Bitcoin is open-source, permissionless, peer-to-peer programmable money. Its supply is permanently capped at 21 million coins. The network operates directly between users, without intermediaries like central banks. All transactions are verified by network nodes using cryptography and recorded in a public distributed ledger known as a blockchain.

As you venture down the Bitcoin rabbit hole, you'll discover fascinating new perspectives. This article introduces you to Bitcoin's core purpose, the creation of coins, and whether it qualifies as real money. You'll also find practical guidance on purchasing bitcoin and securing your holdings.

Bitcoin (with an uppercase letter B) refers to the protocol, software, and network, while bitcoin (with a lowercase b) describes the native monetary asset.

Origins of Bitcoin

Bitcoin was created by a mysterious person or group known as Satoshi Nakamoto and detailed in a white paper published on October 28, 2008. It was the first cryptocurrency ever created. The greatest challenge was developing a digital version of cash that could work peer-to-peer like physical money. Satoshi's brilliance lay in combining existing technologies to solve the double-spending problem in digital currencies without requiring a trusted third party.

Satoshi's true identity remains unknown. After disappearing in 2011, they left the project in the hands of volunteers who continue to expand and upgrade it. This demonstrates that Bitcoin can thrive without a central leader or CEO.

How It Works!

When users send or receive bitcoin, their transaction is broadcast to the network of nodes. Each node verifies the transaction's legitimacy before adding it to the Mempool—a storage area for valid but unconfirmed transactions—and passing it to other nodes in the network.

Miners select transactions (prioritizing those with higher fees) and group them into blocks. Each block includes a block header, transaction counter, and transaction data containing supporting information and hashes.

Miners compete to add the next block to the blockchain. While mining pools with more computational power have better odds, success isn't guaranteed. The network uses a proof-of-work (PoW) consensus algorithm that requires miners to find a valid hash below a network-set target. The successful miner receives new bitcoin—called the block reward—for securing the network. This is how new coins enter circulation.

Each block links to the previous one, creating a chain that cryptographically establishes an immutable public record of transactions. Any attempt to alter a transaction would require changing both its block and all subsequent blocks.

The protocol defines the rules, while PoW governs how these rules are followed. This system is considered one of the most secure solutions to the Byzantine Generals Problem—an academic term for solving the double-spending problem without third-party involvement.

Users don't need to understand Bitcoin's precise mechanics, just as they don't need to know exactly how the internet works to use it. However, grasping the basics helps explain why Bitcoin matters.

Why Is It Revolutionary?

Bitcoin technology enables a trustless economic system where borderless transactions can occur without intermediaries. While traditional banking and payment systems depend heavily on trust, Bitcoin eliminates the need for third parties while maintaining censorship resistance, immutability, and decentralization.

This framework created—for the first time in history—a system independent of government control, establishing a revolutionary separation of money and state. Bitcoin challenges conventional models by reducing state power and control, which explains why governments and their affiliated media often spread misinformation about it.

Bitcoin provides true digital scarcity, making it a store of value; censorship resistance, ensuring universal access without discrimination; and settlement finality, guaranteeing irreversible transactions.

Settlement finality remains one of Bitcoin's most under appreciated features, yet it offers a compelling alternative to traditional payment methods like Visa and SWIFT. While conventional systems can take up to six months to settle, Bitcoin transactions typically finalize in just 10 minutes to a few hours.

What Is Bitcoin Used For?

Glad you asked!

For one: Long term savings. While its price volatility attracts speculative investors seeking quick gains, many who initially buy Bitcoin for profit end up staying for its long-term potential. This pattern has created a growing network of committed users who hold their Bitcoin long-term, strengthening the network's stability and overall soundness.

Trading: Like any valuable asset, bitcoin has become one of the most actively traded holdings in recent years. Trading platforms and tools are widely available for newcomers, and some traders have made it their primary income source by developing strategies that capitalize on bitcoin's price volatility. Rather than increasing their capital in traditional currency terms, traders typically aim to grow their bitcoin holdings.

Inflation hedge: Bitcoin has proven to be an effective hedge against long-term inflation. Unlike traditional currencies that steadily lose purchasing power, Bitcoin maintains its value through its fixed supply, widespread technological adoption, and inherent durability.

