Bitcoin Basics From Zero to What Is It?

Written by Mohamed Habbat · Author

Estimated read time: 10 min• 1904 words•

Lehman Brothers collapsed on a Monday in September 2008. By Tuesday morning, ordinary Europeans found their savings frozen, mortgages in question, pension funds gutted. They had done nothing wrong. They had trusted institutions that lied. One month later a person calling themselves Satoshi Nakamoto published nine pages proposing money that needed no bank at all.

That paper was the Bitcoin whitepaper. You can think Bitcoin is the future of money or a bubble waiting to pop, but understanding how it works is now part of basic financial literacy in Switzerland. This book teaches it from zero.

What is Bitcoin?

Bitcoin is the first decentralized digital currency.

It lives as data on a global public ledger called the blockchain. No authority issues it, controls it, or shuts it down. Anyone with an internet connection can use it, provided they follow the same open rules written into the software.

That makes Bitcoin different from every form of money that came before.

When you hold euros in a bank account, you hold a promise. The bank owes you euros. If the bank fails, that promise breaks under terms you never agreed to. Credit Suisse AT1 bondholders learned this in 2023 when CHF 16 billion was wiped out overnight. (Depositors were made whole when UBS absorbed the bank. Bondholders and shareholders ate the loss.)

When you hold Bitcoin in a wallet you control, no institution sits between you and your coins. You hold a private key. The math does the rest.

Who Invented Bitcoin and Why?

In October 2008, someone using the name Satoshi Nakamoto published the Bitcoin Whitepaper, titled "Bitcoin: A Peer-to-Peer Electronic Cash System."

The problem statement was specific:

Banks can freeze or reverse payments at will.
Governments inflate money by printing more of it, eroding what savers already hold.
Sending money across borders runs through correspondent banks, currency desks, and clearing houses, each taking a cut and adding days.

Bitcoin was the proposed answer: a peer-to-peer money system where math and a decentralized network verify transactions instead of an institution.

Nakamoto shipped the first software in January 2009 and mined the first block (the genesis block) on January 3rd. They embedded a message in it: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks." That was the newspaper headline that morning, and Nakamoto picked it on purpose. The note told you exactly what Bitcoin was a response to.

Satoshi disappeared from the project in 2010 and handed control to the developer community. Nobody has proven who Nakamoto was. Their coins, roughly 1 million BTC, have never moved.

Why is Bitcoin Valuable?

If Bitcoin is just data, why does it cost anything?

Because of a stack of properties that no asset before it has held together:

Scarcity. The supply is hard-capped at 21 million coins. No board votes change this; the rule lives in the protocol. As of mid-2026, roughly 20.0 million Bitcoin have been mined (source). Around 1.0 million remain, and the last one will be minted around the year 2140.

Security. Real-world computational work, called proof of work, protects the network. Miners burn electricity to compete for blocks. An attacker who wanted to rewrite history would have to outcompete every honest miner on Earth, and that costs more than the reward. Honesty pays better than cheating by design.

Neutrality. Bitcoin does not check where you live, your credit score, or whether your government likes what you are buying. A small business owner in Zurich and a market trader in rural Nigeria face the same rules.

Verifiability. Every transaction in history is public. Anyone can download the full blockchain and audit it. No hidden accounts, no off-balance-sheet positions, no creative accounting. You can verify the supply yourself.

Economists treat Bitcoin more like a scarce commodity than a currency. The supply behaves a bit like gold (gold has industrial uses; Bitcoin does not), but the scarcity is mathematical and enforced by code rather than geology.

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

The supply schedule explains why people hold Bitcoin as a long-term store of value.

Hard cap: 21 million coins. Changing this requires every node operator on the network to agree, and they never have.

Current supply (mid-2026): roughly 20.0 million Bitcoin mined.

Remaining: about 1.0 million coins left to issue.

Timeline: the last Bitcoin gets mined around 2140.

New coins enter circulation through mining. Miners who add a valid block earn newly created Bitcoin. That reward halves every 210,000 blocks, roughly every four years, in what people call "the halving." In 2009, miners received 50 BTC per block. After the fourth halving in April 2024, the reward dropped to 3.125 BTC. The next halving lands around April 2028.

New supply keeps shrinking while demand has trended up. Many holders treat Bitcoin as a savings asset for that reason. Price moves around violently in the short term, but the supply side is fixed in a way no fiat currency matches.

What is a Satoshi?

A full Bitcoin trades at tens of thousands of francs, so beginners assume Bitcoin is only for the wealthy. It is not.

Bitcoin breaks down into tiny units called satoshis (often shortened to sats):

1 Bitcoin = 100,000,000 satoshis

Think euros and cents. One euro splits into 100 cents. One Bitcoin splits into 100 million sats.

