Bitcoin

If you’re looking to understand what is Bitcoin, you’re in the right place. In this short post, we answer most of your questions and help you better understand the concept of cryptocurrency.

Throughout history, value has taken many forms and people have used different materials to represent it in the form of money. First, communities used to barter. Then, over time, evolution turned to precious metals, like gold.

The thing about commonly used mediums of exchange, like precious metals, is that everyone needs to believe and trust that they represent value. So our eventual transition to paper money had to abide by this rule as well.

Our current money is used to represent an amount of gold stored in the central bank. Paper bills were simply used as “receipt certificates” to redeem gold since the former was too impractical for daily transactions. In the last few years, however, this concept has changed. 

Since 1971, our money is no longer linked to an amount of gold. Instead, governments are now liable for the value of paper money, and the public trusts in their value because they are being told to. This is how government-backed money (also known as FIAT) was created. 

The current monetary model has two main drawbacks:

• It is controlled by a central authority, in this case, governments and financial institutions.
• These central authorities can issue unlimited amounts of money whenever they need to.

In turn, these issues lead to (1) our money being less valuable over time (due to inflation) and (2) central authorities gaining unlimited power and control. Do you see the problem? This is exactly why Bitcoin was created.

What is Bitcoin?

Bitcoin was created during the latest financial crisis by an anonymous persona known as Satoshi Nakamoto. Through a 9-page whitepaper, the founder revealed an alternative currency that gives power back to the people and does not lose its value over time.

Definition on Bitcoin

Bitcoin is a decentralized digital currency, meaning that it is not controlled by a central authority. Instead, it is fueled by the use of supercomputers, which belong to the network’s own users. 

Each of these users has access to a digital ledger, known as the blockchain, that keeps track of all transactions, and allows people to exchange value directly with one another. Due to this, the network is transparent, and no one can duplicate or issue new coins by will.

If you wish to improve your knowledge, make sure you explore what is Blockchain.

Instead, new coins come from Bitcoin mining. Powerful computers (called nodes) solve mathematical problems to confirm transactions on the blockchain, and the operators of those computers, known as miners, get rewarded with new coins. There is a hard limit of 21,000,000 bitcoins, and the network won’t mint the last one until around the year 2140.

As of mid-2026, around 20 million bitcoins have already been mined, so roughly 95% of the total supply is already in circulation. Every four years, the reward miners get is cut in half in an event called the Bitcoin halving. The last one happened in April 2024, and the next is expected in 2028.

Bitcoin started as a niche experiment among cryptographers. It’s now held by governments, public companies, and millions of individual investors around the world. Its price has grown a lot since 2009, but the path hasn’t been smooth. Bitcoin hit an all-time high of $126,000 in October 2025, then dropped by close to half over the following months. You can check the current Bitcoin price any time.

Bitcoin goes through sharp up and down cycles, and that hasn’t changed as it’s matured. It’s still a volatile asset, even with billions of dollars of institutional money now behind it.

Opinions differ

Public companies have been putting Bitcoin on their balance sheets for a few years now. Firms like Strategy hold billions of dollars worth of it as a reserve asset, and that trend has kept going even through 2026’s price drop. Big asset managers like BlackRock and Fidelity now offer spot Bitcoin ETFs, which let regular investors get exposure to Bitcoin through a normal brokerage account.

Governments have started treating Bitcoin differently too. The U.S. now holds a Strategic Bitcoin Reserve, a government-held stockpile of BTC, which was unthinkable a decade ago. Not every government sees it this way. Some central banks and regulators are still cautious or restrictive, and rules vary a lot from country to country.

There’s still a group of investors who don’t trust Bitcoin at all. They tend to see its price swings as proof that it’s a bubble rather than a real asset. Given that Bitcoin fell almost 50% from its peak in less than a year during 2026, it’s easy to see why that view hasn’t gone away. Whether you find that risky or just part of how a young asset class behaves is really a personal call.

There are also those who believe that Bitcoin is doomed to fail due to its intangible nature and extreme price fluctuations. These are usually investors who are heavily invested in more traditional investment options and do not have a good understanding of technology. Some of them do not even bother to understand the definition of Bitcoin.

Bitcoin’s role in the financial world

Satoshi Nakamoto had originally hoped for Bitcoin to become the first global currency. Has this goal been achieved, or are we moving towards a model where Bitcoin is simply a store of value? Let’s have a look at the current status of Bitcoin in the financial world.

Bitcoin and global payments

At the moment, there is still a lack of availability when it comes to using Bitcoin as a global payment method. However, over the past two years, we have experienced massive growth, thanks to the introduction of cryptocurrency debit cards, Bitcoin payment gateways, as well as mobile payment solutions.

