# WHAT IS BITCOIN? *What is Bitcoin (BTC)? Learn about Bitcoin before investing.* By [Canion Insider](https://paragraph.com/@canion) · 2025-08-24 --- Bitcoin is the world's first cryptocurrency, created on Blockchain technology, by an anonymous figure named Satoshi Nakamoto. Bitcoin was first introduced in 2009. The introduction of Bitcoin has laid the foundation for the development of the current crypto market. ![](https://storage.googleapis.com/papyrus_images/c50cb6a8db9558afede1e2360597485e.png) Bitcoin uses a peer-to-peer network, i.e. the sender transacts directly with the recipient without going through any intermediaries. From there, it eliminates unnecessary fees and makes each transaction much cheaper than international money transfer services. ![](https://storage.googleapis.com/papyrus_images/fededcfa90776f19e0cee2834b17ef1d.png) In the world, a total of 21,000,000 BTC coins have been created. No one will be able to change this number, including its founder, Satoshi Nakamoto. As of March 2024, ~19.6 million BTC have been mined, and only ~1 million BTC remain unmined. Not only does Bitcoin have the largest unit, Bitcoin (BTC), but it also has a smaller unit, Satoshi (or sts) – named after Bitcoin's founder. ![](https://storage.googleapis.com/papyrus_images/811999254ebf05cad9ff286d91ad6df8.png) _Satoshi Nakamoto's wallet_ The ratio of 1 BTC = 100,000,000 Satoshi, i.e. one unit of Satoshi = 0.00000001 BTC. How does Bitcoin work? ---------------------- Bitcoin operates on blockchain technology, a distributed and public system. Each Bitcoin transaction is tied to a block, and these blocks are connected to each other to form the blockchain. The Bitcoin network consists of thousands of nodes (or computers) around the globe that are responsible for confirming and recording transactions. When a Bitcoin transaction is created, it is broadcast to the network and awaits confirmation from nodes in the system. These nodes check the validity of transactions, including verifying the origin of Bitcoin's funds and checking digital signatures. Once the transaction is confirmed, it will be packaged into a new block and added to the blockchain. ![](https://storage.googleapis.com/papyrus_images/e4d82508f0ae9379a9fd55505eec48a6.png) The process of confirming and recording transactions is carried out by Bitcoin miners (called Bitcoin miners). These people use the computing power of computers to solve complex arithmetic problems, known as "mining problems." Successful miners will be rewarded with a certain amount of Bitcoin, and new blocks will be added to the blockchain. This mechanism ensures the integrity and reliability of the Bitcoin system. In addition, the use of blockchain helps prevent fraud and alteration of transaction history, as once a block has been added to the blockchain, it is almost impossible to change. Overall, Bitcoin operates as a decentralized cryptocurrency system, which is not owned by any organization and is based on blockchain technology to ensure the integrity and authenticity of transactions. **What are the characteristics of Bitcoin?** -------------------------------------------- Bitcoin is like all fiat currencies such as USD, Euro, VND... but are electronically encrypted. What sets Bitcoin apart will lie in the following factors: ### **Decentralization** In the traditional financial market (Centralized Finance), fiat currencies will be controlled by institutions such as the Central Bank or the Government. However, Bitcoin is not. Instead, in order for transactions to be executed and validated, they need the consensus of multiple nodes participating in the Bitcoin network. The nodes in the network will be controlled by different individuals/organizations (called miners) and they are located all over the world. When more than 50% of the nodes in the network accept a transaction, creating a consensus, the transaction will be successful ![](https://storage.googleapis.com/papyrus_images/5a472171f96da0d0d94e458786c08629.png) Based on the image above, you can see that the Bitcoin network is not overly controlled by any entity, the most powerful organization being Foundry USA also holds only 22% of the Hashrate market share. Therefore, Bitcoin is considered a decentralized blockchain that cannot be attacked. ### **Security** In theory, you can hack Bitcoin's network to reverse transactions or perform bad behaviors for profit. However, in reality, no one has been able to do this because Bitcoin has a very high security system. Bitcoin's security is ensured by 2 factors: * **Decentralization**: