What is Bitcoin?
Bitcoin (BTC) is the first decentralized cryptocurrency, launched in 2009. It exists in a distributed ledger—a blockchain—copies of which are stored on thousands of independent nodes worldwide. The network has no central issuer or administrator: coin issuance and transaction confirmation are performed according to a predetermined algorithm.
How It Works
Transactions are grouped into blocks, which miners confirm using the Proof-of-Work mechanism—computational work that secures the network. Issuance is capped at 21 million coins, and miner rewards are halved approximately every four years (halving), making the asset deflationary by design.
Pros and Cons for Investors
- Pros: limited issuance, high liquidity, the longest track record and greatest recognition among crypto assets.
- Cons: high price volatility, no return guarantees, regulatory risks, and the need for secure key storage.