Bitcoin is the world's first and most well-known cryptocurrency. It is a decentralized digital currency whose blockchain technology enables a peer-to-peer payment system without the oversight of banks or central banks. The core concept of Bitcoin was published in 2008 by someone using the pseudonym Satoshi Nakamoto (the real person or group remains unknown) in a white paper titled "Bitcoin: A Peer-to-Peer Electronic Cash System". The first Bitcoin block (Genesis Block) was mined on January 3, 2009, which is considered Bitcoin's birthday. Since its founding, Bitcoin has grown into a global phenomenon and the world's largest cryptocurrency.

The Origin of Bitcoin

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• Who created Bitcoin: Bitcoin was created by someone using the pseudonym Satoshi Nakamoto. Many speculations have been made about Nakamoto's identity, but the truth is that the actual creator is unknown. In the early days, they mined approximately one million bitcoins for themselves, which have not been moved since.
• Important dates: Bitcoin's white paper was published in October 2008. The Genesis Block was mined on January 3, 2009. The first commercial Bitcoin payment occurred in 2010 when two pizzas were purchased for 10,000 bitcoins.
• Early developers: Bitcoin's development involved individuals such as Hal Finney and Nick Szabo, who had created cryptographic technology for projects that preceded Bitcoin.

Blockchain and Proof of Work

Bitcoin's technology is based on a distributed blockchain. A blockchain is a public digital ledger where all network transactions are permanently recorded in chained blocks. Each block contains a set of transactions, a timestamp, and a cryptographic reference to the previous block, so changing any data in the chain requires the consensus of the entire network. Bitcoin's blockchain is completely decentralized: thousands of servers around the world maintain copies of the chain, making the network extremely secure and difficult to hack.

Bitcoin's consensus algorithm is Proof of Work (PoW). In this model, miners compete to solve demanding mathematical puzzles in order to add a new block to the blockchain. Solving the puzzle requires significant computing power and electrical energy. The miner who first finds the correct solution gets the right to add the block to the chain and receives a reward in new bitcoins. Proof-of-Work effectively protects the network from issues like double spending. Bitcoin's miner network is vital for its decentralization and security – without miners, Bitcoin could not function.

Other cryptocurrencies like Ethereum have transitioned to a different consensus algorithm called Proof of Stake. Learn more about Ethereum's consensus mechanism.

Bitcoin as a Payment Method and Store of Value

Bitcoin can function as both a payment method and a store of value. Thanks to payments made on the P2P network, bitcoins can be sent directly to anyone without a bank or other intermediary. Bitcoin's actual transfer mechanism is the blockchain, and today the Lightning Network also offers fast, cheap micro and retail payments with Bitcoin.

At the same time, Bitcoin is considered digital gold, a store of value. Its supply is predetermined in the protocol and limited to 21 million coins, so the risk of inflation is relatively small. Bitcoin functions as both a currency and a store of value, and its value is largely based on scarce supply and growth-oriented demand. These characteristics make Bitcoin an attractive alternative especially for investors looking for protection against inflation and adding diversification alongside traditional asset classes.

If you want to know how to buy Bitcoin, read our detailed guide. For Bitcoin purchases, it's important to choose the right crypto wallet.

Where to Buy Bitcoin

Mining and Limited Supply

Bitcoin mining is the process by which the network maintains itself and issuance occurs. A miner adds new blocks to the blockchain by solving mathematical problems (Proof of Work). The validator of a new block receives a block reward, meaning new bitcoins are created for them as a reward for their work. Mining also prevents Bitcoin's double spending in the decentralized network.

Bitcoin's supply is predetermined and limited: the protocol has a maximum of 21 million bitcoins. The block reward generated during mining halves approximately every four years. This halving process slows down the issuance of new bitcoins and ensures that the 21 million limit will not be reached until approximately the 2140s.

Decentralization and Inflation Protection

Bitcoin is considered important both for its decentralized structure and its inflation protection. Decentralization means that no central authority controls Bitcoin's network. Chain control is distributed among thousands of different operators, and thanks to the open blockchain, anyone can set up their own node as part of the network. No single party can change Bitcoin's rules alone, and the network's functionality better withstands various disruptions or cyber threats.

Inflation protection: Bitcoin's supply is predetermined and limited, so the currency's value is not subject to the risks of government money printing. Bitcoin is called digital gold and generally a strong inflation hedge precisely because of its limited supply. Unlike fiat currencies, Bitcoins cannot be freely created, which helps preserve their purchasing power over time.

For investors seeking more stable value preservation, stablecoins are also available, which are pegged to traditional currencies.

Bitcoin for Investors and the Economy

Bitcoin has also become a significant phenomenon from an investment perspective and has broader economic implications. For investors, Bitcoin offered spectacular returns for a long time, but it is also an extremely volatile asset. Bitcoin functions as both a store of value and a medium of exchange, and its primary value is based on limited supply and growing demand. Many investors see Bitcoin as a modern recession hedge or an alternative alongside gold.

Institutional acceptance has also increased. In the United States, spot Bitcoin ETFs have been launched, and traditional financial giants have opened Bitcoin products to their customers. This signifies Bitcoin's gradual transition into the mainstream. Bitcoin's rise has prompted economic policymakers to consider the role of digital currencies; for example, El Salvador became the first country in the world to accept Bitcoin as legal tender.

Investment Risks and Opportunities

Bitcoin's price can rise or fall by tens of percent in a single day. It offers high return potential but also significant risk. Investors often use Bitcoin to diversify their portfolio and protect against inflation.

Institutions and Financial Markets

Professional investors and companies have increased their Bitcoin investments. For example, companies like Tesla and MicroStrategy, as well as investment funds, own bitcoin.

Global Impact

Bitcoin challenges traditional monetary systems and has prompted governments to consider their own digital currency solutions.

Bitcoin's position in the modern economy continues to evolve, and it is one of the most interesting phenomena in the financial world today. You can read more about the psychology of investing in our separate guide.

Also remember to familiarize yourself with the basics of crypto taxation before making investment decisions.