Encyclopedia article
Bitcoin
Decentralized digital currency and peer-to-peer payment network launched in 2009
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See every claimBitcoin (abbreviation BTC; sign ₿) is the first decentralized cryptocurrency 119. It is a peer-to-peer electronic cash system described in a white paper published under the pseudonym Satoshi Nakamoto, whose identity remains unknown 118. Nakamoto mined the genesis block on 3 January 2009 1. The network records transactions on a public ledger called a blockchain, which nodes maintain without central oversight, and it reaches agreement on that ledger through a proof-of-work process called mining 118. Bitcoin's value as money, its role as an investment, its energy use and its use in illicit activity are all disputed among economists, regulators and proponents 345.
Background and creation
#Several digital cash technologies came before bitcoin, beginning with David Chaum's ecash in the 1980s 1. Adam Back developed Hashcash, a proof-of-work scheme for spam control, in 1997 1. In 1998 Wei Dai proposed b-money and Nick Szabo proposed bit gold 112.
These predecessors had different aims and designs. Wikipedia describes them as unsuccessful and lists a limitation of each. Chaum's concept required centralized control and no banks agreed to sign on. Hashcash had no protection against double-spending. B-money and bit gold were not resistant to Sybil attacks 1.
On 31 October 2008, a link to a white paper by Satoshi Nakamoto titled Bitcoin: A Peer-to-Peer Electronic Cash System was posted to a cryptography mailing list 1. Investopedia also dates bitcoin's public introduction to 2008 17. Two other sources describe the publication as taking place in 2009: the St. Louis Fed says the white paper was published in 2009, and the bitcoin.org FAQ says the first specification and proof of concept were published that year 1216. The paper proposed solving the double-spending problem with a peer-to-peer network that timestamps transactions into a chain of hash-based proof of work 15.
According to computer scientist Arvind Narayanan, as reported on Wikipedia, every individual component of bitcoin originated in earlier academic literature, and Nakamoto's innovation lay in how those components interacted 1. The paper was not peer-reviewed 1. The St. Louis Fed says few people took notice of it at the time 16.
Nakamoto mined the genesis block on 3 January 2009 1. On 22 May 2010, programmer Laszlo Hanyecz bought two pizzas for ₿10,000, the first known commercial transaction using bitcoin 1. According to the bitcoin.org FAQ, Nakamoto left the project in late 2010 12. ScienceDirect Topics also dates the departure to 2010 18.
Later history
#Black markets, including the Silk Road darknet site, were among bitcoin's prominent early applications 1. Over about 30 months, Silk Road handled ₿9.9 million, worth about $214 million at the time 1. A survey of the economics and finance literature treats the crash of the Mt. Gox exchange and the Silk Road episode as infamous events that have been discussed at length 2.
In August 2017, the SegWit upgrade was activated. Opponents of the upgrade created Bitcoin Cash, a fork of bitcoin 1. In February 2021, bitcoin's market capitalization reached $1 trillion for the first time 1.
The Congressional Research Service links a series of 2022 crypto company failures, highlighted by the collapse of the exchange FTX, to wider policy questions 5. In January 2024, the first 11 US spot bitcoin exchange-traded funds began trading 1. In December 2024, the price reached $100,000 for the first time 1. In March 2025, President Donald Trump signed an executive order to establish a strategic bitcoin reserve 1.
Design and operation
#Bitcoin works through computers that each act as a node in a peer-to-peer network. Each node maintains an independent copy of a public ledger of transactions, the blockchain 1. New transactions are checked against the blockchain so that bitcoins that have already been spent cannot be spent again 18. A new block is added about every ten minutes on average 114.
Transactions are validated with cryptography, which prevents one person from spending another person's bitcoin as long as the owner keeps certain sensitive data secret 1. Wikipedia cites an estimate that about 20% of all bitcoins are lost 1.
One bitcoin can be divided to the eighth decimal place 14. The smallest unit, the satoshi, is one hundred-millionth of a bitcoin 1. Usage of capitalization varies. One source uses Bitcoin for the system and bitcoin for the unit of currency 18.
