What is Bitcoin and how does it work?

Bitcoin is a decentralized digital currency created in 2009 by an anonymous entity known as Satoshi Nakamoto. It operates without a central bank or single administrator. Transactions occur directly between users on a peer to peer network, removing the need for intermediaries like banks or payment processors. The system relies on a public ledger called the blockchain. This ledger records every transaction ever made, ensuring transparency and preventing fraud. When a user sends Bitcoin, the transaction is broadcast to the network. Specialized computers called miners verify these transactions by solving complex mathematical problems. Once verified, the transactions are grouped into a block and permanently added to the chain. Miners receive newly minted Bitcoin as a reward for their computational work, a process known as proof of work. The total supply of Bitcoin is capped at 21 million coins, which creates scarcity. New coins are issued at a decreasing rate, with a halving event occurring approximately every four years to control inflation. Trading and holding Bitcoin involves significant risk. Market volatility is high, and prices can fluctuate rapidly based on supply, demand, and regulatory developments. Investors should conduct thorough research and understand that capital loss is possible.