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Bitcoin is a decentralized cryptocurrency that was launched in 2009 by Satoshi Nakamoto. It functions as a peer-to-peer electronic cash system that operates entirely without the need for a central bank or a single administrator.

The system relies on decentralization, meaning it is managed by a network of nodes using cryptography instead of a central authority. All transactions are recorded on the blockchain, which is a public distributed ledger made up of linked, cryptographic blocks. To maintain the network and validate transactions, a process called mining is used, which involves Proof of Work to release new bitcoins into the system.

Several key characteristics define Bitcoin, including a fixed supply cap limited to 21,000,000 coins. While the network offers transparency by publicly recording all transactions, it maintains user privacy by keeping participants pseudonymous. Bitcoin is also highly divisible, with its smallest unit, the Satoshi, allowing for precise value transfers.