What Is Bitcoin? A Simple Guide to Understanding Cryptocurrency
What Exactly Is Bitcoin and How Does It Work?
Bitcoin is the original cryptocurrency: a type of decentralized, borderless digital money.
If you’ve used PayNow, PayPal, or even dabbled in NFTs, you’ve brushed up against the edge of Web3. But Bitcoin is something deeper. It’s not just another "digital wallet", but a new kind of financial infrastructure designed to put users, not institutions, in control.
Let’s break down what that actually means, without the jargon.
Key Takeaways
Bitcoin isn’t issued by a central authority. It runs on a decentralized network secured by cryptography.
The blockchain acts as a public, tamper-proof record of all Bitcoin transactions.
Supply is capped at 21 million coins, making it resistant to inflation.
Transactions are verified by miners through a process called Proof-of-Work.
Bitcoin can be bought on exchanges, stored in digital wallets, or earned by mining.
Platforms like Fractal are expanding Bitcoin's utility while preserving its security model.
What Is Bitcoin?
Bitcoin is the original cryptocurrency: a digital form of money created for the internet age. First introduced in 2009 by a pseudonymous figure known as Satoshi Nakamoto, Bitcoin allows anyone to send and receive value globally without relying on banks, governments, or intermediaries.
Unlike dollars or euros, Bitcoin isn't printed. It runs on open-source code and is secured by a decentralized network of computers called miners. Every 10 minutes, these miners process transactions and are rewarded with newly minted Bitcoin.
At its core, Bitcoin is:
Peer-to-peer: You can send it directly to anyone with a Bitcoin address.
Borderless: It works the same whether you’re in Singapore or São Paulo.
Censorship-resistant: No one can freeze your Bitcoin or reverse a transaction.
Finite: Only 21 million bitcoins will ever exist.
Understanding Bitcoin
How Bitcoin Started
Bitcoin emerged from the ashes of the 2008 financial crisis. Its creation was a direct response to distrust in centralized banking systems. Embedded in Bitcoin’s first block was a message referencing bank bailouts: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks."
That message captured the spirit of Bitcoin: a push toward monetary independence and digital self-sovereignty. To learn more about the history of Bitcoin, check out our guide here.
Blockchain
All Bitcoin transactions are recorded on a public ledger known as the blockchain. This chain is maintained by thousands of nodes (computers) around the world. Each block in the chain contains a batch of verified transactions.
Once confirmed, transactions are permanent and visible to all. This makes Bitcoin fully auditable and transparent, unlike traditional banking systems.
Encryption
Your Bitcoin is stored in a digital wallet, which is secured by a private key. This key is like a cryptographic password. Whoever controls the key controls the Bitcoin. It’s why the phrase “not your keys, not your coins” is often repeated in crypto communities.
If you lose your key, there's no password reset. Your coins are gone.
How To Buy Bitcoin
Buying Bitcoin has become easier than ever. You can:
Sign up on a crypto exchange (e.g., Coinbase, Binance, OKX).
Verify your identity through KYC procedures.
Deposit fiat money using bank transfers or credit cards.
Purchase Bitcoin and choose where to store it.
Most exchanges offer custodial wallets, but many users prefer transferring their coins to a non-custodial wallet like UniSat or a hardware wallet for better security.
How To Mine Bitcoin
Mining is how Bitcoin transactions are validated and how new bitcoins enter circulation. Miners use specialized machines to solve cryptographic puzzles. The first to solve it gets to add a new block to the blockchain and receive a reward.
This process, called Proof-of-Work, requires electricity and computational power, which makes Bitcoin secure but energy-intensive.
Fractal innovates on this with a hybrid mining system called Cadence Mining. It combines:
Merged mining: Miners can earn rewards on both Bitcoin and Fractal simultaneously.
Permissionless mining: Open participation for miners not already operating on Bitcoin.
This approach helps secure Fractal while expanding access for new miners.
How To Use Bitcoin
Bitcoin is more than just an investment. It can be used to:
Transfer money internationally with lower fees and no middlemen.
Buy goods and services from merchants who accept crypto.
Hold as a hedge against inflation (digital gold).
Interact with Bitcoin-native apps, like Ordinals and smart contracts on chains like Fractal.
Platforms like Fractal make Bitcoin programmable, enabling a new wave of decentralized apps built on Bitcoin’s security.
Risks of Investing in Bitcoin
Like any investment, Bitcoin carries risks:
Volatility: Prices can swing dramatically.
Security: If you lose your private keys, your funds are unrecoverable.
Scams: Fake websites, phishing emails, and rug pulls exist.
Regulatory uncertainty: Different countries treat Bitcoin differently.
Mitigate risks by learning how wallets work, avoiding suspicious links, and using trusted platforms.
Regulating Bitcoin
Bitcoin is legal in many countries, but how it's regulated depends on where you are. Some governments have embraced it. Others have restricted or banned it.
Key trends in regulation:
Taxation: Bitcoin is often treated as property and taxed on capital gains.
AML/KYC compliance: Exchanges must collect user info.
ETF approvals: Institutional products are on the rise.
As regulation matures, Bitcoin’s legitimacy and accessibility are likely to increase.
Final Words
Bitcoin is a financial revolution that gives individuals control over their money. It’s borderless, programmable, and scarce by design.
For some, it’s a store of value. For others, a payment tool. And for many builders, it’s the foundation for a better internet of money.
Fractal is part of that vision: expanding what Bitcoin can do without changing what makes it secure. Whether you're just getting started or ready to dive deeper, understanding Bitcoin is the first step toward participating in this open financial future.
Curious to explore more? Visit Fractal's Learn Hub to keep going.
