What is Bitcoin?

Bitcoin is a digital currency that allows people to send and receive money directly — without banks, payment processors, or governments in between. 

Created in 2009 by an anonymous person or group using the pseudonym Satoshi Nakamoto, Bitcoin runs on a decentralized network of computers that collectively maintain a shared ledger (the blockchain) recording every transaction ever made. 

No single entity controls Bitcoin. It operates according to transparent rules encoded in software, with a hard cap of 21 million coins that can never be changed.

How Bitcoin works

The basics

When you send Bitcoin, the transaction is broadcast to a global network of computers (nodes) that verify it follows the rules: you actually own the Bitcoin you are sending, you are not spending the same Bitcoin twice, and the digital signature matches your private key. Once verified, the transaction is grouped with others into a “block” and added to the blockchain — a permanent, publicly visible record.

The entire process takes about 10 minutes for a first confirmation and requires no intermediary. A person in Berlin can send Bitcoin to someone in Buenos Aires at the same time and at the same cost as sending it to someone in the next building. No bank transfer, no currency exchange, no business hours.

Key properties

Decentralized: No company, government, or individual controls Bitcoin. The network is maintained by thousands of independent nodes across every continent. Changing Bitcoin’s rules requires overwhelming consensus from the network — no single party can unilaterally alter the supply, change transaction rules, or freeze accounts.

Limited supply: There will only ever be 21 million Bitcoin. This is hardcoded into the protocol and enforced by every node on the network. As of 2026, approximately 19.8 million Bitcoin have been mined. The final Bitcoin will be created around the year 2140. This fixed supply contrasts sharply with fiat currencies, where central banks can create unlimited new units.

Pseudonymous: Transactions are linked to cryptographic addresses, not real-world identities. However, once an address is connected to a person (e.g., through a KYC-compliant exchange), transactions can be traced.

Permissionless: Anyone with an internet connection can use Bitcoin. No application, no credit check, no minimum balance. This makes Bitcoin accessible to the estimated 1.4 billion adults worldwide who lack access to traditional banking.

Irreversible: Once confirmed on the blockchain, transactions cannot be reversed. This eliminates chargeback fraud but means you must be careful when sending — there is no “undo” button.

Why Bitcoin has value

Bitcoin’s value comes from a combination of scarcity, utility, and network effects.

Scarcity: The 21 million supply cap creates digital scarcity. Unlike gold (which can be mined in greater quantities if prices rise) or fiat currencies (which can be printed), Bitcoin’s supply schedule is fixed and verifiable. This is the foundation of Bitcoin’s value proposition as a store of value.

Utility: Bitcoin provides a way to store and transfer value without relying on any institution. This is valuable in countries with unstable currencies, capital controls, or limited banking access. It is also valuable as a censorship-resistant form of money — no government can freeze your Bitcoin if you hold your own keys.

Network effects: Bitcoin is the largest, most liquid, and most widely recognized cryptocurrency. It has the longest track record (17+ years without a single minute of downtime), the most mining power securing it, and the widest merchant and institutional acceptance. Being the first and largest creates a self-reinforcing network effect.

Institutional adoption: Bitcoin ETFs (exchange-traded funds) have been approved in the United States and other jurisdictions, allowing traditional investors to gain Bitcoin exposure through regulated financial products. Major corporations (MicroStrategy, Tesla, Block) hold Bitcoin on their balance sheets. This institutional legitimacy has broadened Bitcoin’s investor base.

Bitcoin as an investment

Bitcoin has been the best-performing asset of the last decade. However, its path has been volatile — annual drawdowns of 30-80% are historically normal. Bitcoin is not a get-rich-quick asset; it is a long-term monetary bet on digital scarcity and decentralized money.

For European investors: The most common approach is dollar-cost averaging (DCA) — buying a fixed EUR amount on a regular schedule, regardless of price. This smooths out volatility and removes the need to time the market. Platforms like Bitwala support automated recurring purchases via SEPA.

Risk management: Financial advisors typically recommend allocating 1-10% of a portfolio to Bitcoin. Only invest money you can afford to lose and can commit to holding for at least 3-5 years.

How to get Bitcoin

Buy on a regulated platform: The simplest method for European users. Choose a MiCA-regulated platform such as Bitwala, verify your identity, deposit EUR via SEPA, and buy Bitcoin. Bitwala offers self-custody — your Bitcoin goes directly into a wallet you control.

Receive as payment: If you sell goods or services, you can accept Bitcoin directly. Some freelancers and businesses in Europe accept Bitcoin payments.

Mine Bitcoin: Mining requires specialized hardware and cheap electricity. For European users, buying Bitcoin is almost always more cost-effective than mining due to high electricity prices.

Bitcoin and the European framework

Bitcoin is fully legal across the European Union. Since MiCA’s implementation in December 2024, crypto-asset service providers must hold a CASP license, providing standardized consumer protections including fee transparency, capital reserves, and complaints handling.

Self-custody is explicitly permitted — no European regulation restricts your right to hold your own private keys. Platforms like Bitwala demonstrate that full MiCA compliance and self-custody are complementary: you get regulatory protections when buying and using Bitcoin, and you get sovereign control when storing it.

Tax treatment varies by country: Germany offers a complete tax exemption after 1 year of holding, France applies a flat 30% on gains, and Spain applies a progressive 19-28% rate. See our Crypto Taxes in Europe guide for detailed country-by-country information.

FAQ

Is Bitcoin real money?

Bitcoin functions as money — it can be used to buy goods and services, store value over time, and transfer wealth. Whether it qualifies as “money” in a legal sense depends on the jurisdiction. In the EU, Bitcoin is classified as a crypto-asset, not legal tender. However, with a crypto Visa card (like Bitwala’s), you can spend Bitcoin anywhere Visa is accepted — effectively using it as money in daily life.

Is Bitcoin safe?

The Bitcoin network itself has never been hacked — it has operated continuously since 2009 with zero downtime. The security risks come from how you store Bitcoin. Custodial exchanges can be hacked or fail (over $2.2 billion was lost to exchange collapses in 2022-2023). Self-custody (holding your own keys, as on Bitwala) eliminates this risk.

How much Bitcoin should I buy?

There is no minimum — Bitcoin is divisible to 8 decimal places, so you can buy as little as a few euros’ worth. Most financial advisors suggest allocating 1-10% of your investment portfolio. A common starting point is €50-€100 per month via an automated DCA savings plan.

Can Bitcoin go to zero?

While theoretically possible, it would require every participant in the network to simultaneously stop using, mining, and valuing Bitcoin. Given Bitcoin’s decentralized nature, institutional adoption, and 17-year track record, a complete collapse to zero is considered extremely unlikely — though significant price drops (50%+) are historically normal.

What can I do with Bitcoin?

You can hold it as a long-term investment (store of value), spend it via a crypto Visa card (Bitwala’s card works anywhere Visa is accepted), borrow EUR against it (Bitwala’s crypto-backed loans provide cash without selling), send it to anyone globally (fast, borderless transfers), or use it as a DCA savings plan (automated recurring purchases).

Is Bitcoin bad for the environment?

Bitcoin mining consumes significant electricity (estimated 100-150 TWh annually). However, an increasing share (estimated 40-60%) comes from renewable sources, and many mining operations use stranded or wasted energy. The environmental impact is debated — proponents argue it secures a trillion-dollar monetary network, while critics point to the absolute energy consumption.

Last updated: April 14, 2026. This article is for informational purposes and does not constitute financial advice. Bitcoin is volatile — only invest what you can afford to lose.