What is Bitcoin?

Depending on who you ask, Bitcoin is:

Digital gold
A decentralized currency
A hedge against inflation
A scam
A revolution

The truth is, Bitcoin has been called all of these things — and often for good reason. But at its core, it is a radical shift in how we think about money, value, and trust. To understand Bitcoin properly, we need to strip away the hype and examine its foundations.

The Basics

Bitcoin is a decentralized digital currency. It doesn’t rely on banks, governments, or corporations to function. Instead, it uses mathematics, cryptography, and a distributed network of computers to operate without needing a central authority.

This makes Bitcoin fundamentally different from the money we use every day — also known as fiat currency.

Some of the core properties of Bitcoin include:

Open-source: Anyone can view, copy, improve, or contribute to Bitcoin’s codebase. This transparency ensures that no single group has hidden control over how the system works.
Permissionless: No one needs approval to use Bitcoin. You don’t need a bank account or identification to send or receive it. This makes it accessible to anyone with an internet connection, including people in parts of the world where banking systems are limited or unreliable.
Fixed supply: There will only ever be 21 million bitcoins. Unlike fiat currencies, which governments can print in unlimited quantities, Bitcoin has a hard cap. This scarcity gives it qualities similar to precious metals like gold — except Bitcoin is digital, portable, and verifiable.

Together, these traits give Bitcoin its appeal as a currency, a store of value, and a financial system alternative.

How Bitcoin Works

To understand Bitcoin, you don’t need to be a programmer or cryptographer. But a basic overview helps demystify how it functions:

Blockchain: Bitcoin’s ledger is called the blockchain. It’s a public, chronological record of all transactions ever made. Each block in the chain contains a batch of transactions, and once it’s added, it cannot be altered without redoing the entire chain — which is computationally impractical. This makes Bitcoin tamper-resistant.
Miners: Mining is the process by which new blocks are added to the blockchain. Miners are specialized computers that compete to solve complex mathematical puzzles. The winner earns new bitcoins and validates a block of transactions. This process also secures the network.
Proof-of-Work: This is the consensus mechanism behind Bitcoin mining. It requires miners to expend energy (in the form of electricity) to solve puzzles. The high cost of cheating makes the network trustworthy even among untrusted participants.
Private and Public Keys: Each Bitcoin wallet is secured with a private key — a secret string of data that proves ownership. When you send Bitcoin, you’re using your private key to sign a transaction. Your public key (or address) is what others use to send Bitcoin to you. As long as your private key remains secret, your Bitcoin is secure.

A New Kind of Money

One of the most important ideas behind Bitcoin is the concept of sound money — money that maintains its value over time because it cannot be inflated or easily manipulated.

Historically, gold served this role. It was scarce, difficult to produce, and universally accepted. Fiat currencies, by contrast, are prone to devaluation through inflation, monetary policy decisions, and political interference.

Bitcoin reintroduces scarcity into a digital system. Unlike any digital money before it, Bitcoin is engineered to resist inflation and centralization. It allows individuals to take custody of their wealth without reliance on institutions. Its supply schedule is publicly known, and no one — not even its creator — can change its core rules without global consensus.

Bitcoin isn’t just money you use online. It’s money designed to work without trust in banks, governments, or any third party. That alone makes it one of the most ambitious financial experiments in history.