Mining and supply
#Consensus between nodes about the content of the blockchain is reached through mining, a computationally intensive process based on proof of work and performed by purpose-built computers 1. The difficulty is recalibrated every 2,016 blocks, or about every two weeks, to keep the average time between blocks near ten minutes 114. Nodes accept the longest proof-of-work chain as the record of what happened 15. The white paper's security argument assumes that nodes not cooperating to attack the network control a majority of computing power 15.
Miners receive a block reward. The reward started at 50 bitcoins and halves every 210,000 blocks 14. Users can also offer transaction fees, which go to the miner who adds the block 14. Under this schedule the total supply approaches but never exceeds 21 million bitcoins 114.
Energy and environmental impact
#Mining consumes large quantities of electricity and has been criticized for its environmental impact 1. A non-peer-reviewed 2025 study by the Cambridge Centre for Alternative Finance estimated that bitcoin mining used 0.5% of global electricity and produced 0.08% of world greenhouse gas emissions 1. Surveyed miners reported that 52% of their electricity use came from sustainable sources 1.
The Council on Foreign Relations says the network consumes more electricity than many countries 4. The Congressional Research Service says the Bitcoin network alone uses as much energy and produces emissions comparable to nation states 5. Proponents say renewable energy can address the problem, citing El Salvador's president's pledge to mine with volcanic energy 4. Some skeptics argue that if crypto has no productive use, its energy use and emissions appear more problematic 5.
As of October 2025, the United States held 38% of global bitcoin mining market share, followed by Russia at 16% and China at 14% 1.
Governance, scalability and centralization
#The 1 MB cap on block size became the subject of a prolonged conflict within the bitcoin community. An article in Internet Policy Review notes that Hearn (2016) described it as a civil war 11. Among the core developers, Gregory Maxwell was a strong proponent of maintaining the cap 11.
In 2014 the mining pool Ghash.io reached 51% of mining power. It later voluntarily capped its share at 39.99% 1. The Congressional Research Service describes a tension between factions that adhere to the idealistic origins of decentralization and the institutions that have fueled crypto's trajectory from obscure technology to financial mainstay 5.
Privacy and illicit use
#Bitcoin is pseudonymous 1. Brookings argues that it does not offer true anonymity, citing the US government's success in tracking and retrieving part of the ransom paid to the hacking collective DarkSide in the Colonial Pipeline attack 7.
The Council on Foreign Relations reports that critics say cryptocurrencies empower criminal groups, terrorist organizations and some governments 4. The same backgrounder cites the US Drug Enforcement Administration's statement that drug cartels and money launderers are increasingly incorporating virtual currency into their activities 4. It also cites the theft of more than $1 billion in cryptocurrency by a North Korean hacking group in 2022 4. According to the Congressional Research Service, a central policy question is how to balance the relative privacy crypto provides against its potential use in illicit activity 5.
Consumer and market concerns
#The Congressional Research Service describes the crypto industry as one that has been rife with scams and thefts, and asks whether investor protections should be put in place 5. The Council on Foreign Relations reports that critics say cryptocurrencies stoke inequality and suffer from drastic market volatility 4. Some analysts say this volatility limits their usefulness as a means of transaction, though some businesses accept bitcoin 4.
Legal status and regulation
#In March 2013, the US Financial Crimes Enforcement Network classified American miners who sell bitcoins as money services businesses 1. As of November 2021, nine countries applied an absolute ban and 42 had an implicit ban 1. The Council on Foreign Relations says regulations vary considerably around the world, with some governments embracing cryptocurrencies and others banning or limiting their use 4.
El Salvador made bitcoin legal tender in September 2021. A January 2025 reform removed the obligation to accept it 1. The Central African Republic adopted bitcoin as legal tender in April 2022 and repealed the reform a year later 1.
The Congressional Research Service describes it as a matter of debate whether crypto needs a tailored regulatory regime. In its account, the current approach has kept the industry at arm's length from the traditional financial system, which limited broader systemic risk, but the lighter touch may have enabled fraud 5. As of January 2024, 130 countries were considering central bank digital currencies 4. A survey of scholarly, media and industry publications identified six dimensions of disagreement over cryptocurrencies, comprising 42 distinct arguments 3.
Economic debate
#According to the European Central Bank, as reported on Wikipedia, bitcoin's decentralization of money has roots in the Austrian school of economics, especially Friedrich Hayek's The Denationalisation of Money 1. Proponents see cryptocurrencies as a democratizing force that takes the power of money creation and control away from central banks and Wall Street 4.
