Bitcoin Basics – From Zero to What Is It?

In September 2008, the investment bank Lehman Brothers collapsed overnight. Hundreds of thousands of ordinary Europeans woke up the next morning to find their savings frozen, their mortgages shaken, their pension funds gutted — not because they did anything wrong, but because they trusted the wrong institutions. One month later, a person or group using the name Satoshi Nakamoto published a nine-page document proposing a different kind of money. One that did not need any bank to function.

That document was the Bitcoin whitepaper. And whether you think Bitcoin is the future of finance or a speculative bubble, understanding what it is and how it works has become a basic form of financial literacy — one this book will give you, step by step.

What is Bitcoin?

Bitcoin is the first decentralized digital currency.

It exists only as data on a global public ledger called the blockchain. No single authority issues it, controls it, or can shut it down. Anyone, anywhere in the world, can use it — as long as they follow the same open set of rules written into the software.

This makes Bitcoin genuinely different from every form of money that came before it.

When you hold euros in a bank account, you hold a promise from the bank. The bank owes you those euros. If the bank fails — as Swiss customers of Credit Suisse discovered in 2023 — that promise can be broken, restructured, or bailed out by governments under conditions you never agreed to.

Bitcoin eliminates that counterparty. When you hold Bitcoin in a wallet you control, no institution stands between you and your coins. The math does.

Who Invented Bitcoin and Why?

In October 2008, an unknown person (or group) under the name Satoshi Nakamoto published the Bitcoin Whitepaper, titled "Bitcoin: A Peer-to-Peer Electronic Cash System."

Their problem statement was specific and serious:

• Banks can freeze or reverse payments at will.
• Governments can inflate money by printing more of it, eroding the purchasing power of savers.
• Sending money across borders requires layers of intermediaries — correspondent banks, currency exchanges, clearing houses — each taking a cut and adding delay.

Bitcoin was the proposed solution: a peer-to-peer money system where transactions are verified by mathematics and a decentralized network of computers, not by trust in any institution.

Nakamoto released the first Bitcoin software in January 2009 and mined the very first block — called the genesis block — on January 3rd of that year. Embedded in that block's data is a message: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks." It was a newspaper headline from that day, and it was not accidental. Nakamoto was stating exactly what Bitcoin was a response to.

Satoshi disappeared from the project in 2010, handing control to the developer community. No one has ever proven Nakamoto's identity. The coins in Satoshi's original wallets — estimated at around 1 million BTC — have never moved.

Why is Bitcoin Valuable?

This is the question that stops most newcomers. If Bitcoin is just digital data, why does it have any value at all?

The value comes from a combination of properties that, taken together, no previous asset or currency has ever had:

Scarcity. The maximum supply of Bitcoin is hard-coded at 21 million coins. This is not a policy decision that a board or government can vote to change. It is written into the protocol itself. As of 2025, approximately 19.7 million Bitcoin have been mined. About 1.3 million remain to be created, with the last one projected to be mined around the year 2140.

Security. The network is protected by an enormous amount of real-world computational work — called proof of work — performed by miners around the globe. An attacker who wanted to rewrite Bitcoin's transaction history would need to outcompete the entire honest network, which would cost more than the reward. The system is designed so honesty always pays more than cheating.

Neutrality. Bitcoin does not care where you live, what your credit score is, or whether your government approves of what you are buying. Anyone with an internet connection can participate. A small business owner in Zurich and a market trader in rural Nigeria operate on exactly the same terms.

Verifiability. Every single transaction in Bitcoin's history is public and checkable. Anyone can download the full blockchain and audit it. There are no hidden accounts, no off-balance-sheet positions, no creative accounting. The supply is verifiable.

In economics, Bitcoin behaves more like a scarce commodity — similar to gold in its supply dynamics — than like fiat currencies, which central banks can expand by issuing more. This comparison has limits (gold has industrial uses; Bitcoin does not), but the scarcity mechanic is real and mathematically enforced.

How Many Bitcoins Exist and What Happens to Supply Over Time?

Understanding Bitcoin's supply schedule is important because it directly affects why people hold it as a long-term store of value.

Here are the core facts:

Hard cap: 21 million coins — this is fixed and cannot be changed without the agreement of the entire network, which in practice has never happened.

Current supply (2025): approximately 19.7 million Bitcoin mined.

Remaining supply: roughly 1.3 million coins left to be created.

Timeline: the last Bitcoin will be mined around 2140.

New Bitcoin enter circulation through a process called mining. Miners who add new blocks to the blockchain earn a reward of newly created Bitcoin. That reward halves approximately every four years in an event called "the halving." In 2009 miners received 50 BTC per block. By 2024, after four halvings, they receive 3.125 BTC per block. This rate will halve again around 2028.

The effect is predictable: new supply keeps shrinking, while demand for Bitcoin has grown over time. This combination is why many long-term holders treat Bitcoin as a savings asset — not because the price always goes up in the short term, but because the supply is structurally constrained in a way that no fiat currency is.

What is a Satoshi?

Because one full Bitcoin trades at tens of thousands of francs or euros, people sometimes assume Bitcoin is only for the wealthy. This is a misunderstanding.

Bitcoin is divisible into tiny units called satoshis (commonly called sats):

1 Bitcoin = 100,000,000 satoshis

The relationship is the same as euros and cents: one euro equals one hundred cents. One Bitcoin equals one hundred million satoshis.

At a price of CHF 90,000 per Bitcoin, one satoshi is worth approximately CHF 0.0009 — less than one tenth of a centime. You can buy, send, and receive Bitcoin in amounts as small as a few hundred satoshis. Many people in countries with high Bitcoin adoption measure their wealth in sats rather than in whole coins.

