What Is Bitcoin? A Complete Guide from Kraken
Bitcoin is the world's first decentralised cryptocurrency. Created in 2009, it enables peer-to-peer transactions without banks, governments, or intermediaries.
Bitcoin Explained
Bitcoin (BTC) is a digital currency that operates on a decentralised network called a blockchain. Unlike traditional currencies issued by central banks, Bitcoin is created through a process called mining, where specialised computers solve cryptographic puzzles to validate transactions and secure the network. The total supply is capped at 21 million coins, creating mathematical scarcity.
Every Bitcoin transaction is recorded on the blockchain, a public ledger that anyone can verify. No single entity controls Bitcoin — it is maintained by thousands of computers (nodes) distributed across the globe. This decentralisation makes Bitcoin resistant to censorship, seizure, and inflationary monetary policy.
Since its creation by the pseudonymous Satoshi Nakamoto, Bitcoin has grown from a niche experiment among cryptographers to a globally traded asset with a market capitalisation in the trillions of dollars. It is accepted as payment by major corporations and held as a reserve asset by publicly traded companies and sovereign wealth funds.
Key Concepts
Blockchain Technology
The Bitcoin blockchain is a chain of blocks, each containing a batch of verified transactions. Blocks are linked cryptographically, making it practically impossible to alter past transactions. This creates an immutable record of every Bitcoin transfer since the network launched in January 2009.
Mining and Proof of Work
Bitcoin miners use computational power to solve mathematical puzzles and add new blocks to the blockchain. In return, miners receive newly minted Bitcoin (the block reward) and transaction fees. This process, called proof-of-work, secures the network by making attacks economically impractical.
Wallets and Keys
Bitcoin ownership is secured by cryptographic keys. A private key proves ownership and authorises transactions, while a public key generates your receiving address. Bitcoin can be stored in software wallets, hardware wallets, or custodial accounts on exchanges like Kraken.
Bitcoin Use Cases
Store of Value
Bitcoin's fixed supply and decentralised nature position it as a digital alternative to gold. Investors use Bitcoin as a hedge against inflation and currency devaluation. Major institutions now allocate portions of their portfolios to Bitcoin as a long-term store of value.
Peer-to-Peer Payments
Send Bitcoin to anyone in the world without intermediaries. Cross-border payments settle in minutes rather than days, with lower fees than traditional wire transfers. The Lightning Network extends Bitcoin's payment capability with near-instant transactions at minimal cost.
Frequently Asked Questions
Bitcoin was created by a person or group using the pseudonym Satoshi Nakamoto. The Bitcoin whitepaper was published in October 2008, and the network launched in January 2009. Nakamoto's true identity remains unknown.
Bitcoin's blockchain has never been hacked. The network is secured by enormous computational power through proof-of-work mining. Individual security depends on how you store your Bitcoin — hardware wallets and reputable exchanges like Kraken provide strong protection.
Bitcoin has a maximum supply of 21 million coins, of which approximately 19.5 million have been mined. The remaining coins will be mined gradually until approximately the year 2140, with the reward halving every four years.