Bitcoin Fundamentals
What would you do if your bank account was frozen tomorrow? No warning, no explanation, no access to your own money.
This isn’t hypothetical. In 2022, Canada froze bank accounts of people who donated to a protest. In 2015, Greeks could only withdraw €60 per day from ATMs. In Argentina, Turkey, and Lebanon, people watched their savings lose half their value in months.
Bitcoin exists because these things happen. Understanding it requires going back to basics: what is money, why does it matter, and how does Bitcoin fit into that picture.
No technical background required. Just curiosity.
A Brief History of Money
Money is a social agreement. A piece of paper, a gold coin, or a number on a screen has value because we all agree it does. This agreement is what makes trade possible.
Throughout history, money has evolved:
- Direct trade: Exchanging goods for goods. “I’ll give you my fish for your bread.”
- Things used as money: Shells, salt, cattle. Valuable because they were useful or hard to find.
- Precious metals: Gold and silver. Hard to find, long-lasting, easy to divide and carry.
- Paper money backed by gold: Receipts representing gold stored in vaults.
- Government money: Paper backed by nothing but a government’s promise. Why does it work? Because governments require you to pay taxes in their currency. This forces everyone to use it.
Money is a way to store and transfer value. The better it performs these functions, the better it serves as money.
What makes good money? These properties:
- Hard to create: Cannot be easily made or faked
- Long-lasting: Doesn’t break down over time
- Divisible: Can be broken into smaller pieces
- Easy to move: Simple to carry and send
- Easy to verify: Simple to check if it’s real
Gold does well on most of these. Paper money is easy to move and divide but fails on being hard to create. Governments can print as much as they want. Bitcoin, as we’ll see, does well on all of them.
What is Bitcoin?
Bitcoin is digital money that works without banks, governments, or any central authority. It was created in 2009 by someone (or some group) using the pseudonym Satoshi Nakamoto. No one knows who this person really is.
The first Bitcoin block (the Genesis Block) contains a hidden message: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” This headline from The Times newspaper referenced the 2008 financial crisis. It wasn’t random. It was a timestamp and a statement of purpose. Bitcoin was created as a response to bank bailouts and monetary manipulation.
Bitcoin builds on decades of work by cryptographers and privacy activists. If you’re curious about the people and ideas that led to Bitcoin, I wrote about The Cypherpunks and their vision for digital privacy.
At its core, Bitcoin is:
- A protocol: A set of rules that computers follow to agree on who owns what
- A network: Thousands of computers worldwide running the Bitcoin software
- A currency: Units of account called bitcoins (BTC), divisible to 8 decimal places
There’s no company behind Bitcoin. No CEO, no headquarters, no customer support. It’s open-source software that anyone can run, inspect, or contribute to.
Sound Money
Scarcity
There will only ever be 21 million bitcoins. This is enforced by the protocol’s code, verified by every node on the network. No government, no committee, no emergency meeting can change this.
Compare this to government money. Central banks can (and do) create money whenever they want. The U.S. dollar has lost over 95% of its buying power since 1913. The Euro, the Pound, the Yen: all follow the same pattern of slowly losing value.
In a world of infinite money printing, a mathematically enforced hard cap is revolutionary.
Bitcoin is often called “digital gold” because it shares gold’s scarcity while being easier to store, divide, and transfer. You can send a billion dollars worth of Bitcoin anywhere in the world in minutes, for a few dollars in fees. Try doing that with gold bars.
Inflation Protection
When governments print money, the value of existing money decreases. This is inflation. Your savings buy less over time, even while sitting untouched in your bank account.
Inflation is often called a “hidden tax” because it transfers wealth from savers to those who receive the new money first (usually governments and banks). I wrote more about this in Understanding Taxes.
Bitcoin’s supply schedule is fixed and predictable. New bitcoins are created through mining at a rate that halves roughly every four years. By around 2140, all 21 million will have been created. No surprises, no government decisions to print more.
Freedom & Sovereignty
Self-custody
With Bitcoin, you can hold your own money. Not a promise from a bank, not a balance on someone else’s books. Actual ownership, secured by cryptographic keys that only you control.
“Not your keys, not your coins.”
