What Is Bitcoin and How Does It Work?
The First Cryptocurrency
Bitcoin is the original cryptocurrency, launched in 2009 by an anonymous creator (or group) using the name Satoshi Nakamoto. It introduced an idea that hadn’t been proven to work before: digital money that can be sent directly from one person to another, anywhere in the world, without a bank or payment processor in the middle.
How Bitcoin Transactions Work
Every Bitcoin transaction is recorded on the Bitcoin blockchain, the shared public ledger we cover in What Is Blockchain? A Beginner’s Guide. When you send bitcoin, the transaction is broadcast to a global network of computers, verified, and permanently added to that ledger. No bank approves it, and no central authority can reverse it once it’s confirmed.
| Bitcoin network | A bank transfer | |
|---|---|---|
| Who approves it | The network, by checking the maths | A named institution, during its working hours |
| Can it be reversed afterwards | No, once it is confirmed | Sometimes, by the institution that sent it |
| What proves it is yours | A private key only you hold | An account in your name on the bank’s books |
| Where the record lives | On every copy of the ledger, worldwide | Inside one institution’s database |
Why Is There a Fixed Supply?
One of bitcoin’s defining features is scarcity: only 21 million bitcoins will ever exist, a limit written into its underlying code. New bitcoins are released gradually through a process called mining, and that release rate is cut in half roughly every four years in an event known as ‘the halving.’ This built-in scarcity is often compared to precious metals like gold, which is why bitcoin is sometimes referred to as ‘digital gold.’
What Is Mining?
Mining is the process by which new transactions are verified and added to the blockchain. Miners use computing power to solve a mathematical puzzle; the first to solve it gets to add the next block and receives newly created bitcoin as a reward. This process is also what secures the network — rewriting bitcoin’s transaction history would require overpowering the combined computing strength of the entire global mining network, which is effectively unfeasible.
A supply cap of 21 million bitcoin is written into the rules every participant on the Bitcoin network runs, and new coins are released only through mining, at a rate that halves periodically. No committee votes on it, and no one can issue more outside those rules. That is a different kind of scarcity from a promise to print less.
Bitcoin Wallets and Ownership
‘Owning’ Bitcoin means controlling the private key associated with a specific address on the blockchain — essentially a secret code that proves you have the right to move those funds. Wallets are the tools used to store and manage these keys. We go into this in more depth in Self-Custody vs Custodial Wallets.
Why Bitcoin’s Price Moves So Much
Bitcoin trades on open markets worldwide, and its price is driven by supply and demand like any other traded asset — but with much smaller markets and higher volatility than traditional currencies or stocks. News, adoption trends, and macroeconomic shifts can all move its price meaningfully within a single day. This volatility is a core reason financial educators generally recommend understanding an asset thoroughly, and only committing funds you can afford to see fluctuate, before buying.
Bitcoin in Iraq
Interest in bitcoin has grown steadily among Iraqi users, both as a store of value and as a way to move funds across borders without relying on traditional banking rails. If you’re looking to buy bitcoin directly, Kurdcoin offers a straightforward, verified way to do so — our step-by-step bitcoin buying guide walks through the entire process.
Bitcoin vs Other Cryptocurrencies
Bitcoin was the first cryptocurrency, but thousands of others now exist, each with different goals — from stablecoins like USDT, designed to hold a steady value, to networks built for running applications. Understanding bitcoin first gives you the foundation to make sense of everything that came after it.
