What Is Bitcoin (BTC)? The Original Cryptocurrency Explained

Bitcoin is the world’s first decentralized digital currency and the foundation of the broader crypto economy. Launched in 2009 by the pseudonymous Satoshi Nakamoto, Bitcoin introduced a way to transfer value online without banks or payment processors, using cryptography, peer-to-peer networking, and economic incentives. If you’re new to Bitcoin or looking for a 2025-ready refresher, this guide walks through how it works, why it matters, recent developments, and how to hold BTC securely.

A brief history: From whitepaper to a global network

In October 2008, Satoshi published the Bitcoin whitepaper, proposing “a peer-to-peer electronic cash system.” On January 3, 2009, the network started with the first block (the genesis block). Over time, open-source contributors and node operators nurtured Bitcoin into a resilient, neutral monetary network that anyone can join.

Key milestones:

• Protocol maturity through upgrades like Taproot, improving privacy and scripting flexibility.
• Growing global recognition, institutional participation, and financial market instruments tied to BTC.
• A predictable supply schedule featuring “halvings,” where miner rewards decrease roughly every four years, reinforcing digital scarcity.

How Bitcoin works (without the jargon)

• Decentralized ledger: Thousands of nodes share and verify a public ledger called the blockchain. Understanding the transaction model (UTXO) and validation rules is easier with the Bitcoin Developer Guide.
• Proof-of-Work mining: Specialized computers compete to add blocks to the chain, securing the network and ordering transactions. Mining difficulty automatically adjusts to maintain ~10-minute block times; see the difficulty target.
• Hard-capped supply: Only 21 million BTC will ever exist. The issuance rate halves about every four years; learn more about the Bitcoin halving.
• Fees and block space: Transactions must fit into blocks with limited space. When demand spikes, fees can rise. Developers track and optimize the fee market; see Optech’s overview of fee estimation.

For a plain-English tour, check Bitcoin.org’s primer on how it works.

Why Bitcoin matters

• Digital scarcity: A fixed, transparent issuance schedule makes BTC akin to a programmable, verifiable scarce asset.
• Neutral settlement: Anyone can send or receive value globally without permission, and without a single point of failure.
• Composability: Bitcoin is an open protocol. Developers can build layers and applications on top, like the Lightning Network for faster, cheaper payments.

What’s new in 2024–2025: Adoption and market structure

• Spot Bitcoin ETFs in the U.S.: In January 2024, the U.S. SEC approved the first spot Bitcoin exchange-traded products, broadening investor access in traditional brokerage accounts. See the SEC Chair’s statement on spot Bitcoin ETPs.
• Asia growth: Hong Kong authorized its first spot virtual asset ETFs in April 2024, signaling growing regional demand. Read the SFC’s announcement.
• New on-chain activity: Bitcoin saw a surge of experimentation, including Ordinals inscriptions (docs) and the Runes token protocol, which went live at the 2024 halving (coverage; protocol notes by Casey Rodarmor: Runes).
• Price discovery: Broader access and macro attention pushed Bitcoin to fresh all-time highs in 2024, with continued institutional interest into 2025. For context, see CNN’s report on BTC’s 2024 breakout to new highs (coverage).

Fees, scaling, and the Lightning Network

Bitcoin’s base layer prioritizes security and decentralization over throughput. That means limited block space and occasional fee spikes during peak demand. Layered scaling solutions help:

• Lightning Network: A second-layer protocol for fast, low-fee payments using payment channels, settled periodically on-chain. Learn more at the Lightning Network site.
• Efficient usage: Features like SegWit and Taproot enable more compact and flexible transactions. Developers keep improving wallet tooling and best practices.

Energy use and sustainability

Bitcoin mining consumes electricity to secure the network. The best neutral data source is the Cambridge Bitcoin Electricity Consumption Index, which tracks estimates and evolving dynamics across geographies and energy mixes. Explore the CBECI.

Addressing common concerns

• Volatility: BTC remains a risk asset with cycles tied to liquidity, adoption, and macro forces. Position sizing and long-term horizons matter.
• Regulation: Frameworks differ widely by jurisdiction and continue to evolve. For U.S. tax considerations, see the IRS hub for digital assets.
• Illicit use: While headlines can overstate it, on-chain analysis shows a small share of crypto activity is illicit and increasingly traceable. See Chainalysis’s 2024 Crypto Crime Report.

Key concepts for beginners

• Self-custody: “Not your keys, not your coins.” Holding your own private keys removes third-party risk. Wallets use human-readable seed phrases defined by BIP39 and hierarchical key derivation (BIP32).
• PSBT and multisig: Partially Signed Bitcoin Transactions (BIP174) enable flexible and secure signing flows. Multisig can require multiple keys to move funds for added security.

How to buy and store BTC in 2025

• Access: Depending on your jurisdiction, you can buy BTC via crypto exchanges, brokerages supporting spot Bitcoin ETFs, or peer-to-peer marketplaces.
• Withdraw vs. exposure: ETFs may provide price exposure but don’t let you withdraw BTC to self-custody. If your goal is permissionless ownership and the ability to spend on-chain, consider acquiring native BTC and withdrawing to your own wallet.
• Security basics:
  • Generate your seed phrase offline, verify backups, and consider a passphrase if you understand the trade-offs.
  • Use address verification and test small sends when moving funds.
  • Consider multisig for larger holdings and segment funds across hot and cold storage.

Why a hardware wallet is still the gold standard for self-custody

A dedicated hardware wallet keeps your private keys isolated from internet-connected devices, reducing the risk of malware and phishing. For Bitcoin users who care about PSBT workflows, Taproot support, and compatibility with modern multisig setups, a hardware wallet provides a clean, repeatable security model that is easier to audit and maintain over time.

If you’re exploring self-custody, OneKey offers:

• Open-source firmware and wallet apps for transparent, verifiable security.
• Bitcoin-first features like SegWit and Taproot support, PSBT signing, and compatibility with common multisig and descriptor standards.
• A streamlined user experience that helps you verify addresses on-device and confirm every transaction before you sign.

This combination aligns with Bitcoin’s ethos: self-sovereign control, careful verification, and defense-in-depth.

The bottom line

Bitcoin is sound, neutral infrastructure for moving value on the internet, with a fixed supply and a growing set of tools for scaling and security. The 2024–2025 cycle expanded access via spot ETFs and catalyzed new on-chain experimentation, but the core remains the same: if you hold your own keys on secure hardware, you own your BTC outright and can transact on a global, permissionless network.

As always, do your own research. Start small, practice good operational security, and choose tools that make safe habits easy—especially when you’re planning to hold Bitcoin for the long term.