This phrase captures a fundamental truth. When you deposit money in a bank, you don’t own that money anymore. You own a claim against the bank. If the bank freezes your account, goes bankrupt, or decides you violated their terms of service, your access disappears.
With Bitcoin, there’s no freeze button. No account to close. No terms of service to violate. You become your own bank.
Permissionless & Borderless
Bitcoin doesn’t care about borders, banking hours, or your credit score. You can send money to anyone with an internet connection, anywhere in the world, at any time.
Traditional banking:
- Hours: Monday-Friday, 9-5 (maybe)
- International transfers: 3-5 business days
- Fees: Percentage of transfer + fixed fees
- Requirements: ID, proof of address, account in good standing
Bitcoin:
- Hours: 24/7/365
- Global transfers: ~10 minutes to an hour
- Fees: Based on data size, not amount sent
- Requirements: A Bitcoin address (free, instant, no ID)
Censorship Resistance
No central authority controls Bitcoin. No single entity can stop a transaction or reverse a payment. Once confirmed, it’s final.
This matters for people living under oppressive governments, facing political pressure, or simply wanting financial privacy. It matters for donations to controversial causes, for journalists protecting sources, for anyone who values financial freedom.
Financial freedom isn’t just about being rich. It’s about having control over your own money, regardless of who you are or where you live.
Real Stories
These aren’t edge cases:
In December 2010, WikiLeaks published classified U.S. diplomatic cables. Within days, Visa, Mastercard, PayPal, and Bank of America cut off all payment processing.
WikiLeaks lost 95% of its revenue overnight. In 2011, they started accepting Bitcoin. It was one of the first major use cases for the cryptocurrency. The financial blockade meant to silence them instead proved Bitcoin's value as censorship-resistant money.
In March 2013, Cyprus banks took 47.5% of all deposits over €100,000 to bail themselves out. No consent, no warning. Money in the bank was simply confiscated to save the banking system.
Bitcoin's price doubled in the weeks following. The Cyprus bail-in was a wake-up call: your bank balance is an IOU, and when banks fail, you're the one who pays.
In June 2015, Greece closed its banks for three weeks. ATM withdrawals were capped at €60 per day. Citizens couldn't access their own money. The debt crisis showed Europeans that bank deposits aren't as safe as they assumed.
Bitcoin interest spiked in Greece during the crisis. It was an early warning: even in "stable" countries, your access to money can be switched off overnight.
Between 2016 and 2019, inflation reached 53,000,000%. Salaries became worthless within days. People couldn't buy food, medicine, or basic goods. Those who converted savings to Bitcoin before the collapse preserved their wealth.
Those who trusted the banking system lost everything. Bitcoin became a lifeline. Not for speculation, but for survival.
In 2019, Lebanese banks began freezing deposits. By 2020, people couldn't access their own savings. The lira lost 90% of its value. ATM withdrawals were capped at tiny amounts. It wasn't a temporary measure. Banks simply didn't have the money.
Those who had converted to Bitcoin before the collapse could still access their wealth. Those who trusted the banks discovered that "your money" wasn't really yours.
During the 2019-2020 pro-democracy protests, Hong Kong activists faced financial surveillance. Banks could freeze accounts of known protesters. Donations through traditional channels could be traced.
Bitcoin offered a way to fund the movement without leaving a trail for authorities. Protesters used crypto to receive international support while protecting their identities. Financial privacy became a tool of resistance.
After the disputed 2020 election, Belarus erupted in protests. The Lukashenko regime responded with violence and financial repression. Bank accounts of activists, journalists, and NGOs were frozen.
The KGB monitored all transfers. A solidarity fund called BYSOL raised over $2 million in Bitcoin and distributed it directly to protesters who lost jobs or faced persecution. The only payment method authorities couldn't control.
The Central Bank banned crypto exchanges in February 2021 and ordered banks to close accounts of anyone dealing in cryptocurrency. The goal was to stop Bitcoin adoption. It backfired.
Peer-to-peer trading surged 27% in the months following the ban. Nigerians simply moved to decentralized platforms. The naira continued losing value while Bitcoin kept working. You can't ban math.
The Turkish lira has lost over 80% of its value against the dollar since 2018. Every currency crisis triggers a spike in Bitcoin trading. In 2021, Turkey banned crypto payments, but trading volumes only increased.
