Bitcoin (BTC) definition: The original and most well-known cryptocurrency, invented by an unknown person or group, often referred to as digital gold.

Bitcoin (BTC) is the pioneering and most widely recognized cryptocurrency in the world. It introduced the concept of decentralized digital currency and blockchain technology, marking a revolutionary advancement in the financial landscape. Created by an individual or group using the pseudonym Satoshi Nakamoto, Bitcoin's emergence in 2009 marked the birth of the cryptocurrency era.

Bitcoin is a decentralized digital currency that operates on a decentralized ledger known as the blockchain. It enables peer-to-peer transactions without the need for intermediaries like banks or payment processors. Bitcoin's decentralized nature and limited supply set it apart from traditional fiat currencies.

Bitcoin operates on a decentralized network of computers (nodes), making it resistant to censorship and control by any single entity. Transactions are verified by participants on the network, and the blockchain serves as a transparent and immutable record of all transactions. Transactions are validated and added to the blockchain through a process called mining. Miners use computational power to solve complex mathematical puzzles, a process known as proof of work (PoW). The first miner to solve the puzzle verifies the transaction and adds it to the blockchain, earning newly minted Bitcoin as a reward.

Bitcoin's supply is capped at 21 million coins, a scarcity factor that differentiates it from traditional fiat currencies. This scarcity, coupled with increasing demand, has contributed to its value appreciation over time. Bitcoin is often compared to gold due to its potential as a store of value. Just as gold has been used historically as a hedge against economic uncertainty, some investors view Bitcoin as a digital alternative with similar properties.

Bitcoin's impact on the financial world has been profound. It has spurred the development of thousands of other cryptocurrencies and has influenced discussions about the future of money, digital assets, and blockchain technology. Bitcoin's success has inspired innovation in various fields. It has prompted the creation of new financial instruments, investment vehicles, and decentralized applications. Additionally, discussions about scalability, energy consumption, and governance have spurred advancements in the cryptocurrency ecosystem.

The regulatory landscape for Bitcoin varies by jurisdiction. Some countries have embraced Bitcoin as a legitimate asset or means of payment, while others have imposed restrictions or bans due to concerns about its potential misuse.

Bitcoin's introduction marked a paradigm shift in the way we perceive and transact with currency. Its decentralized nature, limited supply, and potential as a store of value have positioned it as a groundbreaking invention with far-reaching implications. As the cryptocurrency landscape continues to evolve, Bitcoin's legacy remains a testament to the transformative power of blockchain technology and the decentralized economy.

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Michelle Legge
By Michelle LeggeHead of Crypto Tax Education
Updated Nov 9, 2023
This article has been fact checked and reviewed as per our editorial policy.