Bitcoin is a digital currency that allows you to send and receive value over the internet — without needing a bank, payment provider, or government in the middle. It was introduced in 2009 and is considered the first truly decentralized form of money.

Key Characteristics of Bitcoin:

• Decentralized: No single company or country controls Bitcoin. It is maintained by a global network of users and computers.

• Limited Supply: Only 21 million Bitcoins will ever exist. This scarcity is part of its value.

• Borderless: You can send Bitcoin to anyone, anywhere in the world, 24/7.

• Open and Transparent: Every transaction is recorded publicly on a blockchain and can be verified by anyone.

Bitcoin is often called “digital gold” because, like gold, it is scarce and doesn’t rely on trust in an institution. It’s also used as a store of value, a hedge against inflation, and, for some, as a financial escape from centralized systems.

The blockchain is the core technology behind Bitcoin. It works as a public, digital ledger that stores all Bitcoin transactions in chronological order.

Here’s how it works:

1. Transactions are grouped into blocks
   When you send Bitcoin, your transaction is bundled with others into a “block.”

2. Miners validate the block
   Miners are special participants in the network who solve complex mathematical puzzles to confirm the block. This process is called “proof of work.”

3. Blocks are linked together
   Once confirmed, the new block is added to the chain of previous blocks. This chain is permanent and nearly impossible to alter — hence the term blockchain.

4. Everyone can verify the data
   All this happens transparently. Anyone with internet access can download the Bitcoin blockchain and verify any transaction from day one.

This system makes Bitcoin secure, censorship-resistant, and transparent. It also removes the need for a trusted third party.

Bitcoin was created by a person or group using the pseudonym Satoshi Nakamoto. In 2008, Nakamoto published the Bitcoin whitepaper titled “Bitcoin: A Peer-to-Peer Electronic Cash System”. The goal was to build a new kind of money that could operate without banks or governments.

What we know:

• The first version of the Bitcoin software was released in January 2009.

• Satoshi communicated with early developers and users via email and online forums.

• In 2010, they handed over the project and disappeared from public view.

To this day, no one knows who Satoshi Nakamoto really is. The identity remains one of the biggest mysteries in tech history.

Why does it matter?

The anonymous nature of Bitcoin’s creator adds to its decentralized character. There is no founder to influence the system, promote a personal agenda, or change the rules. It’s truly open and community-driven.

Bitcoin has a hard-coded supply limit: only 21 million Bitcoins will ever exist. This number is written into the software and cannot be changed without global consensus.

How new Bitcoins are created:

Bitcoins are introduced through a process called mining. Miners validate transactions and are rewarded with new Bitcoins. But that reward decreases over time in an event called the halving, which happens roughly every four years.

• In 2009, the reward was 50 BTC per block

• In 2024, the reward dropped to 3.125 BTC per block

• The last Bitcoin will be mined around 2140

Why the supply limit matters:

The fixed supply makes Bitcoin resistant to inflation. Unlike fiat currencies, where central banks can print more money, Bitcoin’s supply is predictable. This scarcity is one reason many people see it as a store of value.

A Bitcoin wallet is a tool that allows you to store, receive, and send Bitcoin. It doesn't hold physical coins — instead, it stores the private keys that give you access to your Bitcoin on the blockchain.

Types of Wallets:

• Software Wallets: Apps or programs for desktop or mobile.

• Hardware Wallets: Physical devices that store your keys offline.

• Paper Wallets: Physical printouts of your keys (less common today).

Your wallet is like your bank account, but you’re the bank. That means you are responsible for keeping it safe.

Wallets come in two main categories: hot and cold. The difference is whether they’re connected to the internet.

Hot Wallets:

• Always connected (e.g. apps, browser extensions)

• Easy to access and use

• Good for small amounts or frequent transactions

• More vulnerable to hacks

Cold Wallets:

• Offline storage (e.g. hardware wallets, air-gapped devices)

• Very secure

• Ideal for long-term storage or large amounts

• Less convenient for everyday use

A good strategy: use both. Keep a little in a hot wallet, and the rest in cold storage.

With Bitcoin, you are your own bank — and that means you’re in charge of security. There’s no “forgot password” if you lose access.

Here are key steps to protect your coins:

1. Use a reliable wallet
   Prefer open-source wallets with a strong reputation.

2. Store large amounts offline
   Use hardware wallets or other cold storage methods.

3. Backup your seed phrase
   Write it down and store it in a safe place. Never save it online.

4. Watch out for phishing
   Only download wallets from official sources.

5. Enable extra protections
   Use PINs, biometrics, and 2FA where possible.

Security is not one action — it’s a mindset.

