What is Bitcoin


Bitcoin Network and Bitcoin Currency (BTC)

Bitcoin is the first distributed consensus-based, permissionless, peer-to-peer payment settlement network, the transactions on which are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain. Bitcoin Network was invented by a pseudonym, Satoshi Nakamoto in 2008, but the true identity of Satoshi Nakamoto is still unknown. 

What is blockchain? What are the features of blockchain? Please refer to the content: What is Blockchain

In Bitcoin's whitepaper, Satoshi Nakamoto described it as a "peer-to-peer electronic cash system", meaning that all transactions happen directly between equal, independent network participants, without the need for any intermediary (like a bank) to permit or facilitate them.

The native currency of the Bitcoin Network is Bitcoin Currency (BTC). The process of verifying transactions on the Bitcoin network is known as mining, and Bitcoin Currency (hereinafter referred to as Bitcoin) serves as an incentive for transaction validators (miners) to verify transactions and maintain the security of the Bitcoin network.

What does “mining” mean? What's its utility? Please refer to the content: What is Mining

What's the Difference between BTC and Fiat Currencies?

Bitcoin was originally designed as a replacement for fiat currency, and Satoshi Nakamoto wanted it to be recognized and used by people all over the world. The biggest difference compared to traditional currencies issued by central banks is that Bitcoin is not controlled by a central bank; its financial system is controlled by millions of computers distributed around the world. As a result, Bitcoin is decentralized and anyone can participate in the Bitcoin ecosystem by downloading open-source software.

In addition, another difference compared to traditional currencies is that the maximum supply of bitcoins is designed to be a fixed 21,000,000, meaning that new bitcoins cannot be created at will, whereas traditional currencies generally do not have a supply limit.

Is Bitcoin a currency or a commodity?

By definition, Bitcoin is a cryptocurrency. 

As a currency, Bitcoin has the basic attributes of a currency, i.e., a means of circulation and a means of storage, etc. People may hold and use bitcoins for a variety of reasons: like traditional currencies, some people use Bitcoin as a means of exchange for other cryptocurrencies; others buy and hold Bitcoin as an investment in the hope that it will appreciate in value for additional benefits. 

In fact, because the price of Bitcoin fluctuates violently, the risk of which is really high. Most countries currently regard Bitcoin as a speculative commodity rather than a currency. In addition, since Bitcoin is not regulated and has spawned a lot of criminal activities, buying and trading Bitcoin or other cryptocurrencies is strictly prohibited in some countries and regions (such as China, Egypt, Morocco, etc.). 

However, there are also countries that are optimistic about Bitcoin. For instance, El Salvador has adopted Bitcoin as a legal tender. The president of El Salvador claimed that it would improve the economy by making banking easier for Salvadorans.

The History of Bitcoin's Development

On January 3, 2009, Nakamoto mined the first block on the Bitcoin network, known as the genesis block, thus launching the world’s first cryptocurrency. In the following years, Gavin Andresen, Martti Malmi, and Saïvann Carignan joined the team to develop and maintain bitcoin.org, but Satoshi Nakamoto disappeared from involvement with Bitcoin in 2010.

The first relatively well-known and interesting Bitcoin business transaction occurred on May 22, 2010, when programmer Laszlo Hanyecz exchanged 10,000 bitcoins for two pizzas, an event that also made May 22 Bitcoin Pizza Day for cryptocurrency enthusiasts. The price of Bitcoin was less than $0.1 when it was launched, and by the beginning of 2011, the price of Bitcoin had risen to $1.

In March 2013, the Bitcoin blockchain was temporarily split into 2 chains ("Fork") and it took 6 hours to restore with the help of miners downgraded to version 0.7 of the Bitcoin software. At that time, the price of Bitcoin on Mt. Got dipped by 23% to 37 USD.

What is a fork? What does it mean to a blockchain? Please refer to the content: What is Fork

In August 2016, the Bitfinex cryptocurrency exchange platform was hacked in the second-largest breach of a Bitcoin exchange platform, which resulted in the loss of approximately 120,000 bitcoins worth approximately $72 million. The price of Bitcoin has also continued to be negatively impacted by several hacks or thefts from cryptocurrency exchanges in the following years.

In late 2017, Bitcoin's price soared, peaking near $20,000; it was worth more than $60,000 as the bull market came in 2021. Then, affected by the bear market and events such as Terra and FTX, its price fell back to around $17,000 at the end of 2022.

You can find the latest price of Bitcoin and other related information on TokenInsight's Bitcoin page.

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