Introduction to Bitcoin (BTC)
Bitcoin (BTC) is a decentralized cryptocurrency created in 2008 as a response to the global financial crisis. It operates on a peer-to-peer network using cryptographic technology without central authority control.
Key Features of Bitcoin:
- Fixed supply: Capped at 21 million coins
- Decentralized: No government or bank oversight
- Mining-based issuance: New coins are earned through computational "mining"
- Global transactions: Low-cost cross-border transfers
The blockchain was launched on January 3, 2009 by Satoshi Nakamoto, with mining rewards halving every 210,000 blocks (~4 years). The final BTC will be mined around 2140.
How to Buy Bitcoin
For most investors, purchasing BTC involves three main methods:
Cryptocurrency exchanges (recommended platforms):
- Spot trading platforms
- Peer-to-peer (P2P) markets
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- Bitcoin ATMs: Physical kiosks for cash purchases
- OTC desks: For institutional-scale purchases
Bitcoin Mining Explained
Mining Requirements:
- ASIC miners: Specialized hardware (Antminer, Whatsminer, Avalon)
- Mining pools: Join collective hashing power
- Wallet address: To receive mining rewards
Cloud mining alternatives exist but carry higher risks due to opaque operations.
Understanding Digital Currencies
Digital currencies like Bitcoin differ from traditional virtual currencies through:
- Algorithmic issuance: No central control
- Fixed supply: Prevents inflation
- Network consensus: Secure transactions
Central bank digital currencies (CBDCs) maintain some characteristics while being government-issued.
Bitcoin Futures Trading
Contract Types:
| Type | Description |
|---|---|
| Coin-margined | Collateral in BTC (e.g., BitMEX) |
| USD-margined | Collateral in stablecoins (e.g., Binance) |
| Perpetual | No expiration date |
| Quarterly | Settles every 3 months |
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Frequently Asked Questions
Is Bitcoin legal?
Bitcoin's legal status varies by country. Most nations permit ownership but regulate exchanges.
How secure is Bitcoin?
The blockchain has never been hacked, but individual wallets can be vulnerable if not properly secured.
What determines Bitcoin's price?
Market demand, adoption rates, macroeconomic factors, and mining costs all influence BTC valuation.
Can Bitcoin be taxed?
Many jurisdictions treat cryptocurrency as taxable property for capital gains purposes.
Why does Bitcoin use so much energy?
The Proof-of-Work consensus requires significant computational power to maintain network security.
Will Bitcoin replace fiat currency?
While unlikely to fully replace government currencies, BTC serves as a complementary store of value and hedge against inflation.