<p>Bitcoin is the first and largest <a href="/NewSite/encyclopedia/cryptocurrency/" class="ency-link">cryptocurrency</a> by market capitalization, introduced in 2009 by an anonymous creator known as Satoshi Nakamoto. It operates on a decentralized network that uses <a href="/NewSite/encyclopedia/blockchain/" class="ency-link">blockchain</a> technology to record and verify transactions without the need for a central authority such as a bank or government.</p>

<h2>How It Works</h2>
<p>Bitcoin transactions are grouped into blocks, which are added to a chronological chain called the blockchain. Participants called miners use computational power to solve cryptographic puzzles; the first to solve a puzzle validates the block and receives newly created bitcoins as a reward, plus transaction fees. This process, known as proof‑of‑work, secures the network and ensures that altering past transactions would require enormous computational effort.</p>
<p>Users store bitcoins in digital wallets that hold private keys, which authorize the transfer of funds. When a wallet sends bitcoin, it signs the transaction with its private key; network nodes verify the signature and the sender’s balance before accepting the transaction into the mempool, where it awaits inclusion in the next block.</p>
<p>The protocol limits total supply to 21 million coins, with the issuance rate halving approximately every four years in an event called the “halving.” This built‑in scarcity mimics the properties of precious metals and influences Bitcoin’s price dynamics.</p>

<h2>Why It Matters</h2>
<p>Bitcoin pioneered the concept of a censorship‑resistant, globally accessible digital money, inspiring thousands of other cryptocurrencies and decentralized applications. Its market dominance makes it a bellwether for the broader crypto ecosystem; significant price movements often trigger ripple effects across altcoins, investment funds, and fintech innovation.</p>
<p>For example, during the 2020‑2021 bull run, Bitcoin’s price surge from roughly $10,000 to over $60,000 attracted institutional interest, leading companies like Tesla and MicroStrategy to add bitcoin to their balance sheets and spurring the launch of bitcoin‑linked exchange‑traded funds (ETFs) in multiple jurisdictions. This demonstrated how a single cryptocurrency can influence corporate treasury strategies, regulatory discussions, and mainstream adoption of digital assets.</p>