The government can't stop people from protecting their savings. When the lira crashes, Bitcoin search trends surge. Turks aren't speculating. They're surviving.
In September 2021, El Salvador became the first country to make Bitcoin legal tender. President Bukele's government installed Bitcoin ATMs nationwide, and even started mining BTC using geothermal energy from volcanoes. Critics predicted disaster.
Instead, tourism increased, remittance costs dropped, and the country gained global attention. A small nation became a Bitcoin laboratory.
When the Taliban took control in August 2021, banks froze. International transfers stopped. Women, banned from working, lost access to income. But some Afghan women had learned about Bitcoin before the collapse.
They could receive payments from abroad, store value the regime couldn't seize, and maintain financial independence. In a country where women can't open bank accounts, Bitcoin became a tool of quiet resistance.
When Russia invaded, traditional aid was too slow. Banks were overwhelmed, wire transfers took days. But within hours of posting Bitcoin addresses on Twitter, donations poured in from around the world. By March 2022, Ukraine received over $100 million in crypto.
Funds went directly to bulletproof vests, medical supplies, and communication equipment. No bureaucracy, no intermediaries, no delays.
In February 2022, the government invoked the Emergencies Act to freeze bank accounts of people who donated to trucker protests. No court order needed. Over 200 accounts were frozen overnight. But Bitcoin donations kept flowing.
Organizers distributed 14+ BTC directly to protesters. The government couldn't touch those funds. In 2024, a court ruled the freezes unconstitutional. The lesson: custodial money can be weaponized.
After Russia invaded Ukraine in 2022, Western sanctions cut Russian banks from SWIFT. Suddenly, Russians abroad couldn't access their money. Many turned to crypto, not to evade sanctions, but to survive.
Meanwhile, Ukrainians used Bitcoin to receive donations and preserve savings. The same technology served people on both sides of a conflict, based on their individual needs. Bitcoin doesn't pick sides.
Argentina suffered 211% inflation in 2023 under decades of big-government policies. Then Javier Milei took office. He halved ministries, cut 40,000 government jobs, and ended monetary financing. Result: inflation dropped to 117% in 2024, then 31% by end of 2025—lowest in seven years. GDP grew 7.6% in Q2 2025, the strongest in two decades.
Poverty fell from 57% to 32%. Smaller government, sound money principles. Bitcoin adoption remains high—Argentines learned not to trust any currency they can't verify themselves.
Migrant workers send $700 billion home every year. Traditional services like Western Union take 6-10% in fees. For a worker sending $200, that's $20 gone. Money their family desperately needs.
Bitcoin and Lightning Network transfer value across borders for cents, settling in minutes instead of days. Companies like Bitso processed $8 billion in crypto remittances in 2023. Cheaper transfers mean more food on the table.
In January 2024, the SEC approved Bitcoin ETFs for the first time. Within months, institutional investment surged 400%. By end of 2024, professional investors held $27.4 billion in Bitcoin ETFs—over 26% of total AUM. BlackRock's IBIT alone reached $50 billion.
Bitcoin was no longer just for early adopters. Wall Street called it "year zero of institutional adoption." The asset that banks once dismissed now sits in pension funds.
When cash imports into Gaza were blocked in 2024, banking infrastructure collapsed. Traditional transfers charged 30%+ fees—if they worked at all. Bitcoin became a lifeline. One volunteer sent $123,000 in BTC that bought food, water, and built shelters for displaced families.
A taxi driver named Yusef received $48k in Bitcoin donations and built 100 tents. When banks fail, Bitcoin still works. No permission needed.
On March 6, 2025, President Trump signed an executive order establishing a Strategic Bitcoin Reserve—a "digital Fort Knox." The reserve holds ~200,000 BTC from seized assets, with a policy never to sell.
The U.S. had lost $17 billion selling seized bitcoin too early. Now it's holding. Pakistan announced its own reserve weeks later. Nations that once dismissed Bitcoin now compete to accumulate it.
María Corina Machado won the 2025 Nobel Peace Prize for fighting Venezuela's dictatorship. Her campaign runs on Bitcoin because "bank wires get blocked, but bitcoin donations cannot be seized." With the bolívar down 98% in a decade and 8,000%+ inflation, Bitcoin became "a vital means of resistance."
