulation. And because it operates on a peer-to-peer basis, users can transact directly with each other, quickly and securely, at any time.

Bitcoin is set up so that only 21 million will ever be created, which makes it a deflationary asset. It was created to give individuals control over their own money and offer an alternative to the traditional financial system. 

For anyone looking to buy, sell or store Bitcoin safely, Crypto.com is a popular, user-friendly platform. 

You can download the Crypto.com App here.

How does Bitcoin work?

Bitcoin operates on a decentralised digital ledger, called a blockchain, which records all transactions across a global network of computers. When you send or receive Bitcoin, the transaction is broadcast to the network and grouped with others into a block. This block is then validated by the network before being permanently added to the blockchain.

The transaction process begins when a user starts a transfer of Bitcoin from their digital wallet to another. Critically, they must digitally sign off on every sending transaction.

Once a transaction is started, miners play a critical role in validating it. They do this by using advanced computers to solve complex mathematical puzzles, competing to be the first to add the next block of transactions to the blockchain. 

Once someone adds the block to the chain, the transaction receives its first confirmation – and then more confirmations follow as additional blocks are added, further securing the transaction. Generally, Bitcoin services require multiple confirmations to consider a transaction final and irreversible. 

This process is known as proof of work (PoW) and is the reason why Bitcoin is both energy-intensive and secure.

To store and manage Bitcoin, users rely on wallets. Wallets come in several different forms, with each having a unique balance of convenience and security. Wallets don’t store the Bitcoin itself, but rather the private keys that allow access to the coins on the blockchain.

The key wallet distinction is between hot and cold wallets. Hot wallets are connected to the internet, making them more convenient for frequent trading or spending but also more vulnerable to hacking and malware. 

By contrast, cold wallets are offline storage solutions, such as hardware wallets or paper wallets, that offer stronger security as your private keys are not in danger from online threats. However, they are much less convenient for day-to-day transactions.

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What is the price of Bitcoin (BTC)?

Bitcoin’s price is constantly changing, driven by global supply and demand, market sentiment and macroeconomic trends. 

You can track the live BTC price using the widget below, which updates in real time:

Bitcoin launched in 2009 with no formal market value, though early transactions valued it at a few cents. Its first recorded price was around US$0.003 in March 2010, and by the end of that year, it reached US$0.30. Since then, Bitcoin has grown from an experimental digital currency to a globally recognised asset.

Bitcoin reached its all-time high of approximately US$122,000 in mid-2025, driven by growing institutional adoption, inflation concerns and widespread retail interest. Although the price remains continuously volatile, Bitcoin continues to be regarded by many investors as ‘digital gold,’ a long-term store of value.

It’s worth noting that as Bitcoin is its own decentralised currency, many investors view its ‘value’ in fiat currency terms as somewhat misleading or secondary, arguing that since Bitcoin isn’t tied to any government or central bank, its true appeal lies in its fixed supply, resistance to inflation and independence from traditional financial systems.

Bitcoin blockchain explained

Blockchain is the foundational technology behind Bitcoin. Simply put, it’s a decentralised and public digital ledger that records every Bitcoin transaction ever made. Unlike traditional ledgers maintained by banks or governments, the blockchain is distributed across thousands of computers worldwide

When you send or receive Bitcoin, the transaction is grouped into a ‘block’ along with others. This block is then added to a chain of previous blocks, hence the name blockchain. Each block contains a unique code called a ‘hash’ that links it to the previous block, creating an unbreakable chain of data.

As noted above, Bitcoin’s blockchain secures transactions using a process called Proof of Work, where miners compete to solve complex mathematical puzzles, to be the first to add the new block.

Because the blockchain is a public ledger, anyone can view its entire history. This builds trust into the system, as all transactions are verifiable and irreversible once confirmed. This also eliminates the need for intermediaries like a bank, allowing for true peer-to-peer transfers.

Bitcoin characteristics: What's the purpose of Bitcoin?

