Have you ever wondered what Bitcoin is or what makes it the most popular cryptocurrency in the world? Bitcoin is the first decentralised cryptocurrency.
Bitcoin is a digital currency powered by a peer-to-peer (P2P) network, used primarily for internet transactions.
If you are here to learn about Bitcoin, you are in the right place. After Reading this blog post, you will have complete knowledge about Bitcoin, how it works, and how to use it.
History of Bitcoin
It was created back in 2009 by an individual or a group of individuals using the name Satoshi Nakamoto. Even today in 2025 No one knows who Satoshi Nakamoto is
How Does Bitcoin Work?
Bitcoin works through blockchain technology, a decentralised public ledger where all transactions are recorded. Through wallets, one user sends bitcoin to others and the transactions are recorded in the public ledger. Miners validate transactions by solving complex puzzles (proof of work) and adding them to the Blockchain, ensuring security and transparency. The cryptography behind Bitcoin is based on the SHA–256 algorithm designed by the US National Security Agency.
Bitcoin was created to be used as a digital currency but today many people see it as an investment option.
How can you use Bitcoin?
If you have a crypto wallet, you can use Bitcoin in your daily life. And you can buy Bitcoin from an exchanger like Binance. Bitcoin can be used for purchasing items like normal currency. Today, many shopkeepers accept Bitcoin as payment.
Bitcoin operates without the need for the authority of the bank or government. So many people try to use it for many illegal activities, but for the public ledger (Blockchain Transparency), the transactions are traceable. Law enforcement agencies use advanced Blockchain analysis tools to monitor suspicious activity.
A 2022 chainlysis report says that only 0.24% of cryptocurrency transactions were linked to illegal activities.
Short Statistics of Bitcoin
Today, in this world, an estimated 560 million people use cryptocurrency. And the most popular and most used cryptocurrency is Bitcoin.
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As of June 2025, the market capitalisation of bitcoin is 2.17 trillion US dollars, and Fully Diluted Market capitalisation is 2.29 trillion US dollars, leaving behind silver and competing with Gold.
Recently, Bitcoin has reached its all-time high of 111,970.1681$ per Bitcoin. This milestone is hit on 22-05-2025.
The supply of bitcoin is limited, and the demand for bitcoin is increasing, so the price is increasing. The max supply of bitcoin is only 21 million, and the current circulation supply of bitcoin is 19.88 million.
Bitcoin Vs Fiat Currency
Technology Used to Create and Run Bitcoin.
Bitcoin is created using very complex technology that can be very hard to understand. Here are a few things that are used for creating Bitcoin and completing the transactions of Bitcoin.
Blockchain Technology
Blockchain technology is a decentralised digital ledger that records transactions securely and transparently across multiple computers in such a way that it cannot be altered.
Key Factors of Blockchain Technology·
- Decentralization: Traditional databases are controlled by a single entity/authority blockchain is controlled by multiple nodes (computers).
- Transparency: All transactions are visible to users, which builds trust among users.
- Immutability: Once a transaction is recorded on the blockchain, it can not be deleted.
Cryptographic Hashing
Many people think that bitcoin transactions are encrypted, but they are not encrypted. In the simplest terms, encryption means converting readable data into code. Bitcoin uses a different technology which is cryptographic Hashing. Cryptographic Hashing can sound like encryption, but it is not the same thing. Cryptographic Hashing is a one-way function; it can not decrypt the hash and get back the original. But encryption is two way function, you can get your original data back by decrypting.
Proof of Work(PoW)
Proof of work is a consensus mechanism which is used in Bitcoin.
A consensus mechanism is a protocol used in Blockchain and distributed networks to ensure all nodes (computers) agree on the current state of the data or ledger.
In simple miners compete to solve a cryptographic puzzle, finding a random number (nonce). The first miner to find a valid nonce broadcasts the block to the network. Other miners (nodes) verify the solution, and if valid, the block is added to the blockchain. The successful miner receives a block reward (currently 3.125 BTC as of the 2024 halving) plus transaction fees.
But Proof of work requires immense computational power, leading to significant electricity usage. Bitcoin mining consumes an estimated 150-200 TWh annually, raising environmental concerns.
Public and private key cryptography
Public and Private key cryptography is the foundation of Bitcoin’s security, enabling secure transactions and ownership verification.
How it Works in Bitcoin?1. Sending Bitcoin2. Receiving Bitcoin3. Security
Peer-to-Peer (P2P) Network
In general, peer-to-peer (P2P) networks are decentralised networks where each participant (or node) acts as both a client and a server, allowing for direct resource sharing without a central authority
In Bitcoin peer-to-peer(P2P) network is a decentralised system that enables its operation without a central authority.
Take an example, Jacob sends 0.1 BTC to Bob; her wallet broadcasts the transaction to nearby Bitcoin miners (nodes). These miners (nodes) verify it, relay it across the P2P network, and miners include it in the block, adding to the blockchain