This matters practically: you do not need to buy a whole Bitcoin to participate. You can buy CHF 50 worth. You can receive a payment of CHF 2 worth of sats for a cup of coffee. The divisibility makes Bitcoin usable at any scale.

How Do I Buy Bitcoin Safely?

This is where most beginners make their first mistake, and often their most expensive one. Research consistently shows that the majority of newcomer losses come not from Bitcoin's price movements but from unsafe purchasing habits — wrong platforms, poor security, and rushed decisions.

Stick to regulated exchanges. In Switzerland and the EU, regulated crypto exchanges must comply with anti-money laundering laws and know-your-customer requirements. This is sometimes seen as inconvenient, but it also means the company has real legal obligations to you. Well-known options that operate in Switzerland include Kraken, Coinbase, Bitstamp, and local Swiss providers like Bitcoin Suisse. Check that your chosen exchange holds a relevant licence before depositing funds.

Enable two-factor authentication. Every account you create on a crypto platform should be protected with a second verification step beyond your password. Use an app-based authenticator (Google Authenticator, Authy) rather than SMS, which can be intercepted.

Withdraw to a wallet you control. An exchange holds your Bitcoin on your behalf. If the exchange is hacked, goes bankrupt, or freezes withdrawals — all of which have happened to major platforms — you may lose access. Moving your coins to a wallet where you hold the private keys eliminates this risk. We cover wallets in detail in Chapter 4.

Avoid red flags. Random sellers on Telegram, "investment opportunities" that promise guaranteed returns, platforms recommended only by someone you met online, or anyone asking you to send Bitcoin to a wallet they provide. These are scams. They work because they appear just professional enough to seem credible.

Can I Lose My Bitcoin?

Yes — and this is one of the most important things to understand before you buy.

Bitcoin itself has no technical failure mode. The network has never been hacked. But individuals lose Bitcoin regularly, and the losses are permanent. Common ways it happens:

Lost private keys or seed phrases. When you set up a wallet, you receive a seed phrase — a list of 12 or 24 words that is the master key to your wallet. If you lose this phrase and your device breaks, your coins are gone. There is no password reset. No support line. The coins exist on the blockchain forever, permanently inaccessible.

Sending to the wrong address. Bitcoin transactions are irreversible. If you enter the wrong address — even one character wrong — and confirm the transaction, the coins are gone. The network does not care about mistakes.

Exchange failures. Keeping Bitcoin on an exchange means trusting that exchange with your coins. When FTX collapsed in 2022, customers lost billions in assets they believed were safely held. The FTX case affected thousands of European investors directly.

Phishing and scams. Someone enters their seed phrase on a fake website, or installs a fake wallet app. The thieves drain the wallet within seconds. We cover this in detail in Chapter 10.

The lesson is simple: if you hold your private keys securely, Bitcoin itself has no counterparty risk. The risk comes from human error and bad security habits, not from the protocol.

Risk Note

Bitcoin is volatile. In 2022, the price fell from approximately USD 67,000 to below USD 17,000 — a drop of more than 74% — before recovering. In 2020, it lost more than 50% of its value in a single week during the Covid market panic before ultimately reaching new all-time highs months later.

This volatility is real and should inform how much of your savings you put into Bitcoin, and how you think about timing. No one can reliably predict Bitcoin's short-term price. Experts who claim otherwise are guessing or selling something.

Regulation also varies across Europe. In Switzerland, Bitcoin is treated as a digital asset and subject to wealth tax on holdings. Gains from trading may be taxable as income depending on your activity level — consult a Swiss tax adviser if you are actively trading rather than simply holding. In the EU, the MiCA regulation framework is now in force and member states are implementing consistent rules around crypto taxation and reporting. Owning Bitcoin means accepting both the opportunity and the responsibility to understand how it is treated in your jurisdiction.

Reader Takeaway

• Bitcoin is money built on mathematical rules rather than institutional trust — and that distinction matters.
• It has a hard supply limit of 21 million coins. No authority can change this. Roughly 19.7 million exist today.
• One Bitcoin equals 100 million satoshis. You can buy and use very small amounts.
• To own Bitcoin safely, use a regulated exchange, enable strong authentication, and move coins to a wallet where you control the keys.
• Bitcoin itself has never been hacked. Losses come from human error, poor security, and bad actors. Protect accordingly.

Chapter Summary

• Bitcoin is the first decentralized digital currency, created in 2009 in response to the 2008 financial crisis.
• No government, bank, or company controls Bitcoin. The rules are enforced by mathematics and a global network of computers.
• Supply is capped at 21 million coins. Around 19.7 million exist today. The remainder will be created slowly until approximately 2140.
• A Bitcoin can be divided into 100 million satoshis (sats), making it usable for payments of any size.
• Buying safely requires a regulated exchange, strong security practices, and moving coins into a wallet you personally control.
• Bitcoin is volatile and regulatory treatment varies by country. Understand both before investing significant funds.

References

• Nakamoto, S. (2008). Bitcoin: A Peer-to-Peer Electronic Cash System. bitcoin.org
• Blockchain.com. Total Bitcoin Supply Data
• BIS Papers on digital currencies: BIS Working Papers 101
• Yermack, D. (2013). Is Bitcoin a Real Currency? An Economic Appraisal. NBER.
• Swiss Federal Tax Administration: guidance on cryptocurrency taxation
• European Securities and Markets Authority (ESMA): MiCA regulation overview