Bitcoin is a digital payment system created entirely by tech enthusiasts. It differs from other currencies in that it has no authority to vouch for it, which led many people to dismiss it as a scam. The fact that the technology behind it is extremely complex didn’t help either, allowing the naysayers to spread misinformation labeled as “Bitcoin facts.” To address that, we have assembled and verified 101 facts about Bitcoin that you need to know, along with some myths in need of debunking.
A good place to start this conversation is to state outright that there is no single answer to the question “What is bitcoin?” Is it a technical marvel, a pinnacle of engineering thought, a tool of criminals, or a liberating force that will lead humanity to a better future? It is probably all of those things and much more. The facts and infographic below will hopefully clarify some questions you might have and help you make the right decision.
Who created Bitcoin?
Bitcoin has a truly cyberpunk beginning – it was conceived, created, and refined as a collaborative project on the web.
Bitcoin started as a whitepaper authored by Satoshi Nakamoto. This document, which describes the vision of cryptocurrency as a decentralized financial system without intermediaries, is still regarded as a closing argument in debates over bitcoin definition and philosophy.
Satoshi’s identity is debated to this day. Nakamoto described himself online as a male living in Japan. However, many details we know, including the Bitcoin code itself, suggest that it was a fake identity of someone whose native language was most likely British.
The creator’s anonymity is intentional: Since the early days of his involvement with the project, Nakamoto was extremely careful not to disclose any personal details, either out of caution or based on motives we are yet to understand.
There is no reason to believe that Satoshi Nakamoto is a single person. Because all the communication was done online, we have no way to tell whether there was one or several people behind the name. Satoshi could turn out to be a “he,” a “she,” or a “they“.
Bitcoin could be a brainchild of an organization: With the veil of secrecy around it, bitcoin’s origin story was destined to breed conspiracy theories. For instance, the interest in Bitcoin shown by the NSA leads some people to believe they may have been involved in its creation.
An unlikely acronym: Other popular culprits are Samsung, Toshiba, Nakamichi, and Motorola, whose names were supposedly used in the pseudonym (because, apparently, that is what companies do when they want to remain in the shadows).
Nakamoto may be dead: After the initial involvement in BTC development, its mysterious creator ceased all activities on his accounts. People have since come up with several explanations, including death. One candidate is Hal Finney, an early contributor to the cryptocurrency scene and, incidentally, the first person to receive a blockchain transaction from Nakamoto himself, who died in 2014.
There are false Nakamotos out there: The notoriety and fame associated with bitcoin’s story inevitably attract pretenders. One of the most prominent examples is Craig Stephen Wright, a developer who claimed to be Satoshi as far as 2015 and presented evidence to back up his words. As you might have guessed, the evidence was dismissed as irrelevant by experts, and most of the community remains unconvinced.
The creator of Bitcoin is (in theory) insanely rich: There is no way to know how much BTC Nakamoto actually has, but it is reasonable to assume it is a lot. Blockchain is a public ledger, so it is theoretically possible to trace every transaction, especially from its early days. Some experts estimate the size of Nakamoto’s wallet at one million BTC, which amounts to about $9 billion as of the time of writing.
The creator’s coins were hardly ever used. Despite the contents of Satoshi’s wallet being worth a fortune, the majority of coins are still there. Only a fraction of a percent was ever used (which, in retrospect, seems like a sound decision).
Satoshi has the power to ruin his creation in a day (probably): The amount of coins on what is believed to be Satoshi’s address is enough to send the Bitcoin market go down in flames. The most horrifying bit is that it could happen by accident.
Satoshi is also a name for a fraction of bitcoin: more specifically, a hundred millionth of a BTC. If that does not sound grand enough, keep in mind that the value was suggested by Nakamoto himself, so it would be thought of as humble.
Nobel Prize Nominee: The impact of Bitcoin on the global financial system led some people to believe that Satoshi Nakamoto deserved a broader recognition. Some went as far as to nominate him for the Nobel Prize in 2015. Unfortunately, the nomination was turned down due to his secret identity.
Distrust in Institution as the main driver: Early messages from Nakamoto suggest that he was dissatisfied with the banking system as well as the loss of control by common people over their autonomy.
We may thank the global financial crisis: To answer the question “Who made bitcoin?” we should also consider their motivation. The economic collapse of 2008, which coincides with the publication of Nakamoto’s whitepaper, was referenced in the first bitcoin transaction, so it probably served as a tipping point for its development.
Satoshi may be the first example of losing crypto fortune: According to a “Reveal” attributed to Nakamoto, he has lost access to his coins in 2010 due to hardware malfunction.
Satoshi was against hyping Bitcoin: Nakamoto’s account has many comments lamenting the notoriety gained from the connection to illicit markets such as Silkroad.
