Bitcoin (or BTC) is a cryptocurrency. The worlds first cryptocurrency in fact. It was designed to act as an alternative to money, allowing peer-to-peer transactions and like all cryptocurrencies, it's free from any reliance on trusted third parties.
This really short video just sets the scene. We'll go into a little more detail below but it's worth the 2 minutes of your time if you are new to Bitcoin.
Bitcoin was created by the illusive Satoshi Nakamoto, an anonymous developer or group of developers. On January 3rd 2009, the first Bitcoin block was mined - block 0, known as the 'genesis block'.
Bitcoin’s are secured using the proof-of-work consensus, which we discussed in an earlier section. One Bitcoin is divisible to 8 decimal places and the smallest unit is referred to as a Satoshi.
Similar to putting a stamp on a letter, all Bitcoin users need to pay a fee for sending a transaction before it can be queued for validation. The fee can determine whether the transaction is processed in a timely manner. Interestingly you can view the average fees in the Bitcoin mempool (a place where transactions wait to be picked up).
The successful miner is allowed to keep any fees attached to the transactions they add and also gets a reward of newly minted Bitcoin. This newly created Bitcoin is known as a 'block reward'.
There will only be ever 21 million Bitcoin.
This video goes a little deeper into the workings of Bitcoin. You’re more than welcome to skip this video if you feel like you already have a high level overview and can answer the question 'what is Bitcoin?'.
1 Bitcoin started out being worth a fraction of a U.S cent and in 2021 it reach an all time high of over $65,000.
Does Bitcoin use proof-of-work or proof-of-stake to confirm transactions?