A seed phrase (also called a recovery phrase) is a series of 12 to 24 words that gives full access to your wallet. Anyone who has it can take your Bitcoin — no password needed.

Why it matters:

• It’s the backup of your entire wallet

• You can restore your wallet on any compatible app or device

• If lost or stolen, your funds are at risk

Important Tips:

• Write it down (don’t store it digitally)

• Keep it in a safe place, away from fire or water

• Never share it with anyone

If you control the seed, you control the coins. Lose the seed — lose everything.

Buy through a cryptocurrency exchange

This is the most common and beginner-friendly method. Create an account with a trusted platform like Kraken, Coinbase, or Binance. After verifying your identity, you can deposit funds via bank transfer, credit card, or other methods. Then simply choose how much Bitcoin you want to buy.

Use a Bitcoin ATM

In many cities, Bitcoin ATMs allow you to buy Bitcoin with cash or card. You scan your wallet's QR code, insert money, and the coins are sent directly to your address. Fees may be higher than on exchanges.

Try peer-to-peer platforms

Platforms like Bisq, Paxful, or LocalBitcoins let you buy Bitcoin directly from other users. Payment methods vary (e.g., PayPal, bank transfer, gift cards). Always check the seller’s rating and reputation.

Keep your Bitcoin safe

After purchase, it's strongly recommended to transfer your Bitcoin to a private wallet instead of leaving it on the exchange. This gives you full control over your funds and reduces the risk of hacks.

Online stores and services

More and more online shops accept Bitcoin as payment. Tech products, travel bookings, web hosting, and even gift cards can be paid in BTC. Some popular platforms that accept Bitcoin include Newegg, Namecheap, and Travala.

Physical stores and restaurants

Depending on your location, you may find cafés, bars, and local shops that accept Bitcoin directly. Look for signs at the entrance or ask the staff. Apps like Coinmap or BTC Map can help you find nearby businesses that accept Bitcoin.

Donations and subscriptions

Many open-source projects, charities, and independent creators accept Bitcoin donations. Websites like Wikipedia and some Substack newsletters support Bitcoin payments.

Convert Bitcoin to gift cards

If a store doesn’t accept Bitcoin, you can still use your BTC to buy a gift card for that shop via services like Bitrefill or Coincards. This way, you can spend Bitcoin almost anywhere.

Why do fees exist?

Bitcoin transaction fees are small amounts of Bitcoin you pay to send a transaction. They go to the miners who confirm transactions and add them to the blockchain. Without fees, there would be no incentive to process your transaction.

How are fees calculated?

Fees are based on data size, not the amount sent. A simple transaction might cost less, while one with many inputs or outputs could cost more. You can usually set the fee manually in your wallet.

Why do fees change?

Fees go up when the network is busy. If many people are sending Bitcoin at the same time, you’ll need to pay more to have your transaction processed quickly. When demand is low, fees drop.

Can I send Bitcoin for free?

Technically yes — some wallets let you set very low or even zero fees. But be aware: your transaction might never get confirmed. It’s safer to include a reasonable fee, especially if speed matters.

Bitcoin needs to be confirmed

When you send Bitcoin, the transaction isn’t instantly final. It must first be picked up by miners and added to a new block on the blockchain. This process is called confirmation — and it can take time.

Fee too low?

If your fee is too low, miners may ignore your transaction in favor of others with higher fees. Your transaction will remain unconfirmed in the mempool (the waiting area) until it is eventually processed — or dropped.

Network congestion

When many people are using the Bitcoin network at the same time, competition for space in the next block increases. That can slow things down, especially if you didn’t set a high fee.

How to avoid delays

Use a wallet that suggests a reasonable fee based on network activity. Some wallets also offer “replace-by-fee” or “accelerate” features to resend your transaction with a higher fee.

The basics

Bitcoin mining is the process by which new bitcoins are created and transactions are verified and added to the blockchain. It’s done by powerful computers solving complex mathematical problems.

Why is mining important?

Mining secures the network, ensures that no one spends the same bitcoin twice (double-spending), and keeps the system decentralized. Miners are rewarded with new bitcoins and transaction fees for their work.

How it works

Miners group transactions into blocks. To add a block, they must find a valid hash – a number that meets certain conditions. This process is called proof of work and requires massive computing power.

What does hashrate mean?

Definition

Hashrate is the measure of how much computing power is used in the Bitcoin network. It reflects how many calculations per second all miners combined are performing to find the next block.

Why it matters

A high hashrate means the network is more secure and resistant to attacks. It also indicates strong participation from miners around the world. The higher the hashrate, the harder it is for bad actors to manipulate the blockchain.

