What Is Bitcoin? Definition, Basics & How to Use

Nerdy takeaways
Bitcoin is a form of digital currency that uses blockchain technology to support transactions between users on a decentralized network.

New Bitcoins are created as part of the mining process, as a reward to people whose computer systems help validate transactions.

Buying Bitcoin exposes you to a volatile asset class. There are many pros and cons to consider about whether it's right for your portfolio.

If you decide to buy Bitcoin, you’ll need a place to store it — like a hot or cold wallet.

Bitcoin (BTC) definition
Bitcoin is a form of digital currency that aims to eliminate the need for central authorities such as banks or governments. Instead, Bitcoin uses blockchain technology to support peer-to-peer transactions between users on a decentralized network.

Transactions are authenticated through Bitcoin’s proof-of-work consensus mechanism, which rewards cryptocurrency miners for validating transactions.

Launched in 2009 by a mysterious developer known as Satoshi Nakamoto, Bitcoin (BTC) was the first, and remains the most valuable, entrant in the emerging class of assets known as cryptocurrencies.
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Bitcoin's price topped $100,000 for the first time on Dec. 4, 2024, a long-awaited milestone.How does Bitcoin work?
Each Bitcoin is a digital asset that can be stored at a cryptocurrency exchange or in a digital wallet. Each individual coin represents the value of Bitcoin’s current price, but you can also own partial shares of each coin. The smallest denomination of each Bitcoin is called a Satoshi, sharing its name with Bitcoin’s creator. Each Satoshi is equivalent to a hundred millionth of one Bitcoin, so owning fractional shares of Bitcoin is quite common.

Blockchain: Bitcoin is powered by open-source code known as blockchain, which creates a shared public history of transactions organized into "blocks" that are "chained" together to prevent tampering. This technology creates a permanent record of each transaction, and it provides a way for every Bitcoin user to operate with the same understanding of who owns what.

Private and public keys: A Bitcoin wallet contains a public key and a private key, which work together to allow the owner to initiate and digitally sign transactions. This unlocks the central function of Bitcoin — securely transferring ownership from one user to another.

Bitcoin mining: Users on the Bitcoin network verify transactions through a process known as mining, which is designed to confirm that new transactions are consistent with other transactions that have been completed in the past. This ensures that you can’t spend a Bitcoin you don’t have, or that you have previously spent.

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jua****@protonmail.com
Great post! I completely agree with your points
2025-02-08 06:32ReplyLike
jac****@fastmail.fm
Great information! Thank you so much for sharing this.
2025-02-08 06:31ReplyLike

What Is Bitcoin? Definition, Basics & How to Use

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