Bitcoin serves multiple important purposes that distinguish it from traditional fiat money. But the three most important are:

1. Store of value – much like gold, Bitcoin is scarce as only 21 million coins will ever exist. This limited supply, combined with its decentralised nature, makes Bitcoin attractive for preserving wealth over time.
2. Medium of exchange – Bitcoin enables fast, borderless peer-to-peer transactions without intermediaries like banks or payment processors. This makes it useful for sending money globally with relatively low fees and no need for currency conversions.
3. Inflation hedge – with many fiat currencies subject to inflationary pressures due to government money printing, Bitcoin’s fixed supply offers protection against the declining purchasing power of traditional money. 

Of course, not everyone agrees with these points.

History of Bitcoin

Bitcoin was introduced in 2009 by an anonymous figure or group known as Satoshi Nakamoto, who published a whitepaper entitled ‘Bitcoin: A Peer-to-Peer Electronic Cash System.’ 

Its first major milestone came in May 2010, when a programmer famously paid 10,000 BTC for two pizzas, marking the first well-known Bitcoin transaction. This event is now celebrated annually as Bitcoin Pizza Day.

Bitcoin then steadily gained traction among developers and early adopters, with the first exchanges and wallet services launching in the early 2010s. By 2013, Bitcoin had reached US$1,000 for the first time and started to garner mainstream interest.

Institutional involvement began to grow in the late 2010s, with many companies starting to accept Bitcoin as payment, with more and more financial institutions exploring blockchain technology. During the pandemic, major firms such as Tesla and Strategy started investing directly in Bitcoin, with El Salvador becoming the first country to adopt Bitcoin as legal tender in 2021.

Today, Bitcoin is recognised as both a digital asset and a global financial innovation. The asset is arguably enjoying significant political support from the US administration, while fiat currencies continue to inflate, both of which are further driving adoption.

Who created Bitcoin?

Bitcoin was created by an individual or group using the pseudonym Satoshi Nakamoto back in 2008, who published the original Bitcoin whitepaper. In January 2009, they mined the first block of the Bitcoin blockchain, known as the Genesis Block, officially launching the network.

Despite countless investigations and identity claims, the true identity of Satoshi Nakamoto remains unknown. They communicated only through emails and online forums, contributing to the development of Bitcoin until 2010 before completely stepping away from the project. Since then, no provable communication from Nakamoto has surfaced.

The mystery surrounding Satoshi’s identity adds to Bitcoin’s decentralised ethos, as there is still no central authority or figure controlling the network, meaning that the focus remains on the system itself rather than any single individual.

Strengths of Bitcoin

• Financial inclusion – Bitcoin gives everyone access to money as long as they have an internet connection, offering banking alternatives to the unbanked and underbanked, especially in regions with limited access to traditional institutions
• Decentralised Finance (DeFi) – Bitcoin operates on a peer-to-peer financial system which allows users to send, receive and store value without intermediaries, and enables decentralised services such as lending and borrowing, often with lower fees and fewer entry barriers
• Transparency and security – all Bitcoin transactions are recorded on a public blockchain, ensuring full transparency and resistance to tampering. Cryptographic algorithms guarantee that once a transaction is confirmed, it cannot be altered

Bitcoin supply: How many Bitcoins are there?

Bitcoin has a fixed maximum supply of 21 million coins, hardcoded into its original protocol to ensure both scarcity and inflation resistance. As noted above, new Bitcoins enter circulation through mining, where participants use advanced computers to validate transactions and secure the network. 

Miners compete to be the first to solve complex cryptographic puzzles, with the winner adding the new block to the chain, and being rewarded with a predetermined number of newly created Bitcoins, known as the block reward.

This block reward halves roughly once every four years in an event known as the ‘halving,’ which slows the rate of supply.

As of 2025, around 19.9 million Bitcoins are in circulation, meaning that roughly 95% of the total supply has already been mined. The remaining coins will gradually be added until the year 2140, assuming the current rate of technological progression continues.