Bitcoin and financial institutions

This has changed a lot since Bitcoin’s early days. Most major banks now offer some way for clients to get exposure to Bitcoin, whether through custody services, ETFs, or trading desks. Some are still cautious, but “enemy of the banking system” isn’t really an accurate description anymore. Banks have largely moved from ignoring Bitcoin to figuring out how to offer it to their clients.

Bitcoin and trading

Due to its popularity as an investment and because of the recent bear market, Bitcoin has experienced a massive increase in trading volumes. Cryptocurrency exchanges are continuously releasing new products and services that allow users to use Bitcoin similarly to other, more traditional investment options. Among the different options, users can stake their coins, place them into high-yield savings accounts, trade using derivatives products, and explore more options on spot markets.

The good and the bad of Bitcoin in global finance

At the moment, we are cruising through a pivotal time. For most institutions, governments, and authorities, the question no longer is “what is Bitcoin” but more so “how can we prepare accordingly”.

Since the cryptocurrency keeps on becoming more popular and important, laws and legislations surrounding it are constantly changing. It is therefore important to create an overview of the pros and cons of Bitcoin when it comes to its applications in global finance:

The pros of Bitcoin

There are many advantages of Bitcoin that make it worth considering as both a currency and a store of value.

• Resistance to inflation – As aforementioned, due to the limited number of coins Bitcoin is resistant to inflation. This is further strengthened by the Bitcoin halvings, which occur once every 4 years. In short, when a halving occurs, the newly minted coins (miners’ rewards) automatically decrease by 50%, slowing down the release of new coins.
• Global availability – In contrast to traditional money, Bitcoin can be sent to anyone, anywhere, at any time. Users can transfer value overseas in just a few seconds. This makes it a great alternative for global commerce and online transactions.
• Efficient store of value – Bitcoin has many advantages over more traditional investment options. It is digital, intangible, easy to store and send, and fully in your control. This makes it better than, for example, gold, which is bulky, hard to transport, and usually stored in third-party facilities. 
• A better form of transactional currency – Bitcoin has little to no fees and is transferred instantly between digital wallets. This makes it better than traditional currencies that are slowed down by government-imposed limitations. For example, a normal bank transfer can take up to 5 working days due to processing times.
• More democratic – Bitcoin is made by the people, for the people. It can be exchanged in a peer-to-peer fashion without the need for a middleman. It is also a great solution for nearly ⅓ of the world’s citizens, who currently remain unbanked due to their location or background.
• Trendy with younger generations – The millennial generation is more accustomed to investing compared to the generations before them. Due to the convenience, youthful design, and easy overview of the crypto markets, Bitcoin has become one of the most accessible investment options for younger demographics.

The cons (and risks) of Bitcoin

• Money laundering – While many point out that the US dollar is responsible for more money laundering than Bitcoin ever will, the latest makes the process a lot easier, since some exchanges do not request KYC verification. Even if this issue is resolved, users will still be able to use decentralized exchanges to make transactions without creating an account.
• Consumer protection risk – Once Bitcoin is sent, the transaction is final. No one can request a refund or open a dispute since the cryptocurrency is not controlled by any financial authority. If you sell Bitcoin or give it to someone else, it’s gone forever.
• Protocol risk – With the growth of supercomputers, protocol compromise risk grows too. If a design flaw is discovered in Bitcoin’s protocol, or some new form of hacking that can breach its underpinning cryptography, the trust in Bitcoin may be affected negatively.
• Tainted coins – Over the years, legal authorities have found ways to “mark” bitcoins that are linked with criminal activity in order to track them. If BTC is to become a legal tender in the future, governments could taint coins at will, making them worthless in the open market. This, in turn, would once again put the control back in the hands of third parties.

What does the future hold for Bitcoin as a financial tool?

Some people still hope Bitcoin becomes a true global currency, the way Satoshi Nakamoto originally described it. That outcome still looks unlikely in the near term. Bitcoin’s price swings too much day to day to work well as everyday money for most people, and the US dollar isn’t losing its dominant role anytime soon.

A more realistic path is the one already playing out. Bitcoin is increasingly treated as a store of value and a reserve asset, sitting on the balance sheets of companies and now a government reserve, rather than something people use to buy groceries. Where the price goes from here is genuinely uncertain. Our Bitcoin price prediction breaks down what’s driving the market right now and what different analysts expect for the rest of 2026.

Wrapping up

Hopefully you now have a clear picture of what Bitcoin is and how it works. It’s worth doing your own reading beyond this guide too, since the space moves fast and a lot of the noise online is outdated or just wrong.

Bitcoin has been through more than one boom and bust cycle since it launched in 2009, and each time it’s found new buyers on the other side of the drop. You can read the full history of Bitcoin if you want the whole story. Whether it makes sense for you depends on your own risk tolerance and goals. If you decide it does, you can buy Bitcoin directly through Paybis and track live pricing on our Bitcoin price page.