Bitcoin is a decentralized digital currency that was invented in 2008 by an individual or group of individuals using the pseudonym Satoshi Nakamoto. It was introduced through a whitepaper titled “Bitcoin: A Peer-to-Peer Electronic Cash System.” Bitcoin is often referred to as a cryptocurrency because it uses cryptography to secure transactions, control the creation of new units, and verify the transfer of assets.

Key characteristics of Bitcoin include:

1. Decentralization: Bitcoin operates on a decentralized network of computers (nodes) distributed worldwide. This network ensures that no single entity or authority has full control over the currency.

2. Limited Supply: Bitcoin has a capped supply of 21 million coins. This scarcity is built into the system to prevent inflation and mimic the properties of precious metals like gold.

3. Blockchain Technology: Bitcoin transactions are recorded on a public ledger called the blockchain. The blockchain is a chronological chain of blocks, each containing a set of transactions. It ensures transparency, security, and immutability of transactions.

4. Mining: New bitcoins are created through a process called mining. Miners use powerful computers to solve complex mathematical puzzles, and the first miner to solve the puzzle gets to add the next block of transactions to the blockchain and is rewarded with newly minted bitcoins and transaction fees.

5. Digital Nature: Bitcoin exists purely in digital form. It’s stored in digital wallets, which can be software-based (online or offline) or hardware-based (physical devices). Transactions occur digitally between these wallets.

6. Pseudonymity: Bitcoin transactions are pseudonymous, meaning that transactions are linked to specific addresses rather than directly to real-world identities. However, with sufficient effort, transactions could potentially be traced back to individuals.

7. Global Transactions: Bitcoin allows for borderless transactions, making it possible to send and receive funds across the globe without the need for intermediaries like banks or payment processors.

Bitcoin’s value is determined by market demand and supply dynamics. It has gained attention as a form of investment, digital gold, and a hedge against traditional financial systems. Its price has been highly volatile, experiencing significant price fluctuations over the years.