Cryptocurrency is not the only Satoshi’s creation: while he is most well-known as the father of bitcoin, Nakamoto is also responsible for Bitcointalk, the main forum of the crypto community.
On the shoulders of giants: no matter how innovative or bold Satoshi’s vision was, it would be unfair to give all credit to him. Bitcoin was and still is, first and foremost, a community effort.
Who controls Bitcoin?
Bitcoin was meant to be controlled by no one: The original whitepaper specifically describes it as a “decentralized peer-to-peer network.” In plain language, it means that there is no central authority to make decisions.
Bitcoin.com: The company with a prominent domain name is sometimes perceived as the owner of the eponymous cryptocurrency. In reality, its “control” does not reach beyond the basic promotion efforts.
In theory, there are lots of ways to control bitcoin, from having hash rate dominance to owning a large sum of coins. Simply put, the answer to “Who owns bitcoin?” should be “What ownership are we talking about?”
The cryptocurrency’s ethos is hard-coded into it (sort of): The process of mining, or distributed computing, was intended as a way to level the field by letting anyone with a PC to join.
Bitcoin soon outgrew its developer’s ambitions: Once mining became profitable, large organizations came to the scene, bringing an end to the decentralization as envisioned by the team.
Evidence exists that the majority of bitcoin’s hashrate is concentrated in China, possibly even within a single entity, placing the very concept of decentralized currency under suspicion.
Mining-based control is possible but impractical: Miners are theoretically capable of disrupting the network but realistically would not be willing to risk the integrity of their assets.
Control over market: A more familiar way to control an asset is by owning a large portion of it. Bitcoin, whose disproportionate distribution model resulted in large payouts in its early days, is particularly vulnerable to this factor.
Satoshi Nakamoto – the Ultimate Culprit: The mysterious creator of Bitcoin is thought to own as much as 1,000,000 BTC at one point. Selling this volume of coins would be sufficient for ruining the entire market, so, in a sense, someone who owns enough BTC owns all of it.
Whales: While Satoshi’s coins are in a mythical treasure ballpark, there is another, more real power at play. Major traders and investors with large sums of crypto in their hands, known as whales, are estimated to control up to 40% of the market.
Anonymous Control is Bad: The blockchain is pseudonymous, which means the identities behind wallets are unknown. This allows whales to resort to unfair practices, like arranging deals for price manipulation and taking advantage of the effects.
Authorities and Bitcoin: Governments and regulatory bodies are understandably concerned with the implications of cryptocurrency. Some of their concerns are legitimate, but others are clearly tied to the loss of control over the financial activities of citizens.
If you can’t stop the revolution: Many national governments have since been spotted hoarding BTC. Some of that amount has since been auctioned, but the majority remains in possession of authorities, which points to their intentions of retaining control over this new force.
Cannot ban = cannot control: Several governments have tried to ban bitcoin to ascertain their control over the financial domain. None of these attempts has proven successful so far, so the one thing we can agree upon is that nobody can control its availability.
Corporations are at it again: Each time a corporation announces its affiliation with bitcoin, the press reports the emergence of a new owner. As you may have guessed, this is similar to saying that NASA controls space.
Control through HODL: some experts argue that the biggest impact is made by long-term investors. This group is united by the principle of investing in bitcoin, and “holding to it for dear life,” or hodling, is surprisingly powerful when it comes to the control of supply.
Developers – the inner order: Bitcoin is a complex system developed by a group of software engineers. Because of this, it feels like a small club of chosen manipulating the entire crypto world (in reality, the chances of this happening are slim).
Nodes: the basic component of the blockchain, a node represents an instance of Bitcoin software run somewhere on the net. The convergence of nodes is used to make decisions on the blockchain, making them the ultimate authority.
Network Users: Bitcoin only works as long as miners and users agree upon which network to use. You can think of it as an elaborate voting scheme, which means, in the end, it is controlled by voters.
Controlled by everyone: To sum it up, there is no single owner of BTC. Each involved party controls it to a certain extent in a truly libertarian fashion, and nobody has enough power to tip the market in its favor.
How does Bitcoin work?
Digital: Bitcoin is at its heart a piece of software and has no physical counterpart, so all those shiny coins with the BTC symbol are nothing more than decorations.
All transactions in the history of Bitcoin are recorded on the blockchain – a form of a public ledger accessible by anyone at any time.
Immutable: Once the information is written into the blockchain, it stays there forever and cannot be altered or removed, making every transaction legitimate.
Trustless: By design, the system is built in a way that requires no reliance on authorities. This means that you can verify any operation instead of taking one’s word for it.
Unhackable: The technology behind Bitcoin remains impenetrable to hacks. New vulnerabilities are occasionally found and fixed, yet none of them has ever been used to compromise the network.