If you want to hack into the Bitcoin network, you need to control 51% of the network's hashrate at that time. However, this is impossible because the cost for you to own that computing power will be very high. According to estimates, the cost to attack Bitcoin in 1 hour is more than $700,000 without taking into account other risks. * **SHA-256 Algorithm:** This is a secure hashing algorithm used to generate hashes that cannot be reversed. According to calculations by experts from the University of Sussex, for a quantum computer to break Bitcoin in 1 hour, it takes 317 million qubits, while the most powerful computer today has only 127 qubits. That is also the reason that once you have made a transaction, you will not be able to undo or get your money back because the information is now recorded in the network, no one will be able to change or edit it. ### **Transparency** As for the US dollar circulating in the market, we will not be able to know exactly how much has been issued. All figures are only published through the government and there are also discrepancies because the integrity of the banknotes cannot be controlled after the expiration date. However, for Bitcoin, all information is recorded on the ledger of the blockchain. This means that anyone can become a miner, anyone can read the network's data. ### **Low transaction fees** Compared to the cost of transferring money internationally through institutions such as banks, the cost of Bitcoin transactions is a relatively low number. ![](https://storage.googleapis.com/papyrus_images/04115aeddf057dc8dd0fcf8f455796ac.png) In fact, each bank will have a different way of calculating fees. However, the majority of banks will charge a fee based on a percentage of the amount you need to deposit, while Blockchain will charge a fee based on the number of transactions. For example, if you send about $10,000 abroad, the fee cannot be lower than $100, not to mention that you need to spend time doing the paperwork. For Bitcoin, the fee is only $1 per transaction with a waiting time of one hour. ### **Finitude and difficulty to mine** These are the two characteristics that make Bitcoin considered digital gold. If Gold is a finite resource on Earth, Bitcoin is finite on the Blockchain (limited to 21 million Bitcoins). For the reason above rarity, it is also becoming more and more difficult to mine BTC. In order to mine Bitcoin, miners must constantly upgrade their mining machines because the difficulty of the Bitcoin network (Hashrate) has been constantly increasing. ![](https://storage.googleapis.com/papyrus_images/87d3fb33e1831e1ffca9e4cbce699b24.png) _Bitcoin mining difficulty increases over time as measured by Hash rate_ ### **Disadvantages of Bitcoin** Although Bitcoin has the largest capitalization in the crypto market, it still has many limitations: * Low block size 1MB * Slow network: Only 7 transactions per second. * Transaction fees are not too high but also not low enough to compete with other blockchains. * There is no high applicability because there are no Smart Contracts like Ethereum. Since the inception of Bitcoin, there have been many solutions launched to handle the above limitations. However, the hard forks did not bring value to Bitcoin, so there were several solutions that had a direct impact: SegWit, SegWit2x, Lighting Network. **How to Profit from Bitcoin** ------------------------------ ### **Bitcoin Mining** Bitcoin mining is the activity of becoming a node of the Bitcoin network, also known as a "miner". Miners use coin miners to solve problems and receive rewards. This reward comes from 2 sources: * Transaction fees paid by users to the network: If there are users who trade, there will be rewards * Block rewards from the Bitcoin network According to Nakamoto Satoshi's vision, block rewards are like Incentives to attract early users and miners to operate the machinery for Bitcoin. When Bitcoin is strong enough, there is a community, and the value of BTC increases, the Bitcoin network will operate on its own without block rewards. ### **Buy and hold Bitcoin** In essence, Bitcoin holding is when an investor buys BTC at a low price, holds it for a long period of time, waits for the price to rise, and sells it for a profit. The purchase decision will be based on fundamental analysis, evaluation, and prediction of the project's future, not just based on each technical analysis. However, investors must have great faith in Bitcoin and have a high level of patience. **How to store Bitcoin (BTC)?