How it’s measured

Hashrate is measured in hashes per second (H/s), with common units like terahashes (TH/s) or exahashes (EH/s). The hashrate can vary depending on network activity and miner profitability.

What is a node?

A Bitcoin node is any computer that runs the Bitcoin software and connects to the network. It helps store, verify, and distribute the blockchain — the public ledger of all Bitcoin transactions.

Full node vs. lightweight node

Most secure are full nodes: they download the entire blockchain and independently verify every transaction. Lightweight (SPV) nodes trust other nodes for some information and are more common on mobile devices.

Why nodes are essential

Nodes enforce the rules of the network. They reject invalid blocks and transactions, help keep the system decentralized, and allow users to interact with Bitcoin without relying on a third party.

Can I run my own node?

Yes. Anyone can run a Bitcoin node with standard hardware and internet access. Running a node gives you privacy, independence, and a better understanding of how Bitcoin works.

The basics

The Lightning Network is a second-layer protocol built on top of Bitcoin. It enables fast and cheap transactions by creating payment channels between users, avoiding the need to record every transaction on the main blockchain.

How it works

Two users open a payment channel by creating a Bitcoin transaction on the main chain. They can then send unlimited transactions between each other off-chain. When they’re done, the final balance is written to the blockchain.

Benefits of Lightning

Lightning transactions are nearly instant and cost just a fraction of a cent. The system reduces congestion on the Bitcoin network and makes microtransactions possible — something not feasible on-chain due to fees and speed limits.

Is Lightning secure?

Yes. Lightning relies on smart contracts and cryptographic rules that are enforced by the Bitcoin blockchain. It’s ideal for day-to-day payments, while still backed by Bitcoin’s strong security model.

In most countries: Yes

Bitcoin is legal to own, buy, and use in most countries around the world. It is treated as a private digital asset, not as a national currency. You can hold it, send it, and receive it freely — just like gold or art.

What’s not legal?

Some activities involving Bitcoin can be illegal, depending on how you use it. For example, using Bitcoin for money laundering, tax evasion, or to finance crime is against the law — just like with cash.

Banking laws and regulations

In some countries, using Bitcoin may be limited by financial regulations. Banks may refuse to work with crypto platforms, and some services may require ID verification due to anti-money laundering (AML) laws.

Always check your local rules

Laws differ by country. While Bitcoin is legal in most of Europe, the U.S., and Japan, some countries have bans or restrictions. It's a good idea to stay informed about your local legal environment.

Owning Bitcoin is not taxable

Just holding Bitcoin is usually not a taxable event. You don’t need to report anything if you simply bought Bitcoin and are still holding it without selling or using it.

When do taxes apply?

You may need to declare Bitcoin if you:

• Sell it for fiat money (like euros or dollars)
• Exchange it for another cryptocurrency
• Use it to pay for goods or services

Keep records

It’s important to document when you bought your Bitcoin, how much you paid, and when/how you used or sold it. This helps calculate gains or losses correctly for tax purposes.

Rules vary by country

Tax laws are different everywhere. In some places, small gains or long-term holdings may be tax-free. In others, any crypto sale must be declared. Check with a tax advisor familiar with crypto.

Tax-free after one year

In Germany, if you hold Bitcoin for at least 12 months before selling or using it, any profit is completely tax-free. This makes long-term holding very attractive for investors.

Short-term sales are taxable

If you sell Bitcoin within less than 12 months after buying it, the profit is taxable as private income. You must declare it in your tax return, and it may increase your personal tax rate.

Small profits are exempt

If your total profit from private sales (including Bitcoin and other goods) is under €600 per year, you don’t have to pay tax on it — even if you sold within a year.

Different rules in other countries

Many countries, like the U.S. or France, do not offer a 1-year exemption. There, any Bitcoin sale is generally taxable, no matter how long you held it. Germany’s rule is quite special in this regard.

A small market with big players

Compared to traditional assets, Bitcoin still has a relatively small market size. This means that even moderate trades can have a strong impact on the price — especially when large investors, called “whales,” are involved.

Speculation drives the market

Much of Bitcoin’s trading is driven by speculation. News, rumors, and emotions can cause sudden price swings as traders react quickly. This short-term thinking adds to the volatility.

Lack of regulation

Unlike traditional financial markets, Bitcoin is not centrally regulated. That means no circuit breakers, no coordinated price stability tools, and fewer protections — which leads to more extreme ups and downs.

Media hype and panic sell-offs

Media coverage can quickly influence sentiment. Positive headlines drive prices up, while negative news or government announcements can trigger panic sales — especially among newer investors.