However, not all mined Bitcoins remain in circulation. Many analysts estimate that as many as 4 million Bitcoins have been lost forever, whether from lost hard drives, forgotten private keys or even early adopters forgetting about their holdings. 

In one famous example, an early adopter named James Howells accidentally threw away a hard drive containing 8,000 Bitcoins. The device ended up in landfill, where despite repeated attempts to dig it up, the coins remain unrecoverable.

Essentially, this means that the available supply is lower than might be expected. And this permanent loss of coins, hard cap on total supply and predictable issuance schedule are all key to the crypto’s status as ‘digital gold’.

How is Bitcoin used?

Four key uses of Bitcoin include:

• Everyday currency use – Bitcoin is accepted by thousands of merchants worldwide for online purchases. Payment processors are also allowing businesses to accept BTC and instantly convert it to local currency.
• Store of value – many view Bitcoin as a long-term investment, holding it with the expectation that its limited supply and increasing demand will drive future value appreciation.
• Trading – active traders buy and sell Bitcoin on crypto exchanges, capitalising on its market volatility to earn short-term gains.
• International transfers – Bitcoin lets you send fast, low-cost cross-border payments without the need for currency conversions or intermediaries, offering an alternative to traditional remittance services.

How to buy Bitcoin (BTC)

Buying Bitcoin is quick and simple with us. Follow these four easy steps to get started:

1. Download the Crypto.com App

Start by downloading the Crypto.com App from the App Store or Google Play. The app offers a secure, user-friendly interface designed for both beginners and experienced crypto users.

2. Sign up and complete KYC

Create your free account by providing basic details such as your name and email address. To comply with global regulations, you'll need to complete a Know Your Customer (KYC) process by uploading a valid ID and a selfie. This usually takes around five minutes.

3. Deposit funds

Once your account is verified, you can deposit funds using your preferred payment method, including a bank transfer, debit/credit card or another crypto wallet. Crypto.com supports multiple currencies and offers competitive exchange rates.

4. Buy Bitcoin easily

With funds in your account, simply navigate to the Bitcoin page in the app, enter the amount you wish to purchase, and tap ‘Buy’. Your BTC will then be credited to your in-app wallet.

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How to sell Bitcoin (BTC)

Selling Bitcoin is just as straightforward as buying it, especially when using the Crypto.com App: 

1. Access your Crypto.com App wallet

Open the Crypto.com App and log in. From the home screen, tap on your Crypto Wallet, where you’ll see a list of all your digital assets, including Bitcoin.

2. Choose Bitcoin and select 'Sell'

Tap on Bitcoin, then press the 'Sell' button. You’ll be able to choose how much BTC you want to sell and whether you'd like to convert it into your local currency.

3. Confirm the transaction

Review the details of your sale, including the current exchange rate and any applicable fees, then tap 'Confirm' to finalise the transaction. Your BTC will be converted instantly at the market price.

4. Withdraw funds or keep in the App wallet

Once the sale is complete, you can withdraw the fiat currency to your linked bank account or keep it in your Crypto.com fiat wallet for future trades or purchases. Alternatively, you can transfer your funds to a Crypto.com Prepaid Visa Card to spend it like cash.

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What is Bitcoin halving?

Bitcoin halving is a special event which occurs roughly every four years, where the reward miners receive for validating transactions is cut in half. For example, when Bitcoin was first launched in 2009, miners earned 50 BTC per block. After each halving, that reward is reduced by 50%, leaving the current reward at 3.125 BTC per block.

Halvings are built into Bitcoin’s code to control supply and mimic the scarcity of precious resources like gold. With a maximum supply capped at 21 million BTC, halvings ensure that new coins are introduced into circulation at a gradually decreasing rate. 

The impact on miners is significant, as they earn fewer bitcoins for the same amount of work, which can affect their profitability if Bitcoin’s price doesn’t rise accordingly. However, past halvings have often been followed by price increases, as the reduced supply meets steady or rising demand.