The Congressional Research Service reports two opposing views. Some call the industry a technological solution in search of a problem and note that it has no economic or productive capacity beyond speculation or the expectation of appreciation. Proponents disagree and regard crypto as a new and innovative technology with potentially valuable applications, many of which may not yet be realized 5.
A 2013 Chicago Fed article found that the uses of bitcoin as a medium of exchange appeared limited, particularly if illegal activities are excluded 14. Some proponents present bitcoin as an inflation hedge because its supply is permanently fixed. According to the Council on Foreign Relations, many experts questioned this argument after bitcoin plummeted in 2022 4.
Economists including Joseph Stiglitz, James Heckman and Paul Krugman have described bitcoin as a bubble 1. Jean Tirole described it as a pure bubble in 2024 1. In 2014, Nouriel Roubini called bitcoin a Ponzi scheme. Legal scholar Eric Posner and a 2014 World Bank report disagreed with that characterization 1.
Bitcoin is often compared to gold, and is sometimes called digital gold 1017. A 2022 analysis found it less volatile than oil, silver and US Treasuries during and after the 2020 crash 1.
Scripture
Passages quoted from the King James Version. The text is fetched, never written by a model.
A false balance is abomination to the LORD: but a just weight is his delight.
Wealth gotten by vanity shall be diminished: but he that gathereth by labour shall increase.
Tell us therefore, What thinkest thou? Is it lawful to give tribute unto Caesar, or not? But Jesus perceived their wickedness, and said, Why tempt ye me, ye hypocrites? Shew me the tribute money. And they brought unto him a penny. And he saith unto them, Whose is this image and superscription? They say unto him, Caesar’s. Then saith he unto them, Render therefore unto Caesar the things which are Caesar’s; and unto God the things that are God’s.
But they that will be rich fall into temptation and a snare, and into many foolish and hurtful lusts, which drown men in destruction and perdition. For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows.
Sources
- 1.Bitcoin — Wikipedia (opens in a new tab)
en.wikipedia.orgWikipedia (CC BY-SA 4.0)
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- 7.The brutal truth about Bitcoin (opens in a new tab)
brookings.edu
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- 12.FAQ - Bitcoin (opens in a new tab)
bitcoin.org
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- 14.Bitcoin: A Primer (opens in a new tab)
chicagofed.org
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- 18.Bitcoin - an overview | ScienceDirect Topics (opens in a new tab)
sciencedirect.com
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Truth Ledger
Every checkable claim in the draft, checked by GPT-6.1 Sol and Grok 4.7. A claim is stated as fact only when both checkers confirm it from the cited sources; a split verdict is published with attribution, and a claim neither can confirm is cut.
Showing 45 claims.
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A white paper by Satoshi Nakamoto was linked on a cryptography mailing list on 31 October 2008.
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Source [1] gives the mailing-list posting date as 31 October 2008. / Wikipedia says Nakamoto's white paper link was posted to a cryptography list on 31 October 2008.
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The St. Louis Fed and the bitcoin.org FAQ describe the white paper or first specification as published in 2009.
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Source [12] dates the first specification to 2009; source [16] describes the white paper as published in 2009. / St. Louis Fed dates the white paper to 2009; bitcoin.org FAQ dates the first specification to 2009.
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The genesis block was mined on 3 January 2009.
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Source [1] states that Nakamoto mined the genesis block on 3 January 2009. / Wikipedia states Nakamoto mined the genesis block on 3 January 2009.
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Laszlo Hanyecz bought two pizzas for ₿10,000 on 22 May 2010, the first known commercial bitcoin transaction.
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Source [1] confirms the buyer, date, two pizzas, ₿10,000 price, and first-known-commercial-transaction qualification. / Wikipedia reports Hanyecz's 22 May 2010 purchase of two pizzas for ₿10,000 as the first known commercial transaction.
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Nakamoto's white paper was not peer-reviewed.
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Source [1] explicitly states that Nakamoto's paper was not peer-reviewed. / Wikipedia explicitly says Nakamoto's paper was not peer-reviewed.
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Silk Road transacted ₿9.9 million, worth about $214 million.