She promised a democratic Venezuela would embrace Bitcoin in its national reserves. Freedom money for a freedom fighter.
Common Objections
-
“It’s used for crime.” So is cash. The difference: Bitcoin leaves a permanent, traceable record. The blockchain is a forensic tool. Most criminals prefer dollars.
-
“It’s too volatile.” True in the short term. Zoom out: Bitcoin has been the best-performing asset of the last decade. Volatility decreases as adoption grows. Don’t invest money you need next month.
-
“It wastes energy.” Bitcoin mining uses electricity to secure a trillion-dollar network. Much of it comes from stranded energy (gas flares, excess hydro) that would otherwise be wasted. The real question: is financial sovereignty worth the energy cost? Air conditioning uses more.
-
“It’s too late to buy.” People said this at $100, $1,000, $10,000, and $100,000. If Bitcoin achieves even a fraction of gold’s market cap, there’s still room to grow.
Honest Caveats
Bitcoin isn’t perfect. Things to be aware of:
- Self-custody requires responsibility. Lose your seed phrase, lose your funds. No customer support.
- Irreversibility. No chargebacks. Send to the wrong address? Gone.
- Learning curve. Wallets, keys, fees, P2P trading. The more you learn, the more sovereignty you gain. KYC exchanges are easier but come with regulatory strings attached.
- Privacy takes effort. The blockchain is transparent, not anonymous. True privacy requires learning how to use Bitcoin properly.
- Scaling tradeoffs. Base layer is slow by design. Lightning adds speed but also complexity.
None of these are dealbreakers. They’re tradeoffs. The more you learn, the fewer limitations you face.
Bitcoin Today
This isn’t just theory anymore.
Institutional adoption
- US Bitcoin ETFs approved in 2024, bringing billions in institutional money (source)
- Strategy holds 660.000+ BTC as corporate treasury, inspiring others (source)
- Major banks now offer Bitcoin custody and trading services to clients
- Pension funds and asset managers are adding Bitcoin to portfolios
Global adoption
- Central African Republic adopted Bitcoin as legal tender in 2022 (source)
- Switzerland allows tax payments in Bitcoin in Canton Zug since 2021 (source)
- Emerging markets lead in grassroots adoption: Vietnam, Philippines, Nigeria
Real-world usage
- Square accepts Bitcoin payments since Nov. 2025 for 4M+ merchants (source)
- Lightning Network (LN) processes millions of instant payments monthly (source)
- Merchants worldwide accept Bitcoin, from small shops to major retailers (source)
You can dismiss it, or you can understand it.
Getting Started
Bitcoin is money that no one controls and everyone can verify. It’s scarce in a world of infinite money printing. It’s permissionless in a world of financial gatekeepers. It’s programmable in ways we’re only beginning to explore.
Understanding Bitcoin doesn’t require believing it will change the world. It requires understanding what money is, how it evolved, and why these properties matter. From there, you can form your own conclusions.
Want to try?
The best way to understand Bitcoin is to use it:
- Start small: Buy a small amount on a trusted Bitcoin-only platform like:
- Move it to your own wallet: Download a mobile wallet and transfer your Bitcoin there. Feel what self-custody means. Some wallets like BlueWallet, Nunchuk.
- Send a transaction: Send some sats to a friend. Watch it confirm in ~10 minutes. Get curious looking at your transaction in the mempool.
- Try Lightning: Send an instant, near-free payment. This is the future of everyday transactions. Some LN wallets like Alby Go, Muun.
You don’t have to go all in. Start small and keep learning, one step at a time.
Related posts
- The Cypherpunks Pioneers of privacy in the digital age
- Understanding Taxes Where your money goes and how to rethink the system
- Programmable Money The power of Bitcoin’s Script
- Run your LN node on a Raspberry Pi Take full control of your Lightning payments
- Pretty Good Privacy A beginner’s guide to encryption
Related readings
- Mastering Bitcoin by Andreas M. Antonopoulos, David A. Harding
- The Genesis Book by Aaron van Wirdum
- The Book Of Satoshi by Phil Champagne
Further reading
- Bitcoin 101 by Cosme - Another beginner-friendly introduction
- How to Buy Bitcoin Securely by Cosme - Step-by-step guide