Halving events are closely watched by investors as they influence both market sentiment and long-term value projections. From a deflationary perspective, it’s also worth noting that some BTC are lost every year as well from lost private keys, forgotten seed phrases or accidental destruction of storage devices.

Bitcoin mining: What does it mean?

Beyond creating new coins for the wider Bitcoin circulation, mining helps to maintain network security by making attacks very expensive, validating all Bitcoin transactions, and ensuring continued decentralisation by distributing control across thousands of miners in countries all over the world.

However, the Proof-of-Work consensus mechanism that underpins the Bitcoin network has come under fire for its high energy needs. The network now consumes as much as 150 terrawatt-hours a year, which is on par with many smaller countries. 

However, as miner profits are the margin between hardware and electricity costs, and the Bitcoin price, many are being strongly incentivised to commit to green energy to make operations sustainable, as well as to increase profitability.

While Bitcoin could be mined with relatively commonplace hardware in the early days, the cryptography has become increasingly complex, so specialised chips called Application-Specific Integrated Circuits (ASICs), which are designed solely for bitcoin mining, now win the vast majority of block awards. However, some GPU miners, and even on occasion a CPU miner, can and do win.

But as the chances of winning are low even with specialised equipment, most miners join mining pools to combine their computational power, and then share the rewards proportionately. This provides more consistent income, though it’s worth noting that profitability still varies due to the constantly changing hardware costs, electricity pricing and Bitcoin price.

How to mine Bitcoin (BTC) 

Mining Bitcoin is significantly more complex than buying Bitcoin, but it can be rewarding both creatively and financially. 

The essential requirements have remained the same for some time: ASIC mining hardware (which costs anywhere from US$2,000 to US$10,000+ per unit), reliable and low cost electricity, a stable internet connection, installed cooling and ventilation systems, and sufficient technical knowledge.

Here’s how to get started:

1. Choose your mining method – solo mining offers a chance of receiving the full block reward and transaction fees, but as there is an element of luck, your income will almost always be inconsistent. Pool mining splits the rewards, providing steadier returns for small-scale miners.
2. Acquire hardware – purchase an in-date ASIC miner. Key considerations will include its power efficiency and hash rate, alongside warranties whether buying new or second-hand. Second-hand machines can often be found for a fraction of the cost of new rigs, but, as always, buyer beware.
3. Download mining software – popular programs include CGMiner and BFGMiner, though some machines come with specific applications that connect your hardware to the network.
4. Connect to a mining pool – it’s often easier for beginners to connect to an established pool like Slush Pool, F2 Pool, or Antpool (these are popular platforms though not recommendations). You will need to configure your software with the pool’s server details.
5. Set up a Bitcoin wallet – hardware wallets like a Trezor are viewed as best for long-term storage of your Bitcoin rewards by the mining community.
6. Monitor and optimise – Bitcoin mining is not a source of truly passive income. It’s important to track hash rates, temperatures, electricity consumption and, most importantly, profitability. You will also need to consider fan speeds, overclocking settings and which pools perform best for you over time. There’s the maintenance on top, so think carefully about whether the capital investment is right for you.

Bitcoin forks: What are they?

Bitcoin forks are changes to the Bitcoin protocol which create new versions of the blockchain. They only happen when developers change Bitcoin’s underlying code, which means a change in the rules guiding how the network operates. Forks can either be consensually planned, or be the result of disagreements within the project community about how Bitcoin should function going forwards.

Hard forks create permanent splits from the original blockchain, resulting in a completely new cryptocurrency. A hard fork change is not backwards-compatible, which means that older versions of the software will be unable to recognise blocks created under the new rules. Ergo, when hard forks occur, holders of the original cryptocurrency will often be compensated with equivalent amounts of the new cryptocurrency.

By contrast, soft forks are backward-compatible upgrades which either clarify or create new rules for Bitcoin, which are accepted by the wider community and do not create new cryptocurrencies.