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Source [1] gives Silk Road's transaction total as ₿9.9 million, worth approximately $214 million. / Wikipedia states Silk Road transacted ₿9.9 million, worth about $214 million.
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The economics literature treats Mt. Gox and Silk Road as key episodes in bitcoin's history.
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Source [2] highlights both episodes as infamous events discussed at length in the literature. / The economics-literature survey calls Mt. Gox and Silk Road infamous episodes discussed at length.
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SegWit activated in August 2017 and its opponents forked to create Bitcoin Cash.
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Source [1] confirms August 2017 activation and the Bitcoin Cash fork by SegWit opponents. / Wikipedia says SegWit activated in August 2017 and opponents forked to create Bitcoin Cash.
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Bitcoin's market capitalization first reached $1 trillion in February 2021.
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Source [1] states that market capitalization first reached $1 trillion in February 2021. / Wikipedia says bitcoin's market capitalization first reached $1 trillion in February 2021.
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The first 11 US spot bitcoin ETFs began trading in January 2024.
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Source [1] states that the first 11 US spot bitcoin ETFs began trading in January 2024. / Wikipedia says the first 11 US spot bitcoin ETFs began trading in January 2024.
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Bitcoin's price first reached $100,000 in December 2024.
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Source [1] dates bitcoin's first $100,000 price to December 2024. / Wikipedia says bitcoin's price first reached $100,000 in December 2024.
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President Trump signed an executive order in March 2025 to establish a strategic bitcoin reserve.
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Source [1] explicitly records the March 2025 executive order establishing a strategic bitcoin reserve. / Wikipedia says President Trump signed a March 2025 order establishing a strategic bitcoin reserve.
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Mining difficulty is recalibrated every 2,016 blocks, about two weeks.
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Source [1] specifies recalibration every 2,016 blocks, approximately two weeks. / Wikipedia says difficulty is recalibrated every 2,016 blocks, about two weeks; the Chicago Fed says every two weeks.
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The block reward started at 50 bitcoins and halves every 210,000 blocks.
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Source [14] confirms the initial 50-bitcoin reward and halving every 210,000 blocks. / The Chicago Fed says the reward began at 50 and halves every 210,000 blocks; Wikipedia confirms the halving interval.
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An estimated 20% of all bitcoins are lost.
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Source [1] reports an estimate that around 20% of all bitcoins are lost. / Wikipedia says it is estimated that around 20% of all bitcoins are lost.
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A non-peer-reviewed 2025 CCAF study estimated that bitcoin mining used 0.5% of global electricity and produced 0.08% of greenhouse gas emissions.
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Source [1] gives both percentages and identifies the 2025 CCAF study as non-peer-reviewed. / Wikipedia cites a non-peer-reviewed 2025 CCAF estimate of 0.5% of electricity and 0.08% of emissions.
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Surveyed miners reported that 52% of their electricity came from sustainable sources.
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Source [1] reports surveyed miners' sustainable-electricity share as 52%. / Wikipedia says surveyed miners reported 52% of electricity use from sustainable sources.
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The bitcoin network consumes more electricity than many countries.
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Source [4] explicitly states that the network consumes more electricity than many countries. / CFR says the bitcoin network consumes more electricity than many countries.
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In October 2025 the US held 38% of global bitcoin mining share, Russia 16% and China 14%.
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Source [1] gives October 2025 mining shares of 38% for the US, 16% for Russia, and 14% for China. / Wikipedia gives October 2025 mining shares as US 38%, Russia 16%, and China 14%.
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A dispute over the 1 MB block size cap was described as a civil war, with Gregory Maxwell supporting the cap.
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Source [11] describes the conflict as a civil war and identifies Gregory Maxwell as a strong supporter of the cap. / The source calls the conflict a civil war and says Gregory Maxwell strongly supported the 1 MB cap.
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Mining pool Ghash.io reached 51% of mining power in 2014 and later capped its share at 39.99%.
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Source [1] confirms Ghash.io's 51% share in 2014 and subsequent voluntary cap of 39.99%. / Wikipedia says Ghash.io reached 51% in 2014 and later capped itself at 39.99%.
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The US government recovered part of the bitcoin ransom paid in the Colonial Pipeline attack.