At CHF 90,000 per Bitcoin, one satoshi is worth about CHF 0.0009, less than a tenth of a centime. You can send and receive Bitcoin in amounts as small as a few hundred sats. In countries with heavy Bitcoin adoption, people measure savings in sats rather than 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 CHF 2 worth of sats for a coffee. The divisibility makes Bitcoin usable at any scale.

How Do I Buy Bitcoin Safely?

Most beginners lose money on their first purchase, and it is usually not because the price moved. They picked the wrong platform, skipped two-factor authentication, or rushed.

Stick to regulated exchanges. In Switzerland and the EU, regulated crypto exchanges must comply with anti-money laundering and know-your-customer rules. The KYC step feels intrusive, but it means the company carries real legal duties toward you. Kraken, Coinbase, and Bitstamp operate in Switzerland, alongside Swiss-domiciled providers regulated under the Anti-Money-Laundering Act through a FINMA-recognised self-regulatory organisation. Check the FINMA SRO member register and confirm your exchange holds a current licence before you deposit.

Enable two-factor authentication. Every crypto account needs a second verification step beyond the password. Use an app-based authenticator like Google Authenticator or Authy. SMS gets intercepted through SIM-swap attacks.

Withdraw to a wallet you control. An exchange holds Bitcoin for you. If the exchange is hacked, goes bankrupt, or freezes withdrawals (all of which have happened to major platforms), you may never see those coins again. Move them to a wallet where you hold the private keys. Chapter 4 covers wallets in detail.

Avoid the obvious red flags. Random sellers on Telegram. "Investment opportunities" promising guaranteed returns. Platforms only recommended by someone you met online. Anyone asking you to send Bitcoin to a wallet they provide. These are scams. They work because they look professional enough to trick someone in a hurry.

Can I Lose My Bitcoin?

Yes, and you need to understand this before you buy.

The Bitcoin protocol itself has no technical failure mode. The network has never been hacked. But individuals lose Bitcoin every week, and the losses are permanent.

Lost private keys or seed phrases. When you set up a wallet, you receive a seed phrase: 12 or 24 words that act as the master key. Lose that phrase, lose your device, and the coins are gone. No password reset. No support line. The coins still sit on the blockchain. You just cannot reach them.

Sending to the wrong address. Bitcoin transactions are irreversible. Type one character wrong, hit confirm, and the coins go to whoever owns that address (or to nobody, if the address is malformed). The network does not care.

Exchange failures. Keeping Bitcoin on an exchange means trusting the exchange. When FTX collapsed in 2022, customers lost billions in assets they believed were segregated. Thousands of European investors were directly affected.

Phishing and fake apps. Someone types their seed phrase into a fake website, or installs a wallet app from a copycat. The wallet drains within seconds. Chapter 10 covers the playbook in detail.

The lesson: if you hold your own keys with proper backups, 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 roughly USD 67,000 to below USD 17,000, a drawdown of more than 74%, before recovering. In March 2020 it lost over 50% in a single week during the Covid panic and went on to set new all-time highs within months.

That volatility is real. It should shape how much of your savings you put into Bitcoin and how you think about timing. Nobody can predict short-term price moves. Anyone who claims they can is guessing or selling.

Regulation varies across Europe. Switzerland treats Bitcoin as a digital asset, subject to wealth tax on holdings. Gains may count as taxable income if your activity looks like trading rather than holding; ask a Swiss tax adviser if you trade actively. In the EU, the MiCA framework is now in force and member states are implementing consistent rules on crypto taxation and reporting. Owning Bitcoin means owning the responsibility to know how it is taxed where you live.

Reader Takeaway

Bitcoin is money built on mathematical rules rather than institutional trust, and the difference matters.
Supply caps at 21 million coins and no authority can change that. Roughly 20.0 million already exist.
One Bitcoin equals 100 million satoshis. You can buy and use very small amounts.
To buy safely, use a regulated exchange, enable app-based two-factor authentication, and move your coins to a wallet where you hold the keys.
Bitcoin itself has never been hacked. Losses come from human error and bad security habits. Defend accordingly.

Chapter Summary

Bitcoin is the first decentralized digital currency, launched in 2009 as a response to the 2008 financial crisis.
No government, bank, or company controls Bitcoin. Mathematics and a global network of computers enforce the rules.
Supply is capped at 21 million coins. Roughly 20.0 million exist today. The rest will trickle out until around 2140.
A Bitcoin divides into 100 million satoshis (sats), so payments at any size are practical.
Safe buying needs a regulated exchange, strong security, and self-custody of the keys.
Bitcoin is volatile and regulatory treatment varies by country. Understand both before committing serious money.

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

This content is educational and does not constitute financial advice.