Achilles heel: Hypothetically, quantum computers are capable of cracking the cryptographic protection used by Bitcoin (and countless other services). Fortunately, they are not yet here, so we still have time to find a way and avert the disaster.
Mining: Processing transactions on the network takes time and resources. In a truly decentralized manner, everyone can join this process by running a node and helping to maintain bitcoin operational.
Collective Effort: To write a single block (a group of transactions in a certain period), all nodes on the network share resources to solve a complex cryptography puzzle. Think of it as a bunch of people coming together to crack a difficult equation by sharing their thoughts.
Self-adjusting: As more people start mining, the computing power of the network grows. The system adjusts for this by raising the difficulty of computations. This system is meant to control the number of miners and maintain the cost-efficiency of operations.
Secure ledger: The concept of mining may seem overly complicated but is actually a necessary precaution. Essentially, it prevents individual malevolent parties from selecting which transactions go into a block and which do not.
Rewards: Every time a block is written, new bitcoins are distributed among nodes that participated in computation. The more work, your processor, has done, the higher your reward will be.
Open for all: The blockchain was designed to let anyone run a node. This means you could have a copy of the ledger available for checking for errors at all times.
The tragedy of commons: as bitcoin became more expensive, more people joined the mining operation. Nowadays, it is next to impossible to make a dent in a block using your laptop only.
ASICs: Today, mining is mostly done using specialized hardware solutions known as application-specific integrated circuits (ASICs). Simply put, these are computers that are good for solving cryptography puzzles and pretty much nothing else.
Inflation-proof: Unlike fiat currencies, which can be created when the authorities feel like it, Bitcoin is strictly limited in supply, which should protect its price from inflating.
Limited Supply: Aside from being programmed to never exceed the 21 million mark, bitcoin supply is expected to decrease as users lose access to their wallets, which will drive the price further up.
No accounts: You don’t need to register anywhere to start using the Bitcoin network. All you need to do is generate a pair of keys that would be used to control your coins.
Wallets: A bitcoin wallet is any piece of software that can communicate with the blockchain. Don’t be deceived, though: wallets do not store your money – just manage them.
Store however you like it: Your money is only as secure as your keys. The good news is that you can store them however you want, from an encrypted file on your PC to a piece of paper in a vault in a secret location.
They come in many forms: A key is a long stroke of random numbers. Some software products convert them to a string of words, a QR-code, or an encrypted file to make them more usable.
The Buck Stops Here: The only person responsible for the safety of your coins is you, so if, for example, you send them to a wrong address – there is no support team to contact for a refund.
No way back: All transactions on the network are final and irreversible. Once you send your coins, it is written in the blockchain, and there is no way to undo it, so check every detail carefully!
No downtime: As long as there is at least one node out there, the blockchain will always be online, so you can forget about those “our servers are down” excuses.
Works offline: Bitcoin uses a peer-to-peer model, which means exchanges occur between parties directly. Fortunately, you don’t need to have your device powered on at all times – your funds reside on your address, not your phone.
Lightning-Speed Fast (mostly): It takes mere seconds for coins to travel between addresses. Everything happens on the same ledger, which means you can forget about annoying delays.
Confirmation bottleneck: The lengthiest part of the process is waiting for a confirmation. This occurs while the transaction is waiting to be written into a newly mined block.
The average confirmation time for Bitcoin is 10 minutes. Depending on how busy the network currently is, you may need to wait anywhere from seconds to an hour. Still way faster than banks, though.
Who needs fees? Sending bitcoin requires paying a small fee. This fee goes directly to miners, so you can think about it as a way to help others maintain the network operational.
Choose your own fee: Most wallets allow increasing the size of the transaction fee to speed up the confirmation. You may choose to go with the cheaper option if you don’t mind waiting or pay extra when in a hurry.
Pseudonymous: Your identity is not included in the blockchain, but all your transactions are. In other words, it is only anonymous as long as your address cannot be tied to you.
The Incredible Facts About Bitcoin
Bitcoin is not real: That’s right, the entire thing does not actually exist – it is just a set of rules everyone chooses to follow. If that makes it any better, the same can be said about fiat money.
Nobody can set the Bitcoin’s price: Cryptocurrency is only valuable as long as someone is willing to pay for it, so its price is decided by “The invisible hand of the market,” not by some authority.
The power of math: Bitcoin has no authority to vouch for it or a fund to hedge its price. Its reliability is rooted in millions of processors, making complex calculations – the awesomeness of math at work.
The game of chance: Because of its precise and transparent nature, the blockchain can be used to create a provably fair bitcoin casino. Trustworthy bitcoin gambling platforms often disclose the underlying algorithms to demonstrate their honesty.
Yes, it can lose value: Despite being superior to fiat in many regards, bitcoin is not immune to failure. There is always a chance people will lose trust, or something better will come around.
