The oldest and most popular cryptocurrency, bitcoin is a digital cash alternative introduced in 2009 that has rapidly grown in popularity and now boasts a global user base. Enthusiasts point to bitcoin’s decentralized nature—meaning it is not created or controlled by any central government—lending it several potential advantages.
As of this writing, the currency was valued at roughly $72K per single bitcoin (see current price), with a total market value of more than $1T.
History
Bitcoin’s conceptual origins lay in a now-famous white paper written by an inventor using the pen name Satoshi Nakamoto. The pseudonymous author has reached near-mythical status, with their identity never revealed and supposedly holding a stash of bitcoin worth more than $70B.
For the first few years, the uptake of bitcoin remained relatively slow. The first significant transaction was made in 2010 in a now-infamous purchase of two pizzas for 10,000 bitcoin (now worth around $700M).
Transaction volume grew slowly but steadily in the first seven years, reaching 300,000 transactions per day by early 2017. Both the price and amount of bitcoin swapping hands saw increased volatility between 2018 and 2024.
See a timeline of bitcoin’s rise, along with major events, here.
How Bitcoin Works
Like most cryptocurrencies, bitcoin relies on blockchain technology. Blockchains are the digital equivalent of public ledgers—every transaction is recorded and bundled into “blocks,” which are added to a long “chain” of blocks viewable by anyone.
While bitcoin relies on a blockchain, blockchain technology has many use cases beyond cryptocurrency. See an overview here.
Transactions are verified through a process called mining. In simple terms (mining 101), miners with significant computing power solve cryptographic puzzles to verify transactions and enshrine them into the blockchain.
In return, miners are given newly created bitcoins for their efforts. Only 21 million bitcoins can ever be created—as the available supply reaches that number (currently at 19.6 million), the energy needed to mine bitcoin becomes increasingly large.
After a miner is paid, the coins have entered the global ecosystem and can be exchanged on trading platforms or used wherever bitcoin is accepted.
Similar to dividing a dollar into cents, the smallest unit a bitcoin can be divided into is one one-millionth (if one bitcoin were worth $1M, the smallest unit would be worth $1). This allows users to buy, sell, and hold fractional amounts of the currency.
Future
In principle, digital currencies have a variety of uses—paying for goods and services (where accepted), instantly sending money around the globe, and more. Currently, bitcoin is primarily used as a store of value, similar to investing in gold or other assets.
The currency has gone through several boom cycles but has steadily gained wider adoption as online exchanges (such as Coinbase or Crypto.com) became more common, opening bitcoin up to millions of retail investors. Its use in commercial transactions is likely to be driven by where the money can be spent—see a database of companies accepting bitcoin here.
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Want to understand bitcoin and cryptocurrencies on a deeper level? This free online course from Princeton University unpacks the technical details of bitcoin, from how it works to what distinguishes it from other currencies, to the security and anonymity associated with its use. Explore standalone explainer videos, or take the course as a series of lessons, with material relevant for enthusiasts and computer science students alike.
Sometime around around 2008, a person known as Satoshi Nakamoto began working on the underlying bitcoin code and blockchain. Widely credited as inventing the currenc, Nakamoto abruptly disappeared from the digital world—no one has confirmed his identity, or whether he was even a single individual. Take a look inside the turbulent days of bitcoin development after Nakamoto stepped back into the shadows.
A bitcoin transaction is a transfer of value between two bitcoin addresses, with transactions recorded in a public ledger called the blockchain. The blockchain is a distributed ledger, meaning that it is replicated on every node in the Bitcoin network, making it exceptionally difficult to tamper with. Because the ledger is tamper-proof, the transaction information is nearly irreversible. See how the full process works in one quick chart.
In 2010, a programmer Laszlo Hanyecz made what is believed to be the first real-world transaction involving cryptocurrency—purchasing two Papa John’s pizzas for 10,000 bitcoins. While the transaction was lauded as a major milestone for cryptocurrency, it has also become a tongue-in-cheek cautionary tale, as the value of the purchase price exceeded $620M at bitcoin’s all-time high. Hear a short interview with Hanyecz almost a decade later.
Blockchain, the key technology behind bitcoin and many other Web3 applications, is an approach to record and store information using a decentralized, totally open web network. While the concept may be simple, the details can quickly become complex when discussing specific cases. Listen to an expert explain blockchain to five separate people, from a second-grader to another technical expert.
As crypto markets declined during the post-pandemic slowdown, Sam Bankman-Fried helped prop up the markets with billions he'd earned leading FTX, one of the largest crypto exchanges. Then, in one of the most rapid financial implosions in modern history, the exchange collapsed in late 2022 as investors rushed to withdraw money following reports the company had used customer deposits to fund a de facto hedge fund.
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