Bitcoin

Key points

• Bitcoin was the first cryptocurrency, proposed in 2008 and launched in 2009 under the pseudonym Satoshi Nakamoto as peer-to-peer electronic cash.
• It runs on a public blockchain maintained by thousands of nodes, with no central bank or intermediary needing to authorize each transaction.
• Issuance is capped at 21 million units, and the creation of new coins is cut in half at every halving, roughly every four years.

What is Bitcoin?

Bitcoin is a cryptocurrency created by the pseudonymous developer Satoshi Nakamoto, initially described as a peer-to-peer electronic cash system. It was the first asset to solve, without a central authority, the problem of transferring digital value without the same unit being spent twice. The network went live in January 2009.

How it works

Bitcoin transactions are grouped into blocks and recorded on a blockchain, a public and distributed ledger. Each node in the network keeps a copy of this history and independently validates the protocol's rules, which removes the need to trust a single intermediary.

New blocks are added through mining, a proof-of-work process in which participants spend computational power to find a valid cryptographic solution. Whoever manages to add the block receives a reward in newly issued bitcoins plus the fees from the transactions included. This reward is cut in half at every halving, which controls the pace of issuance.

The maximum supply is fixed at 21 million units, defined in the protocol's own code. The smallest fraction is the satoshi, equivalent to one hundred millionth of a bitcoin. This programmed scarcity and decentralized validation are the two defining characteristics of the asset.

Mining difficulty automatically adjusts as the network's total processing power rises or falls, so that new blocks appear at an average interval of about ten minutes. This mechanism keeps the pace of issuance predictable, regardless of how many miners are participating.

Why it matters

Bitcoin is the benchmark of the crypto market and serves both as a reserve asset and as a means of international transfer. For an expat, for example, it is a way to move value between countries without depending on banking hours, although the final conversion to reais still goes through a regulated crypto off-ramp step. Its price, however, fluctuates sharply.

Risks and limitations

Bitcoin's price varies widely, which makes it unsuitable as a stable store of value in the short term. Transactions are irreversible and the responsibility for safeguarding keys falls on the user: losing the private key means losing access to the funds. The network also has limited transaction capacity per block, which can raise fees during periods of congestion.