Bitcoin

Bitcoin was described in a 2008 paper by a pseudonymous author or group called Satoshi Nakamoto, and its network went live in 2009. It lets people transfer value directly over the internet without a bank, using a public ledger, the blockchain, maintained by thousands of computers. New transactions are grouped into blocks by “miners”, who compete to solve a computational puzzle in a process called proof of work and are rewarded with newly created bitcoin plus fees. The protocol limits total supply to 21 million coins, and the reward for mining a block halves roughly every four years.

Supporters see bitcoin as a scarce, censorship-resistant store of value, sometimes called digital gold; critics point to its lack of income or cash flows, its energy use, its use in crime and its extreme price swings. Bitcoin is high risk: its price has repeatedly fallen by more than half, and it could lose all its value. It is not legal tender in most countries, and holdings at exchanges are not generally covered by investor compensation schemes. Owning it directly means controlling private keys through a crypto wallet; losing them, or being defrauded, usually means the coins are gone for good. Exchange-traded products linked to its price exist in some markets, which avoids handling keys but not the price risk.