Supply and demand

Like any market, the price of Bitcoin is mainly driven by supply and demand. Since Bitcoin has a fixed supply of 21 million coins, rising demand — especially during bull runs — pushes the price up.

Market sentiment and news

Public opinion, media coverage, and social media hype can cause quick price changes. Positive news, such as institutional adoption, tends to boost the price, while negative events can trigger sell-offs.

Macro events and regulations

Global economic trends, inflation fears, or interest rate changes can affect crypto prices. Regulatory announcements — such as bans or approvals — often have an immediate impact on the market.

Investor behavior

Retail investors, institutional traders, and so-called “whales” (large holders) can all influence the market differently. Panic selling or sudden buying by major players can lead to sharp price movements.

What is a Bitcoin ETF?

A Bitcoin ETF (Exchange-Traded Fund) is a financial product that allows people to invest in Bitcoin without directly buying or storing it. The ETF is traded on traditional stock exchanges, just like regular stocks or index funds.

Types of Bitcoin ETFs

There are two main types:

• Spot ETFs: These are backed by actual Bitcoin held in custody.
• Futures ETFs: These track Bitcoin’s price using futures contracts rather than holding Bitcoin directly.

Why ETFs matter

ETFs make Bitcoin accessible to traditional investors who prefer regulated financial products. They offer exposure to Bitcoin with the convenience of a brokerage account, without needing a crypto wallet.

What to keep in mind

Bitcoin ETFs may have management fees and don’t offer the same level of control or privacy as owning real Bitcoin. However, they are a popular option for institutional and retirement investors.

Purpose and vision

Bitcoin was created to be a decentralized form of money — digital cash that can’t be controlled by governments or banks. Ethereum, on the other hand, was designed as a platform for smart contracts and decentralized applications (dApps).

Technology and functionality

Bitcoin is more limited on purpose — its simplicity helps keep it secure and reliable. Ethereum is more flexible and programmable, enabling features like NFTs, DeFi protocols, and token creation.

Monetary policy

Bitcoin has a fixed supply of 21 million coins, making it deflationary. Ethereum doesn’t have a hard cap, but after recent updates, it introduced mechanisms to reduce supply over time through burning.

Use cases and adoption

Bitcoin is mostly seen as a store of value (digital gold), while Ethereum powers an entire ecosystem of applications. Both have strong communities and wide adoption, but serve different roles in the crypto space.

Bitcoin came first

Bitcoin was the original cryptocurrency, launched in 2009. It introduced the concept of decentralized digital money and paved the way for all other coins. That’s why it stands apart from the rest.

Definition of altcoins

“Altcoin” means “alternative coin” — anything that isn’t Bitcoin. While technically all other coins fit this label, the term often implies smaller, newer, or less established projects.

Unique position in the market

Bitcoin has the strongest brand, the largest market cap, and the most decentralized structure. It’s often seen as digital gold — while altcoins are considered more experimental or utility-driven.

Community and culture

The Bitcoin community emphasizes security, stability, and long-term value. Altcoin communities often focus on innovation, speed, or specific use cases. This cultural divide further separates Bitcoin from the rest.

Definition and purpose

A stablecoin is a cryptocurrency that’s designed to maintain a stable value, usually pegged to a fiat currency like the US dollar or euro. It combines blockchain technology with price stability.

How stablecoins are backed

There are different types of stablecoins:

• Fiat-backed: Each token is backed 1:1 by money held in reserve (e.g. USDC, USDT).
• Crypto-backed: Backed by other cryptocurrencies, with overcollateralization (e.g. DAI).
• Algorithmic: Use smart contracts to balance supply and demand, but are riskier (e.g. UST – now collapsed).

Why stablecoins matter

Stablecoins make it easy to transfer value without the volatility of Bitcoin or Ethereum. They are used for trading, payments, and as on/off ramps between crypto and fiat systems.

Risks to consider

Not all stablecoins are equally safe. Transparency, reserves, and regulation vary. It’s important to research how a stablecoin is structured before using or holding it.

Not entirely. Bitcoin is pseudonymous, not anonymous. All transactions are recorded on a public blockchain that anyone can inspect. While wallet addresses don’t include names, they can often be linked to identities through exchanges, merchant services, or blockchain analysis.

If you buy or sell Bitcoin through regulated platforms, your identity is usually tied to your wallet. Advanced users sometimes use tools like coin mixers, privacy wallets (like Wasabi or Samourai), or privacy-oriented networks (e.g., the Lightning Network) to enhance anonymity – but Bitcoin itself is not private by design.