Discover how to buy Bitcoin (BTC) in Singapore on an exchange you can trust

What is Bitcoin?

Bitcoin is a decentralized digital currency that enables peer-to-peer value transfer without reliance on banks or central authorities. Proposed in 2008 by the pseudonymous Satoshi Nakamoto in the white paper “Bitcoin: A Peer-to-Peer Electronic Cash System,” it launched in January 2009 as the first successful implementation of a blockchain-based cryptocurrency. Bitcoin’s supply is programmatically limited to 21 million coins, issued on a schedule that halves the block subsidy approximately every four years. This fixed issuance combined with an open, borderless network has made Bitcoin both a medium of exchange and a store-of-value asset for many users around the world.

Key properties:

• Decentralized: No single entity controls the network. Thousands of nodes validate rules independently.
• Scarce: Supply cap of 21 million coins with predictable issuance and periodic “halvings.”
• Censorship-resistant: Transactions can be broadcast and confirmed without permission from intermediaries.
• Transparent yet pseudonymous: The ledger is public, while addresses are not directly tied to real-world identities by default.
• Programmable: Bitcoin supports basic scripting for conditions like multisignature spending, time locks, and more advanced features via upgrades.

Use cases range from cross-border remittances and savings in high-inflation economies to a macro-asset used by institutions for diversification. Some jurisdictions recognize Bitcoin in specific regulatory frameworks; notably, El Salvador adopted Bitcoin as legal tender in 2021, while multiple countries treat it as a digital asset with varying tax and compliance regimes.

How does Bitcoin work? The tech that powers it

Bitcoin is powered by a blend of cryptography, distributed systems, and economic incentives designed to achieve consensus over a shared ledger without a central coordinator.

• Ledger and UTXO model:

  • Bitcoin’s blockchain is an append-only ledger of blocks containing transactions.
  • Balances are tracked via the Unspent Transaction Output (UTXO) model: transactions consume prior outputs and create new ones, enabling parallel validation and easy verification of coin ownership.

• Public-key cryptography:

  • Ownership is proved using digital signatures (Elliptic Curve Digital Signature Algorithm over secp256k1).
  • Users control private keys that sign transactions spending their UTXOs. Losing a private key effectively loses access to associated coins.

• Mining and Proof-of-Work (PoW):

  • Miners bundle transactions into candidate blocks and compete to find a nonce that makes the block header’s SHA-256 hash fall below a network-defined target.
  • The first valid block propagates to the network and is accepted by nodes if it follows the consensus rules.
  • Incentives: Miners receive a block reward (newly minted BTC plus transaction fees). The block subsidy halves every 210,000 blocks (~4 years), progressing from 50 BTC per block initially to 25, 12.5, 6.25, 3.125 BTC, and so on, until near the 21 million cap.

• Consensus and difficulty adjustment:

  • Nodes independently verify blocks against consensus rules (e.g., valid signatures, no double-spends, block weight limits).
  • The “longest (most cumulative work) chain” rule ensures convergence.
  • Every 2016 blocks (~two weeks), the protocol adjusts mining difficulty so the average block interval remains ~10 minutes, stabilizing issuance.

• Networking and mempool:

  • A peer-to-peer network relays transactions and blocks.
  • Unconfirmed transactions sit in nodes’ mempools and are prioritized by fee rates. A fee market arises during congestion.

• Script and upgrades:

  • Bitcoin Script enables conditions like multisig, timelocks (CheckLockTimeVerify/CheckSequenceVerify), and more.
  • Upgrades via soft forks have improved efficiency and privacy:
    • Segregated Witness (SegWit, 2017) reduced malleability and expanded capacity.
    • Taproot (BIP-340/341/342, activated 2021) introduced Schnorr signatures and Merkleized scripts for more private and efficient multisig and complex spending conditions.

• Layer 2 and scalability:

  • Lightning Network (introduced by Poon and Dryja) enables off-chain, instant micropayments using bidirectional payment channels that settle to the base chain only when necessary, increasing throughput and reducing fees for suitable use cases.
  • Other scaling approaches include batched transactions, coinjoin/privacy tools, and improved wallet practices.

Security model:

• Honest-majority assumption in terms of hash power: an attacker would need to control a large share of mining power to rewrite recent blocks.
• Full nodes enforce rules regardless of miner actions, preventing invalid transactions from being accepted.
• Economic incentives reward honest participation and penalize attacks through cost and risk.

What makes Bitcoin unique?

• Credible monetary policy: A transparent, programmatic issuance schedule with a terminal cap of 21 million contrasts with discretionary monetary policies in fiat systems.
• Leaderless decentralization: Bitcoin’s governance is rough consensus among users, node operators, developers, and miners; there is no foundation or CEO.
• Security through PoW: Bitcoin’s Proof-of-Work has a long operational history, high hash rate, and well-understood game theory, providing robust finality over time.
• Neutral base layer: Minimal, conservative changes at Layer 1 prioritize security and decentralization, with innovation moved to layers above (e.g., Lightning).
• Liquidity and network effects: As the first and most widely held cryptocurrency, Bitcoin benefits from deep liquidity, broad exchange support, and institutional-grade infrastructure (custody, derivatives, ETFs in some markets).
• Transparency and auditability: Anyone can run a full node to independently verify supply, rules, and their own transactions.

