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Cryptobeginner

What is Bitcoin?

The first cryptocurrency, how it works, and why it matters.

TL;DR

Bitcoin is a decentralised digital currency that operates without a central bank. New coins are created via mining; all transactions are recorded on a public ledger called the blockchain.

The core idea

Bitcoin was proposed in 2008 by Satoshi Nakamoto in a 9-page whitepaper. It solves the 'double-spend' problem digitally — how do you prove a digital token hasn't been copied? — without trusting a central authority.

Key properties

These properties make Bitcoin behave differently from any traditional asset.

  • Fixed supply: 21 million BTC will ever exist, hard-coded in the protocol
  • Decentralised: tens of thousands of nodes worldwide enforce the rules
  • Permissionless: anyone can send, receive, or run a node — no signup
  • Pseudonymous: addresses are public but not linked to identity by default
  • Programmatic issuance: new BTC is created via mining, with rewards halving every 4 years

Why it matters for traders

Bitcoin's price tends to lead the broader crypto market — when BTC rallies, alts often follow with a delay; when BTC dumps, alts usually drop harder. The 4-year halving cycle (next: 2028) has historically preceded major bull runs.

Worked example

BTC supply schedule

How Bitcoin's monetary policy works mechanically.

  1. 12009 — Genesis block50 BTC per block
  2. 22012 — First halving25 BTC per block
  3. 32016 — Second halving12.5 BTC per block
  4. 42020 — Third halving6.25 BTC per block
  5. 52024 — Fourth halving3.125 BTC per block
  6. 6~2140Last fraction of a Bitcoin mined
Takeaway

BTC's issuance rate halves every ~4 years. Once issuance falls below natural loss rate, scarcity pressure intensifies.

Common mistakes

What to avoid

  • !Confusing Bitcoin (BTC) with Bitcoin Cash (BCH), Bitcoin SV (BSV), or 'Bitcoin' on the wrong network
  • !Storing large amounts on exchanges instead of using self-custody hardware wallets
  • !Losing seed phrases or sharing them — there's no password reset
  • !Believing 'crypto' means anything besides BTC has the same scarcity properties — most don't
Self-check

Test yourself

Q1What's the maximum number of Bitcoin that will ever exist?+

21 million.

Q2What happens to the block reward every roughly 4 years?+

It halves — this is called 'the halving'.

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