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What is Bitcoin?
Bitcoin is digital money that can be used to pay for goods and services. It was the first cryptocurrency, a form of money that exists outside of the traditional financial system. Crypto is an alternative to ‘fiat’ currency, like pounds or dollars, where the supply is managed and controlled by a central bank.
The first Bitcoins were created in 2009. There are now thousands of other cryptocurrencies in circulation but Bitcoin remains the largest and most popular one.
How does Bitcoin work?
Bitcoin works by storing all of its transactions on a digital ledger known as a ‘blockchain’. The Bitcoin blockchain is a public record of every transaction that has ever taken place and it effectively replaces the role that a bank plays with regular money.
To make sure that there is one, verifiable record, everyone can access a copy of the blockchain ledger. Confirmation that it is the official ledger is given by a consensus of users with a stake in the system, through a process known as ‘Proof of Work’.
How is the Bitcoin network secured?
It’s secured using cryptography and an algorithm known as SHA-256. This is simply a long string of numbers that encrypts the information inside every ‘block’ – which includes a number of transactions – and links it to the block before it to create a block chain.
To create a block and approve the transactions inside involves a process known as Bitcoin mining. Miners run computer programs that compete to solve equations. By solving the equation, you earn the right to add the block to the chain and earn some Bitcoin as a reward.
What is Bitcoin used for?
Many people simply use Bitcoin as a financial asset to speculate on, in the same way you might buy and sell stocks to take advantage of price fluctuations. Bitcoin is slightly different, however, in the way it can also be used as money to pay for goods and services
Its scarcity and its relatively high value means it can be best to think of Bitcoin like gold. You can use it to buy things, speculate on its price changes, or hold onto it as a long term store of value.
Why does Bitcoin have value?
One reason is its position as the oldest and best known cryptocurrency. It has a level of popular and widespread appeal that’s far in excess of any other crypto coin, which helps to maintain its value.
Another feature is its scarcity: only 21 million Bitcoins will ever be created, which also helps to make it more valuable than other coins. In a general sense, there are plenty of other unique features as well, like the fact Bitcoin operates outside of the traditional financial system and thus can’t be controlled by governments.
Who created Bitcoin?
Bitcoin was created by Satoshi Nakamoto in response to the Great Financial Crisis of 2008. They introduced the concept in a white paper entitled ‘Bitcoin: A Peer to Peer Electronic Cash System’, published in October of that year.
Satoshi is a pseudonym, and no one knows exactly who is behind the name. They have never revealed themselves. It may have been a single person, while some have speculated that there may have been a group of people involved in creating it.
How much energy does Bitcoin use?
Proof of Work blockchains like Bitcoin consume a lot of energy because they require significant amounts of computer power. Most miners run lots of powerful computer processors all the time in order to give them the best chance of solving the equations and earning rewards.
However, these days a lot of the energy comes from renewable sources – possibly as much as 60%. It is in everyone’s interest to use low-cost, clean energy, and there is considerable pressure from within and without the industry to reduce the energy footprint.
Where can I buy Bitcoin?
Most cryptocurrency brokers allow you to keep the coins you buy in your account. However, you may want to sign up for a dedicated Bitcoin wallet for some extra security. Particularly if you want to buy large amounts of Bitcoin.
You can deposit money into an exchange account by a bank transfer or card payment. However, if you prefer to use a different payment method, like PayPal, then your options may be more limited. Use these guides to find out how to buy Bitcoin with different payment methods.
- Buy Bitcoin with American Express
- Buy Bitcoin with Apple Pay
- Buy Bitcoin with bank transfer
- Buy Bitcoin with cash
- Buy Bitcoin with credit card
- Buy Bitcoin with debit card
- Buy Bitcoin with Google Pay
- Buy Bitcoin with Neteller
- Buy Bitcoin with Payoneer
- Buy Bitcoin with PayPal
- Buy Bitcoin with Paysafecard
- Buy Bitcoin with Skrill
- Buy Bitcoin with Swish
- Buy Bitcoin with Venmo
Are there any other ways to invest in Bitcoin?
The simplest way to invest in Bitcoin is to buy it outright. However, another option is to simply open a crypto account. Crypto accounts are like regular bank accounts and allow you to store a variety of currencies, send and receive payments, earn interest on savings, and spend freely with a credit card.
You can also invest in crypto more generally through a Bitcoin ETF or a Bitcoin fund. These are financial instruments that give you exposure to a group of leading cryptocurrencies, more suited to high net worth individuals.
More about Bitcoin
What is the total supply of Bitcoin?
The circulating supply is 19,152,250 BTC, out of a total maximum supply of 21,000,000 BTC. While this might seem like the supply is about to run out, Bitcoin is designed so that it takes longer to create new coins the more there are in circulation. The final Bitcoin isn’t expected to be mined until 2140.
What is the Bitcoin price today?
The BTC price has been fluctuating between $19,000 and $24,000 for the last few months. The price of Bitcoin is down more than 50% from its all time high. You can use the live Bitcoin chart to track the BTC/USD price in real time, or compare the Bitcoin value today to its past performance using the Bitcoin price history tab on that page.
What is the price prediction for Bitcoin?
The average Bitcoin price prediction vaues the coin at $250,000 by the end of 2025. Things like the economic climate, establishment support and acceptance, and the crypto market as a whole can all have an impact on the price.
It’s best to take predictions with a grain of salt but you can use expert estimates to help you understand the weight of opinion about a coin. Read our latest Bitcoin price prediction for more analysis and guidance.
Are there any Bitcoin alternatives?
There are lots of Bitcoin alternatives and many cryptocurrencies have attempted to imitate it. Bitcoin is by far the most popular crypto but there are others that have tweaked the code to offer something different, such as more anonymity or to allow for transactions to be processed faster.
- Bitcoin Cash. Bitcoin Cash is a hard-fork of Bitcoin.
- Bitcoin SV. Bitcoin SV is designed to provide a scalable blockchain platform.
- Ravencoin. Ravencoin is a Bitcoin fork that’s built for transferring assets from one person to another.
More crypto guides
- Buy Bitcoin anonymously
- Best Bitcoin trusts
- How to sell Bitcoin
- Bitcoin calculator
- Bitcoin mining calculator
- Cryptocurrency staking calculator
Is Bitcoin safe?
Bitcoin is the most safe and secure cryptocurrency because it is extraordinarily difficult to hack. In order to attack the blockchain, you must control more than 50% of the total Bitcoin in circulation, a virtually impossible task.
What risk there is tends to come from third-party exchanges. Exchanges that store your cryptocurrency can be hacked, and some people have had their money stolen that way. However, if you store your Bitcoin in a crypto wallet then it is entirely safe unless someone else gains access to your private key.
Has Bitcoin been hacked?
No, Bitcoin itself has never been hacked. There has occasionally been high-profile hacks of crypto exchanges, most notably the Mt. Gox exchange in 2017. The Bitcoin blockchain is very secure and can resist virtually any hacking attempt.
What is a Bitcoin halving?
A Bitcoin halving is when the reward on offer for mining Bitcoin is cut in half. The halving takes place every four years – the most recent one took place in 2020 and the next one will be in 2024 – and is written into the Bitcoin code. Halving, like the supply cap, is designed to ensure that Bitcoin is not inflationary and maintains its value.
Latest Bitcoin price analysis
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