Bitcoin started in 2009 as open‑source software created by an anonymous inventor (or group) known as Satoshi Nakamoto. It introduced the idea of a fixed supply currency that is not controlled by any government or company, with settlement that happens on a global public ledger. It matters because it provides:
Bitcoin records all transactions in a chain of blocks. Each block contains a list of transactions and a cryptographic link to the previous block, creating an immutable history that is replicated across thousands of nodes worldwide.
Miners compete to solve a cryptographic puzzle to create a new block. The winner adds the block to the chain and receives newly minted bitcoins as a reward plus any transaction fees. This process secures the network by making it costly to tamper with history and aligns incentives for honest participation. The difficulty adjusts roughly every two weeks to keep block production steady.
Bitcoin uses an Unspent Transaction Output (UTXO) model. Transactions consume existing unspent outputs and create new outputs that can be spent in the future. This design supports robust validation, privacy properties, and simple coin control for spenders.
Ownership of bitcoins is controlled by private keys. A wallet stores keys and allows you to sign transactions proving you own the funds at a given address. Losing the private key means losing access to the funds.
Nodes communicate over a peer-to-peer network, validating and relaying transactions and blocks. The longest valid chain with the most proof-of-work is the agreed consensus, making the network resilient to outages and attempts at double-spending.
All Bitcoin transactions are public on the blockchain. Addresses are pseudonymous, not anonymous, and sophisticated analysis can sometimes link addresses to identities. Careful practices (like using fresh addresses and coins from different sources) can improve privacy.
To improve scalability and enable small, fast payments, people use Layer 2 solutions such as the Lightning Network, which conducts many transactions off the main chain and settles them later on-chain. This helps with faster, cheaper microtransactions while maintaining on-chain security.
Bitcoin supports a simple scripting language that enables basic conditions for spending coins (e.g., pay-to-script-hash, multi-signature). It’s intentionally conservative but allows a range of use cases beyond simple transfers.