Bitcoin

What is Bitcoin in simple words

Bitcoin (BTC) is digital money that does not exist in the form of paper notes or coins. It is not controlled by banks or states, but is stored in the computers of network participants around the world. The main task of Bitcoin is to allow people to safely, quickly and directly transfer value to each other without intermediaries.

The meaning of Bitcoin is the creation of an independent payment system where transfers are made directly between users, and all records are stored in a common, tamper-resistant database — the blockchain. This makes Bitcoin resistant to inflation and state control.

Bitcoin was created in 2009 by an unknown developer (or group of developers) under the pseudonym Satoshi Nakamoto. The first real transaction using Bitcoin occurred in 2010, when Laszlo Hanyecz paid 10,000 BTC for two pizzas. Today that amount would be worth hundreds of millions of dollars, which clearly demonstrates the growth in popularity of the cryptocurrency.

For those who want to learn how these principles work in practice and why blockchain technology is considered revolutionary, we recommend studying our materials on cryptocurrency and electronic signature, which also use cryptographic protection methods.

How Bitcoin works

Bitcoin works on the basis of blockchain technology — a distributed ledger that stores information about all transactions. This ledger is maintained by thousands of computers (nodes) around the world, which makes it decentralized and resistant to hacking.

Key features of Bitcoin

• Decentralization: Bitcoin does not belong to any single person, company or government. The network is maintained by thousands of computers around the world, so it cannot be blocked or closed.
• Limited quantity: In total, exactly 21 million bitcoins will be created worldwide. Unlike ordinary money, which states can print endlessly (which is why inflation grows), new bitcoins appear according to a strictly defined mathematical algorithm. The last bitcoin will be mined around 2140.
• Irrevocability of transactions: A sent transfer cannot be cancelled or forged. The money belongs only to the one who knows the password (secret key) to his wallet.
• Full transparency and pseudo-anonymity: The history of all transfers can be seen in the blockchain, but no one knows the names of the owners — wallet numbers are used instead.

About how cryptography is arranged in the blockchain, read the article Encryption.

Why Bitcoin is needed

1. Fast and cheap international transfers

You can transfer any amount of bitcoin to any point on the planet in a few minutes. Banks cannot freeze the account or delay the transfer. The transaction fee is usually fixed and does not depend on the amount of the transfer.

2. A means of preserving capital (digital gold)

Due to the limited supply, many people use Bitcoin to protect their savings from inflation. Like gold, Bitcoin is not subject to depreciation from printing new money. It is often called "digital gold".

3. Financial freedom

Bitcoin allows people in countries with unstable economies or strict currency control to store and transfer value without permission from the state. In countries with hyperinflation, Bitcoin becomes a lifeline for savings.

Read more about how to use cryptocurrency in Russia in the article Import substitution.

How to buy and store Bitcoin

Ways of purchase

• Cryptocurrency exchanges: The most popular way. Platforms like Binance, Bybit and OKX allow you to buy bitcoin for rubles or dollars.
• P2P platforms: Transactions between users directly. The exchange acts as a security guarantor.
• Online exchangers: Quick exchange of rubles or dollars for bitcoin. You can choose a reliable service through aggregators like BestChange.
• Offline exchangers: The ability to exchange cryptocurrency for cash at a company office.

Ways of storage

• Hot wallets: Storage on an exchange or in a mobile application. Convenient for active trading, but less secure.
• Cold wallets: Hardware devices (for example, Ledger or Trezor) for storing keys in offline mode. The safest way for large amounts.
• Paper wallets: Printed private keys. Reliable, but requires caution.

About how to secure your crypto assets, read the article CIPF.

Bitcoin mining

Mining is the process of creating new bitcoins and confirming transactions in the network. Miners use powerful computer equipment to solve complex mathematical problems. For each block found they receive a reward — new bitcoins and transaction fees.

After the 2024 halving, the reward for one block is 3.125 BTC. The halving occurs approximately every 4 years and halves the reward, which makes bitcoin a scarce asset. It is predicted that the last bitcoin will be mined around 2140.

How much electricity is needed for mining

To mine 1 bitcoin, from 200,000 to 650,000 kWh of electricity is required. The exact value depends on the energy efficiency of the equipment used and the current network difficulty. Modern ASIC miners consume about 13–15 J/TH, which makes mining an energy-intensive process.

Forecasts and the future of Bitcoin

Forecasts of the bitcoin price vary greatly. Conservative estimates suggest growth to $72,000–$82,000 by 2030. Moderately optimistic forecasts speak of $500,000–$700,000. The boldest experts, for example from Ark Invest, predict $1 million–$1.5 million per bitcoin.

Key factors influencing growth:

• Institutional adoption: Large companies and funds increasingly include bitcoin in their reserves.
• Regulation: Legalization of cryptocurrencies in different countries increases trust.
• Technological development: Second-layer solutions (Lightning Network) make bitcoin faster and cheaper for everyday payments.

About how bitcoin is connected with other digital assets, read the article Cryptocurrency.