** ------------------------------- ### **Store Bitcoin on the exchange** Most CEXs support buying and selling Bitcoin, so you can store your Bitcoin on the exchange as well. However, for investors with large assets, storing assets on the floor is not recommended. The collapse of FTX is the biggest proof that storing on the floor will leave a lot of risks. Therefore, you should store with Non-custodial wallets to have full control over your assets. If you leave assets on the floor for convenient trading, you should choose large and reputable exchanges such as Binance, Bybit, Coinbase, OKX... ### **Bitcoin Storage Wallets** To store Bitcoin, users need to prepare a Bitcoin wallet. In which,Non-custodial wallets (decentralized wallets) are the safest type of wallet for investors to have full control over their assets. Each Bitcoin wallet will include: * A public address (like the account number and holder's name) is called a Bitcoin Address. * A private key (like the password of an Internet Banking account) is a Private Key or Passphrase. A special note is that decentralized wallets will not be able to recover their private keys or Passphrases. Therefore, users are required to store their private keys or Passphrases carefully and not disclose them to anyone, whether it is the party that supports you to create a wallet such as Coin98 Super Wallet, Metamask, Trust, etc. **Risks of holding Bitcoin that investors need to know** -------------------------------------------------------- **Market risk** Not only Bitcoin, the crypto market is highly risky due to high price volatility. Therefore, you should only invest with a small amount of capital to minimize risk. Bitcoin has had an extremely "crazy" price history: * 1/2016-2/2017: 400-1000 USD/BTC * 12/2017: Peaked at 17,000 USD/BTC * 8/2018: Reaching the bottom of the cycle of 3,400 USD/BTC * 4/2021: Peaking at 63,000 USD/BTC * 7/2021: Down to 31,000 USD/BTC * 11/2021: ATH peak of 67,000 USD/BTC * 1/2023: Long slide to 16,000 USD/BTC * 8/2025: ATH reached 124,498 USD/BTC **Security risks** Security is a factor that the vast majority of users are interested in when holding Bitcoin. If the account is not properly secured, the investor may lose all the assets they hold. **Legal risks** The level of recognition of Bitcoin by different countries. Therefore, investors need to carefully study the regulations of the country they live in to have appropriate Bitcoin investment activities. **Why was Bitcoin created and valuable?** ----------------------------------------- According to newly updated data from Coingecko, BTC reached a high price of **$73,737/BTC** on March 14, 2024. But this is not the real value of BTC, but only a reflection of the law of supply and demand of the market. According to the information mentioned above, Bitcoin's greatest value comes from its **decentralization**. This is one of the types of assets that are not controlled by an agency/organization/government, and are not stopped or removed because of a country's decision or law. For billionaires or oligarchs, finite assets such as Bitcoin, Gold, and real estate are real assets, while fiat currencies are always subject to inflation. Therefore, Bitcoin is considered to be an investment channel or a shelter channel for currency inflation. Although Bitcoin is not as wieldy as Gold or has a certificate book like real estate, it is also an advantage because Bitcoin cannot be counterfeited and is not controlled. In contrast, Bitcoin can be accessed anywhere as long as you have an Internet connection. **Organizations that buy and hold Bitcoin** ------------------------------------------- In addition to individuals holding BTC, companies also announced that they hold Bitcoin. However, it will be difficult for us to track through Blockchain Explorer because they can use 3rd party custody services such as Coinbase, BitGo, etc. or divide into many small wallets to hold. ![](https://storage.googleapis.com/papyrus_images/a5a898fea81589764d64765f16941e24.png) The number of wallets with a recorded Bitcoin balance is 43 million wallets. In which: Top 10 holder 5.4% Top 20 holder 7.4% Top 50 holder 10.7% Top 100 holder 13.5% With the ownership rate evenly distributed, this shows that Bitcoin is an asset that is not controlled by any entity. Top Bitcoin holders will often change. According to the data above, we cannot determine who Bitcoin belongs to because most of the largest wallets are exchange wallets, which contain investors' assets. * * * CANION --- *Originally published on [Canion Insider](https://paragraph.com/@canion/what-is-bitcoin-1)*