Not a bubble: In the past decade, bitcoin has appreciated insanely fast, leading some to call it a bubble. Fortunately, bitcoin’s value growth has nothing to do with artificial over-valuation, so we can safely dismiss this allegation.
Long live the king: Over the years, many predictions were made by critics of cryptocurrency about its nearing demise. Some websites list more than 350 such predictions, none of which has since turned out to be true (obviously).
Authority Dilemma: Bitcoin is backed by the efforts of all its adopters, investors, merchants, and developers. This creates a dilemma of choosing between a large group of complete strangers and a much smaller group of political and economic elites.
Superior in every way: Bitcoin has proven to be better than fiat money in every possible way, including speed, security, and accessibility, so the Bitcoin vs. US Dollar debate revolves mainly around ideological values rather than technical qualities.
Power-hungry: Bitcoin mining is actually quite energy-intensive and, according to some estimates, rivals real-life mining operations. However, when you consider the benefits of an honest and efficient payment system, these expenses can be justified.
Legal currency for illegal purposes: Early on, bitcoin has become synonymous with criminal activities due to its popularity on websites like Silkroad. In reality, though, bitcoin pails in comparison to a much more popular payment system used by criminals – cash.
Not that anonymous after all: No list of bitcoin facts is complete without a mention of terrorists. Now that law enforcement has figured how to analyze the blockchain, using it for illicit purposes is more likely to disclose your actions than conceal them.
We’ll never reach the 21 million mark: We will come pretty close, though. Because of tiny errors across the network, the amount will be just below, at approximately 20,999,987.
The number of bitcoins mined per block will be halved every four years or so. The idea is bitcoin will appreciate in value so fast there would be no need to give it away in hundreds.
Less than 13% left: The majority of bitcoin (more than 18 million) has already been mined. The remaining 2.6 million, or about 12.5% of all coins, will be mined in the next 100 years or so.
The great heist: The biggest theft of bitcoin to date was a hack of the Mt. Gox exchange, during which 850,000 bitcoins were allegedly stolen. The sum has since been only partially recovered, and it remains unclear whether it was an external attack or an inside job.
Transaction King: The number of transactions on Bitcoin blockchain has already outgrown some of the competing payment systems like Paypal and may beat giants like Visa and Mastercard within a decade.
True supply: There is no way to tell exactly how many coins are lost forever. Estimates range from a million to four million BTC. On the bright side, this makes the remaining supply even more valuable.
Early Success: When it comes to investing in bitcoin, there is a good chance lucky early adopters will be mentioned. There is nothing more attractive than a story of a tech geek who put their trust in novel technology and saw it pay off.
Millionaires: It is actually possible to calculate the number of bitcoin millionaires. With the price of $9000 per BTC, anybody with more than 112 bitcoin counts, and there are more than 160,000 such accounts on the blockchain.
Bitcoin trading: This topic is full of bitcoin facts and myths, but only a fraction of them are true. To stay on the safe side, don’t act upon advice that sounds too good to be true and rely on professional assistance before making important decisions.
A massive loss: The stories of immeasurable fortunes come hand-in-hand with devastating losses. Nobody knows it better than James Howells, who literally threw his 7,500 BTC in the trash during a cleanup.
Bitcoin Pizza: the first major step towards adoption was a purchase of a Pizza for 10,000 bitcoins on May 22, 2010 – worth just over $40 at the time. The date is now celebrated as a milestone known as the Bitcoin Pizza Day.
Choice of the Next Generation: Numerous surveys show that bitcoin is more popular among younger individuals. A growing number of millennials prefer cryptocurrency over traditional institutions.
A currency for the young: The main bitcoin demographic is a tech-savvy male between 25 and 35 years.
Bitcoin is Freedom: Security and convenience aside, in some parts of the world, cryptocurrencies may be the only choice. Examples like Venezuela demonstrate that bitcoin can be used to counter the effects of authoritarian regimes.
Liberty vs. Authority: Data suggests that authoritarian countries tend to ban bitcoin or place it under tight regulations, whereas democratic governments support their adoption.
Decided by Everyone: All important changes have to be accepted by the community. In rare cases, the disagreement between developers may lead to the creation of rival currencies, with Bitcoin Cash being the closest example.
Forks: Occasionally, the project code is split, usually in an attempt to create a better version of bitcoin. Currently, numerous forks of bitcoin exist, none of which has yet surpassed the original in popularity.
Nakamoto didn’t plan for everything: Many of today’s realities of the crypto scene, like mining pools and ASICs, go against Satoshi Nakamoto’s philosophy, so it is reasonable to expect more surprises in the coming years.
Whatever you make of it: In the end, Bitcoin is an amazing social experiment that humans are free to make into anything they want, from a liberating force to a dystopian surveillance system. The power is in our hands, and this is perhaps the most interesting facts about bitcoin we need to keep in mind.