Bitcoin (abbreviation: BTC; sign: ₿) is the first decentralized cryptocurrency. It was invented in 2008 when an unknown person or group published a white paper under the pseudonym Satoshi Nakamoto, titled "Bitcoin: A Peer-to-Peer Electronic Cash System." Use of bitcoin as a currency began in 2009 with the release of its open-source implementation. The bitcoin network was created on 3 January 2009, when Nakamoto mined the genesis block, which embedded the text "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks."
Technical Design
Bitcoin operates as a decentralized system without a central authority or single administrator. It functions through a peer-to-peer network of computers, each acting as a node that maintains an independent copy of a public distributed ledger called a blockchain. Transactions are validated using cryptography, preventing one person from spending another person's bitcoin as long as the owner keeps certain sensitive data (private keys) secret.
Consensus between nodes is achieved through a computationally intensive process based on proof of work, called mining. Miners group transactions into blocks and must find a nonce that produces a hash numerically smaller than the network's difficulty target. The difficulty is recalibrated every 2,016 blocks (approximately two weeks) to maintain an average block time of ten minutes. The hash function used is SHA-256 (two rounds).
One bitcoin is divisible to eight decimal places. The smallest unit is the satoshi, equal to one hundred millionth of a bitcoin. The total supply is capped at 21 million bitcoins, with block rewards halving every 210,000 blocks. As of 2026, the block reward is 3.125 BTC, and the circulating supply was approximately 20,057,778 BTC as of June 2026.
History
Before bitcoin, several digital cash technologies were developed, including David Chaum's ecash in the 1980s, Adam Back's Hashcash proof-of-work scheme in 1997, and proposals by Wei Dai (b-money) and Nick Szabo (bit gold) in 1998. These earlier attempts were not fully successful due to issues such as centralized control, lack of double-spending protection, or vulnerability to Sybil attacks.
The domain bitcoin.org was registered on 18 August 2008. On 31 October 2008, the bitcoin white paper was posted to a cryptography mailing list. Nakamoto's identity remains unknown. The first known commercial transaction using bitcoin occurred on 22 May 2010, when programmer Laszlo Hanyecz bought two pizzas for 10,000 BTC, an event later celebrated as "Bitcoin Pizza Day."
In 2013, the US Financial Crimes Enforcement Network (FinCEN) established regulatory guidelines for decentralized virtual currencies. In December 2013, the People's Bank of China prohibited Chinese financial institutions from using bitcoin. In 2017, the SegWit software upgrade was activated, and the first bitcoin futures were introduced by the Chicago Mercantile Exchange (CME). In February 2021, bitcoin's market capitalization reached $1 trillion for the first time. In September 2021, bitcoin became legal tender in El Salvador alongside the US dollar, though this status was effectively revoked in January 2025. In January 2024, the first 11 US spot bitcoin ETFs began trading. In December 2024, bitcoin's price reached $100,000 for the first time.
Legal Status and Regulation
The legal status of bitcoin varies substantially by jurisdiction. As of November 2021, nine countries applied an absolute ban (Algeria, Bangladesh, China, Egypt, Iraq, Morocco, Nepal, Qatar, and Tunisia), while another 42 countries had an implicit ban. Bitcoin is pseudonymous, with funds linked to addresses rather than real-world identities, and its use by criminals has attracted the attention of regulators. In March 2025, US President Donald Trump signed an executive order to establish a strategic bitcoin reserve.
Economic Perspectives
Bitcoin has been described as an economic bubble by several economists, including Nobel laureates Joseph Stiglitz, James Heckman, and Paul Krugman. Robert Shiller has argued that bitcoin is a fad that may become an asset class. In 2024, Jean Tirole described bitcoin as a "pure bubble" with an intrinsic value of zero. Federal Reserve Chair Jerome Powell has described bitcoin as a digital competitor to gold rather than to the dollar, characterizing it as a highly volatile speculative asset. Bitcoin is rarely used in regular merchant transactions but is popular in the informal economy and for certain cross-border uses.
Environmental Impact
Bitcoin mining consumes significant quantities of electricity. As of 2025, a study by the Cambridge Centre for Alternative Finance estimated that bitcoin mining represented approximately 0.5% of global electricity consumption and 0.08% of world greenhouse gas emissions. About half of the electricity used is generated through fossil fuels. Mining hardware's short lifespan also results in electronic waste.