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Source [7] states that the government tracked and retrieved part of the Colonial Pipeline bitcoin ransom. / Brookings says the government tracked and retrieved part of the Colonial Pipeline bitcoin ransom.
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As of November 2021, nine countries had an absolute ban on bitcoin and 42 had an implicit ban.
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Source [1] gives nine absolute bans and 42 implicit bans as of November 2021. / Wikipedia says that as of November 2021, nine countries had absolute bans and 42 implicit bans.
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El Salvador made bitcoin legal tender in September 2021, and a January 2025 reform removed the obligation to accept it.
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Source [1] confirms September 2021 adoption and the January 2025 removal of mandatory acceptance. / Wikipedia says El Salvador made bitcoin legal tender in September 2021 and a January 2025 reform removed acceptance obligations.
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The Central African Republic adopted bitcoin as legal tender in April 2022 and repealed the reform a year later.
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Source [1] confirms April 2022 adoption and repeal one year later. / Wikipedia says CAR adopted bitcoin as legal tender in April 2022 and repealed it one year later.
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As of January 2024, 130 countries were considering central bank digital currencies.
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Source [4] states that 130 countries were considering CBDCs as of January 2024. / CFR says that as of January 2024, 130 countries were considering CBDCs.
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A survey identified six dimensions of disagreement over cryptocurrencies, comprising 42 arguments.
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Source [3] reports six dimensions of disagreement comprising 42 distinct arguments. / The cited analysis identifies six dimensions of disagreement comprising 42 distinct arguments.
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The ECB traces bitcoin's theoretical roots to the Austrian school and Hayek's The Denationalisation of Money.
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Source [1] attributes these theoretical roots to the ECB, specifically naming the Austrian school and Hayek's book. / Wikipedia attributes to the ECB the view linking bitcoin to the Austrian school and Hayek.
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Some critics describe crypto as a technological solution in search of a problem.
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Source [5] explicitly reports this criticism of the crypto industry. / The CRS report says some describe the crypto industry as a solution in search of a problem.
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A 2013 Chicago Fed article found bitcoin's uses as a medium of exchange limited.
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Source [14], the 2013 Chicago Fed article, describes bitcoin's medium-of-exchange uses as limited. / The 2013 Chicago Fed Letter says bitcoin's medium-of-exchange uses appear limited.
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Many experts questioned the inflation-hedge argument after bitcoin's 2022 decline.
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Source [4] says many experts questioned the inflation-hedge argument after bitcoin plummeted in 2022. / CFR says many experts questioned the inflation-hedge argument after bitcoin fell in 2022.
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Stiglitz, Heckman and Krugman have described bitcoin as a bubble.
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Source [1] names Stiglitz, Heckman, and Krugman among economists describing bitcoin as an economic bubble. / Wikipedia says Stiglitz, Heckman, and Krugman are among economists who described bitcoin as a bubble.
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Jean Tirole called bitcoin a pure bubble in 2024.
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Source [1] attributes the phrase 'pure bubble' to Jean Tirole in 2024. / Wikipedia says Jean Tirole described bitcoin as a pure bubble in 2024.
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Nouriel Roubini called bitcoin a Ponzi scheme in 2014, a view disputed by Eric Posner and a World Bank report.
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Source [1] records Roubini's 2014 characterization, Posner's disagreement, and the World Bank report's contrary conclusion. / Wikipedia says Roubini called bitcoin a Ponzi scheme in 2014; Posner and a World Bank report disagreed.
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A 2022 analysis found bitcoin less volatile than oil, silver and US Treasuries during and after the 2020 crash.
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Source [1] reports these findings from a 2022 analysis covering the 2020 crash and its aftermath. / Wikipedia cites a 2022 analysis finding bitcoin less volatile than oil, silver, and US Treasuries around the 2020 crash.
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FinCEN classified US miners who sell bitcoins as money services businesses in March 2013.
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Source [1] confirms the March 2013 classification, specifically for American miners selling their generated bitcoins. / Wikipedia says March 2013 FinCEN guidance classified US miners selling bitcoin as money services businesses.
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Text is available under the Creative Commons Attribution-ShareAlike 4.0 licence. Written by Claude Opus 5.5 from the sources listed and checked claim by claim by GPT-6.1 Sol and Grok 4.7.