Remittances: Through the Lightning Network's ability to enable borderless payments without intermediaries, Bitcoin has become an increasingly popular tool for remittances. A prime example is El Salvador, where Bitcoin was adopted as legal tender in 2021. With remittances making up 24% of El Salvador's GDP, the country may serve as a model for international remittance practices in other nations.

Collateral: Bitcoin can be used as collateral in decentralized finance (DeFi), an emerging branch of finance that enables mortgages, refinancing, and other financial services. While traditional financial institutions still consider this a gray area, using bitcoin as collateral has become common practice among cryptocurrency users.

Payments: Layer 2 (L2) protocols have been developed to address scalability and enable faster, cheaper off-chain payments compared to Bitcoin's base layer (L1). The Lightning Network and Liquid Network are the two leading examples of this technology.

Energy monetization: What was once viewed as a problem—Bitcoin's high energy consumption from mining—is becoming an advantage. By utilizing excess renewable energy production, Bitcoin mining can monetize surplus power and make energy projects more cost-effective and environmentally friendly. Miners are uniquely suited for this role since they can relocate to where power is available, even in remote areas, helping to fill energy gaps and support the transition to clean energy.

Is Bitcoin A Safe Investment? (This is not investment advice, just our opinion!)

Pros

Bitcoin's security is built on its SHA-256 algorithm, designed by the U.S. National Security Agency (NSA). This foundation, combined with years of successful operation, makes it a uniquely secure investment. No other cryptocurrency matches Bitcoin's security record—its blockchain remains unhacked, and its security strengthens as more blocks are added to the chain.

The protocol's programmed supply and issuance create predictability, a crucial feature. As long as basic supply and demand economics hold true, Bitcoin's scarcity will maintain its value.

Bitcoin offers unique security as private property—once properly stored, it can't be confiscated. Unlike traditional assets that rely on legal systems for protection, Bitcoin is secured by the network's built-in incentives. A cryptographically secured wallet provides better security than traditional bank accounts, where cash is often re-hypothecated.

According to the Lindy effect—which suggests a technology's future life expectancy equals its current age—Bitcoin should exist for at least another 12 years. However, given its resilience despite numerous "death" proclamations, its longevity will likely extend far beyond that.

Major figures in business and technology have demonstrated their confidence in Bitcoin's future. Jack Dorsey, Elon Musk and Tesla, Michael Saylor, Ray Dalio, and other prominent leaders have not only personally invested but have also added Bitcoin to their companies' reserves, often replacing traditional gold and cash holdings.

Cons

We at Eve always want to be honest with you, and nothing is without cons!

Price volatility, while often viewed as a significant concern for potential investors, can actually be considered a feature rather than a bug. Bitcoin is still a relatively new asset, which naturally leads to substantial price swings. This volatility has decreased over time and should continue to stabilize as the asset matures. While short-term price fluctuations occur, the long-term trend shows consistent upward movement—particularly evident when examining multi-year price charts.

Technical barriers are typical with new technology, and Bitcoin's learning curve can initially seem overwhelming. But try not to let that discourage you.

Soooo. How Does Bitcoin Make Money?

Bitcoin's network operates on carefully designed incentives that reward miners with bitcoin to maintain the system.

Initially, regular node operators mined Bitcoin using their computer's central processing unit (CPU) power to find the next block, just as Satoshi did with the first blocks. These operators received bitcoin rewards for using their electricity to expand the network by adding new blocks to the longest chain.

This system, called Proof of Work, is the core consensus algorithm that forms the network's foundation and ensures its security.

As more nodes joined and competed for block rewards, basic CPU power became insufficient. Over a decade, miners progressed from using graphic processing units (GPUs) to today's application-specific integrated circuits (ASICs) to compete more effectively in finding the next block.

This incentive system is how Bitcoin generates value. But what's the cost to produce one bitcoin? Mining profitability depends on several factors: electricity costs, mining difficulty (which automatically adjusts to maintain a 10-minute block generation time), and the block reward.

With current parameters—a block reward of 6.25 BTC, difficulty at 27.5 trillion hashes, $0.15 per kilowatt hour (kWh), and energy efficiency of 45 joules per terahash—the cost to produce 1 BTC is approximately $35,500.

Okay, so Bitcoin Is Similar To Gold?