Bitcoin price history and value: A comprehensive overview

Bitcoin’s price has experienced multiple boom-bust cycles while trending upward over the long term, reflecting adoption waves, macro liquidity, and changing narratives.

• Early years (2009–2012):

  • Price was effectively zero at launch; notable early events include the “Bitcoin pizza” purchase in 2010 (~10,000 BTC).
  • Early exchanges and mining on CPUs/GPUs drove discovery and volatility.

• First major cycle (2013–2015):

  • Rapid rise to over $1,000 in late 2013, followed by a multi-year bear market after exchange failures (e.g., Mt. Gox) and regulatory uncertainty.

• 2016–2017 bull run:

  • SegWit activation and growing retail interest culminated in an all-time high near $20,000 in December 2017, then a retrace through 2018’s bear market.

• 2020–2021 institutional wave:

  • Post-2020 halving, macro stimulus, and growing institutional interest helped push Bitcoin to new highs near $69,000 in November 2021.
  • Broader crypto leverage and risk collapses in 2022 contributed to a drawdown into the mid-teens (USD).

• 2023–2025 developments:

  • Improvement in macro conditions and the approval of spot Bitcoin ETFs in the United States in January 2024 expanded institutional access and demand.
  • The fourth halving occurred in April 2024, reducing the block subsidy from 6.25 to 3.125 BTC.
  • Bitcoin set new all-time highs in 2024, with renewed volatility thereafter. Through 2025, price continues to be influenced by ETF flows, liquidity conditions, regulatory clarity, and adoption metrics.

Determinants of value:

• Supply dynamics: Fixed cap and periodic halvings create a predictable stock-to-flow trajectory.
• Demand drivers: Macro hedging, remittances, digital gold narrative, corporate treasuries, and institutional products (ETFs, futures).
• Network health: Hash rate, active addresses, liquidity, and development cadence.
• Regulatory and macro factors: Interest rates, risk appetite, and jurisdictional policies.
• Fee market and utility: On-chain settlement demand, Lightning usage, and new applications (e.g., Ordinals/inscriptions) can affect fees and user behavior.

Note: Bitcoin remains highly volatile. Historical performance is not indicative of future results.

Is now a good time to invest in Bitcoin?

Whether now is a good time depends on your objectives, risk tolerance, time horizon, and understanding of the asset’s volatility and unique risks.

Considerations:

• Investment thesis: Are you seeking long-term exposure to a scarce digital asset (“digital gold”), a hedge against monetary debasement, or a venture-style allocation to an emergent monetary network?
• Time horizon: Multi-year horizons have historically reduced the impact of short-term drawdowns, but they do not eliminate risk.
• Position sizing and diversification: Many investors limit allocation to a small percentage of their portfolio due to volatility.
• Custody: Decide between self-custody (greater control, requires operational security) and reputable custodians (convenience, counterparty risk).
• Dollar-cost averaging: A systematic approach can mitigate timing risk compared to lump-sum entries.
• Regulatory and tax: Understand your local regulations, reporting requirements, and tax treatment of purchases, sales, and transfers.
• Environmental and governance views: Consider your stance on Proof-of-Work’s energy profile versus its security properties. Empirical data shows a significant share of mining uses low-cost and, in some regions, renewable or curtailed energy, but the debate remains active.

Risks:

• Market risk: Extreme volatility, large drawdowns.
• Operational risk: Key mismanagement, phishing, exchange failures.
• Regulatory risk: Changing rules can impact access, custody, and taxation.
• Liquidity and fee spikes: Network congestion can raise transaction fees and slow confirmations.

This is educational information, not financial advice. Consider consulting a qualified financial professional before investing.

References and further reading

• Satoshi Nakamoto (2008). Bitcoin: A Peer-to-Peer Electronic Cash System. https://bitcoin.org/bitcoin.pdf
• Bitcoin Developer Documentation (Consensus, Transactions, Script, P2P). https://developer.bitcoin.org/
• Bitcoin Core docs and BIPs (e.g., BIP-340/341/342 for Taproot). https://github.com/bitcoin/bips
• Lightning Network (Poon & Dryja, 2016). https://lightning.network/lightning-network-paper.pdf
• Cambridge Bitcoin Electricity Consumption Index (CBECI). https://ccaf.io/cbeci/
• U.S. SEC approval of spot Bitcoin ETFs (Jan 2024). See SEC releases and major exchange listings.
• BIS and IMF publications on cryptoassets for regulatory and macro perspectives.