Bitcoin is a digital asset and payment system created by an individual or group using the pseudonym Satoshi Nakamoto. A white paper outlining its design was published in 2008, and the software was released as open source in 2009. The system operates on a peer-to-peer network, allowing users to conduct transactions directly with each other without needing an intermediary. These transactions are verified by network nodes and recorded on a public distributed ledger known as the blockchain. Bitcoin serves as the unit of account within this ledger. Without a central authority or administrator, the U.S. Treasury classifies Bitcoin as a decentralized virtual currency. It is often referred to as the first cryptocurrency, though earlier systems existed, making Bitcoin the first truly decentralized digital currency. Today, it holds the highest market value among cryptocurrencies.
Bitcoins are generated as a reward for a process called mining, where users provide computing power to verify and record transactions on the blockchain. Miners receive both transaction fees and newly minted bitcoins for their efforts. Apart from mining, bitcoins can be exchanged for other currencies, goods, and services. Transactions can include an optional fee to prioritize their processing.
Bitcoin addresses the double-spending problem through its peer-to-peer network. It timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, creating an immutable record. The longest chain demonstrates the chronological order of transactions and indicates the largest amount of computational work performed. As long as the majority of computing power is held by nodes that are not colluding to attack the network, they will create the longest chain, thereby outpacing potential attackers. The network operates with minimal structure, relying on broadcast messages and allowing nodes to join or leave freely while accepting the longest proof-of-work chain as a record of events during their absence.