Bitcoin has once again taken center stage in 2024, making headlines with record-breaking milestones and transformative developments. From the historic approval of the first U.S. Bitcoin spot ETF to the price soaring past $73,000 — a new all-time high — and the fourth Bitcoin halving event in April, the digital asset continues to shape global financial conversations. These events aren't just trending among seasoned investors; they’ve sparked widespread curiosity among newcomers eager to understand what Bitcoin is and how it works.
In Taiwan alone, searches related to "Bitcoin – cryptocurrency" ranked 24th on the 90-day financial search trend list, reflecting growing public interest. But diving into crypto without foundational knowledge can lead to costly mistakes. As the saying goes: “Rely on mountains, and they may crumble; rely on people, and they may leave. Rely on yourself — that’s the best strategy.” That’s why building a solid understanding of Bitcoin, the pioneer of all cryptocurrencies, is essential.
Let’s begin this journey by exploring Bitcoin’s origins, core principles, and the revolutionary technology behind it — all explained in simple, beginner-friendly terms.
What Is Bitcoin?
You’ve probably heard that Bitcoin is the most valuable cryptocurrency by market cap. You might have also seen headlines claiming it delivered over 43 million times returns since its inception. Some even call it “digital gold” due to its scarcity and store-of-value properties.
But to truly grasp what Bitcoin is, we need to go deeper — back to the moment it was born.
Imagine Bitcoin writing its autobiography. It might start like this:
“I was born during one of the darkest hours in global finance. Lehman Brothers collapsed. Governments printed trillions. Trust in banks evaporated. On Halloween night in 2008, an unknown creator named Satoshi Nakamoto introduced me to the world through a document titled ‘Bitcoin: A Peer-to-Peer Electronic Cash System.’ My mission? To become a decentralized ledger — a new kind of money that doesn’t rely on governments or banks.”
That whitepaper laid the foundation for a financial revolution. Unlike traditional currencies controlled by central banks, Bitcoin operates on a decentralized network where no single entity has control. Every transaction is recorded on a public ledger called the blockchain, maintained not by a bank, but by a distributed network of participants.
👉 Discover how decentralized networks are reshaping finance — start your learning journey here.
The Birth of Blockchain Technology
Traditional financial systems depend on intermediaries. When you send money, your bank verifies the transaction, updates records, and ensures everything balances out. This centralized model works — until it doesn’t. The 2008 financial crisis exposed its vulnerabilities.
Bitcoin was designed as an alternative: a trustless, transparent, and immutable system.
Here’s how it works:
- All Bitcoin transactions are grouped into blocks.
- Each block is linked to the previous one using cryptographic hashes, forming a chain of blocks — hence, blockchain.
- Once data is written, it cannot be altered without changing every subsequent block, which requires near-impossible computational power.
This structure ensures security and transparency. Anyone can view the entire transaction history, yet no one can tamper with it.
Interestingly, while the term “blockchain” is now ubiquitous, it doesn’t appear in the original Bitcoin whitepaper. It was coined later by the community — a testament to how quickly the ecosystem evolved.
Consensus Mechanisms: How Do Miners Agree?
If there’s no central authority, how does the network agree on which transactions are valid?
Enter consensus mechanisms — the rules that keep the system running smoothly without conflict.
Bitcoin runs on a public blockchain, meaning it’s open for anyone to join and participate. In such a system, maintaining order requires cooperation. That’s where miners come in.
Meet the Miners
Miners are individuals or groups who use powerful computers to validate transactions and add them to the blockchain. In return, they’re rewarded with newly minted Bitcoin and transaction fees.
But who gets to validate the next block?
The answer lies in Proof of Work (PoW) — Bitcoin’s consensus mechanism.
Think of it as a high-stakes math competition:
- Thousands of miners race to solve a complex cryptographic puzzle.
- The first to find the correct solution gets to "pack" the next block of transactions.
- Once verified by others, the block is added to the chain, and the winner receives their reward.
This process is known as mining — not because it digs up earth, but because it uncovers new Bitcoin, much like gold mining.
And just like gold, Bitcoin has a finite supply.
Why “Digital Gold”? Scarcity by Design
One of Bitcoin’s most revolutionary features is its hard-coded supply cap: 21 million coins.
No more. No less.
This artificial scarcity mirrors physical gold — hence the nickname “digital gold.” Unlike fiat currencies that central banks can print endlessly (leading to inflation), Bitcoin’s supply decreases over time through events called halvings.
Every 210,000 blocks (approximately every four years), the mining reward is cut in half. This slows down new supply and increases scarcity. The 2024 halving reduced rewards from 6.25 to 3.125 BTC per block — a moment eagerly watched by investors worldwide.
Frequently Asked Questions (FAQ)
Q: Who created Bitcoin?
A: Bitcoin was introduced in 2008 by an anonymous person or group using the pseudonym Satoshi Nakamoto. Despite numerous investigations, their true identity remains unknown — one of the greatest mysteries in tech history.
Q: Is Bitcoin legal?
A: The legal status varies by country. Many nations, including the U.S., Japan, and Germany, recognize Bitcoin as a legitimate asset. Others restrict or ban its use. Always check local regulations before investing.
Q: Can Bitcoin be hacked?
A: The Bitcoin blockchain itself has never been successfully hacked due to its robust cryptographic design. However, individual wallets or exchanges can be vulnerable if proper security measures aren’t followed.
Q: How is Bitcoin different from other cryptocurrencies?
A: Bitcoin was the first cryptocurrency and remains the most widely adopted. While others offer additional features like smart contracts (e.g., Ethereum), Bitcoin focuses primarily on being a secure, decentralized store of value.
Q: What happens when all 21 million Bitcoins are mined?
A: Mining will continue, but rewards will shift entirely to transaction fees. This transition is expected to incentivize miners to maintain network security even after block rewards reach zero.
Q: Can I buy less than one Bitcoin?
A: Yes! Bitcoin is divisible up to eight decimal places. The smallest unit, 0.00000001 BTC, is called a satoshi, named after its creator.
Final Thoughts
Bitcoin isn’t just another digital currency — it’s a radical rethinking of money itself. Born out of financial chaos, built on cryptography and decentralization, and secured by global consensus, it represents a shift toward trustless systems powered by code rather than institutions.
Understanding its foundation — from Satoshi’s vision to blockchain mechanics and mining incentives — empowers you to navigate the crypto space with confidence.
This is only Step 1 of your journey. In the next part, we’ll explore how Bitcoin has evolved, including recent trends like Bitcoin ordinals and inscriptions, proving that even after 15 years, innovation around Bitcoin is far from over.
👉 Stay ahead of the curve — dive deeper into Bitcoin’s evolution and future potential today.