Please be aware that forks are highly technical and you should consider in-depth research into any proposed fork in a crypto you own to check whether it aligns with the original vision.

Well-known hard fork examples include Bitcoin Cash in 2017, which increased the block size from 1MB to 8MB for faster transactions, and Bitcoin SV in 2018, which increased the block size to 128MB.

Is Bitcoin safe?

Bitcoin is built on the highly secure foundation of blockchain technology. Its decentralised network and cryptographic protocols make it extremely difficult to hack or manipulate, because every transaction is verified by thousands of independent nodes, and once confirmed, it's permanently recorded on the public blockchain.

However, while the Bitcoin network itself is secure, there are still risks for individual users. The most common threats include phishing scams, hacked exchanges and loss of private keys (which are essential for accessing your Bitcoin).

To keep your Bitcoin safe, it’s essential to use a trusted platform and secure wallet solutions. Cold wallets (offline storage) offer the highest level of protection, while hot wallets (online) are more convenient but can be more vulnerable. We offer multi-factor authentication and cold storage for most funds.

Bitcoin vs Ethereum: What's the difference?

While Bitcoin and Ethereum are the two largest cryptocurrencies, they serve different purposes and are built on distinct technologies.

Ethereum was launched in 2015 and is arguably more than just a digital currency. While also a decentralised platform, it allows developers to build and deploy smart contracts and decentralised applications (dApps) which enable complex financial services, games, NFTs and more to operate directly on the Ethereum blockchain.

From a technological perspective, Bitcoin is designed for security and simplicity, whereas Ethereum is more flexible and feature driven. Since the Merge upgrade in September 2022, Ethereum now works on a proof-of-stake consensus model, while Bitcoin continues to use proof-of-work, which relies on mining.

In terms of investment, Bitcoin is often seen as a relatively stable long-term asset, ideal for holding during market cycles. Ethereum, due to its evolving technology and broader range of applications, may offer higher potential returns, but with increased volatility.

Both assets are available on Crypto.com, where users can easily explore, buy and manage BTC and ETH depending on their goals and risk tolerance.

FAQs about Bitcoin (BTC)

What exactly is Bitcoin and how does it work?

Bitcoin is a decentralised digital currency that allows you to conduct peer-to-peer transactions without intermediaries like banks. It operates on a blockchain, a public ledger where miners validate and record transactions securely.

Is Bitcoin real money?

Bitcoin is considered digital money and a store of value but isn’t legal tender in most countries. Its acceptance as a medium of exchange varies, though it is widely used for online payments and investing.

Is Bitcoin a good investment?

Bitcoin has shown strong long-term growth but remains highly volatile and speculative. Investors should consider their risk tolerance and investment goals before buying.

How long does it take to mine 1 Bitcoin?

It typically takes about 10 minutes to find a block, but individual miners rarely earn a whole Bitcoin alone and instead usually join mining pools. The actual time depends on mining computers available and network difficulty.

Can I mine Bitcoin?

Yes, anyone with the right hardware and software can mine Bitcoin, but it requires a significant investment in specialised equipment and electricity costs. Mining is more competitive now, making it less profitable for casual users.

How can I make money from Bitcoin?

You can make money by buying and holding Bitcoin for its price appreciation, trading it actively or mining if you have access to the right resources.

Who owns the most Bitcoin?

The largest individual Bitcoin holder is believed to be its mysterious creator, Satoshi Nakamoto, estimated to own around 1.1 million BTC. Large institutional investors and crypto exchanges also hold significant amounts.

Is Bitcoin safe for beginners?

Bitcoin is secure by design, but beginners must use trusted wallets and platforms to avoid scams and loss of private keys. Following the best security practices is essential for safe usage.

Important Information: This is informational content sponsored by Crypto.com and should not be considered as investment advice. Trading cryptocurrencies carries risks, such as price volatility and market risks. Before deciding to trade cryptocurrencies, consider your risk appetite.