Bitcoin has similar monetary properties to gold and is often called digital gold. The production processes of both commodities are similar: gold is mined from the ground using energy-intensive machinery, while bitcoin is mined using energy-intensive computers. Their mining processes share key characteristics, including rising marginal costs—as more parties compete to mine, the process becomes increasingly difficult.

This creates an expense that cannot be forged, a concept known as "unforgeable costliness" that cryptographer and computer scientist Nick Szabo explains.

Both commodities are scarce, but there's a key difference: while gold's total supply remains unknown, bitcoin has a fixed limit of 21 million coins. Gold has relative scarcity—it's scarce in relation to the energy needed to mine it. Bitcoin has absolute scarcity—it's finite. Regardless of how much energy miners expend, the network will continue to produce new blocks at the same rate until reaching its hard cap.

Bitcoin can be easily verified and audited thanks to its immutable and programmable protocol, unlike physical assets like gold, which are harder to scrutinize. Both are decentralized forms of money that can be held independently without intermediaries.

Both bitcoin and gold are considered "hard money"—assets people want to retain because they're robust, reliable, and secure.

Is Bitcoin Money?

Throughout history, money has evolved from commodities like grain to precious metals like gold and finally to government-controlled fiat currencies. In each form, money has served as a means to facilitate value exchange between participants in an economy.

Money traditionally requires several key properties: fungibility, durability, portability, divisibility, and stability. Bitcoin possesses all these qualities except stability, which it has yet to achieve.

When we consider additional properties like scarcity, censorship-resistance, programmability, and decentralization, bitcoin emerges as perhaps (in our opinion) the most perfect form of money ever created, as we'll explore below.

While many believe that only fiat currencies qualify as money, this wasn't true until 1971, when U.S. President Richard Nixon ended the dollar's convertibility to gold.

Today's money exists primarily in digital form—what we see in our bank accounts is merely an entry in the bank's ledger. We can't even verify whether actual money backs these digital entries. Don't love that!

Bitcoin represents money in its purest form, though without physical attributes. While it too exists as ledger entries, a non-custodial wallet gives us direct ownership through private keys—no one can seize these funds. This feature makes Bitcoin invaluable for refugees fleeing war zones or citizens facing authoritarian governments that might freeze traditional financial assets.

Is Bitcoin Too Expensive? What About Cheaper Coins? A lower price doesn't mean better value. Many crypto investors have learned this lesson the hard way after losing money in questionable projects they chose simply because they were cheap.

The emergence of alternative coins (altcoins) has created more cryptocurrency investment options. While some new investors avoid Bitcoin because they perceive it as too expensive—preferring altcoins for their supposed growth potential—this strategy has consistently failed. These investors often lose money by focusing on price rather than fundamental value.

Don't fall for unit bias—the misleading urge to own whole units rather than fractions of an asset. Many newcomers mistakenly view Bitcoin as too expensive and turn to "cheaper" alternatives just to own more units.

Market speculation has led small investors to chase the cheapest coins, hoping they'll increase in value regardless of their actual utility or fundamentals. This often results in risky investments and holding onto altcoins despite poor performance.

Altcoins are typically less secure than Bitcoin and have shorter track records. While they're often marketed as having higher potential returns in fiat terms, they usually disappoint when measured against Bitcoin. They lack Bitcoin's valuable properties, particularly regarding their supply, which is often unlimited and difficult to verify.

They are decentralized in name only (DINO), typically controlled by influential leaders, developer groups, or venture capital firms, with governance structures that compromise true decentralization.

Remember that Bitcoin is highly divisible—you don't need to buy a whole coin. The smallest unit, called a satoshi, is 0.00000001 BTC. As Bitcoin's value grows, these "sats" will likely become the standard unit of exchange, making it practical to start accumulating them if you can't afford an entire bitcoin.

Taking full ownership and control of our finances through Bitcoin requires both willingness and personal responsibility to understand its nature, purpose, and potential. While some concepts may seem complex at first, the learning journey proves worthwhile over time. Bitcoin not only has the potential to enhance individual financial well-being but can also fundamentally reshape the world into a better and fairer place.

We've come to understand why Bitcoin represents the next logical step in money's evolution—a step that returns monetary control to the people rather than governments. This is precisely why media and authorities often spread fear and mistrust about Bitcoin. Yet for us HODLers, this same characteristic represents hope for humanity.