Inside Bitcoin: Secrets of the Cryptocurrency That Dominates the Market

If you'd put just $100 into Bitcoin back in 2010, you'd be sitting on over $9 million today. No kidding. Nothing else - not stocks, gold, or real estate - comes close to this kind of growth.

But here's the million-dollar question (pun intended): has that ship sailed, or does Bitcoin still have room to grow in 2025?

Bitcoin Basics: Origins and Definition

Bitcoin emerged right after the 2008 financial mess, a crisis I remember vividly because my aunt lost her house despite never missing a payment (the bank that held her mortgage went under). Its mysterious creator, Satoshi Nakamoto, clearly had enough of banks wrecking people's lives. His answer? Create money that cuts out the middlemen entirely.

When I first got into Bitcoin in 2013, I was TERRIBLE at explaining it. My dad thought I'd joined some internet cult, and my friends just rolled their eyes when I tried to get them interested. This is actually why we at CoinMinutes focus so much on plain-language explanations in our guides - because I remember how confusing this all was.

How Bitcoin Works: The Technical Foundation

Shared ledger, math puzzles, and money revolution

Blockchain: The Innovation Behind Bitcoin

Think of blockchain as a shared record book that thousands of computers update together. But whew, it gets complicated fast.

Behind the scenes, there's this whole system where computers have to solve math puzzles to agree on transactions. I spent a weekend trying to understand how these "hash functions" work and nearly fried my brain. Still fascinating though.

I won't bore you with all the details about Merkle trees and the other technical stuff (though I geeked out on this for MONTHS). The bottom line? Once something's recorded on the blockchain, it's basically permanent. At CoinMinutes, we've created several visual guides that break down these concepts without the headache-inducing jargon.

Bitcoin Halving: The Supply Shock That Drives Bitcoin's Value Cycles

I still remember staying up til 3AM for the 2020 halving. Complete waste of time honestly, since nothing dramatic happened right away. But these halvings are a big deal.

Here's what happens: Every 4 years (or technically, every 210,000 blocks), the Bitcoin network basically cuts the reward miners get in half. I tried explaining this to my dad once by saying "imagine if your pension suddenly got cut 50% overnight" - which freaked him out until I explained that miners knew this was coming since day one.

The May 2020 halving dropped rewards from 12.5 to 6.25 bitcoin per block. Then the April 2024 one cut it to 3.125. Each time this happens, new bitcoin creation slows down, making each coin a bit more scarce if demand stays the same.

Bitcoin vs. Traditional Money: Why I Started Caring

Bitcoin flips traditional money upside down in ways I found mind-blowing once I finally understood it:

Nobody's running the Bitcoin show. Like, literally nobody. I grew up assuming money needed governments and central banks to function - turns out that's not true. With regular money, Fed can just decide to print trillions more (like they did during COVID, which is why my grocery bill is now ridiculous).

Bitcoin has a hard cap at 21 million coins, period. This is why my savings account loses value every year but my Bitcoin has a shot at holding its value long-term.

Transactions are WAY faster with Bitcoin - usually minutes vs the THREE BUSINESS DAYS my bank took to send money to my cousin in Toronto last Christmas. Seriously, three days to move digital money across a border? It's 2025!

And don't get me started on banking access. With Bitcoin, people only have to download an app. Done. No permission needed, no "sorry sir, you don't qualify" BS.

How to Get Bitcoin: Buying vs. Mining

Getting Bitcoin is pretty straightforward now, but man, my first attempt in 2014 was a DISASTER. I ended up on some sketchy exchange because it was the only one that would accept my debit card. After my bank froze my account for "suspicious activity," I had to physically go to a branch with ID to unfreeze it. The lady at the counter looked at me like I was laundering money or something.

Different paths to Bitcoin ownership

Buying Bitcoin on Exchanges (The Way Most Normal People Do It)

After my early mess-ups, I stuck with crypto exchanges like most people do. They're basically just websites where you can buy and sell Bitcoin. Nothing fancy. The CoinMinutes team regularly reviews the major exchanges for security and user experience, saving you from learning the hard way like I did.

I eventually figured out Coinbase existed, though their verification was its own special hell. My driver's license photo got rejected TWICE because of "poor lighting" (it was fine), and I ended up having to take a new selfie in my bathroom where the lighting was better. Took almost a week to get verified while Bitcoin jumped 15%. Still salty about that.

For security. My original Coinbase password was the same one I used for everything. When some random shopping site got hacked in 2017, someone tried to use those same credentials on Coinbase. Thank GOD I had set up Google Authenticator by then, otherwise bye-bye Bitcoin.

Once your account is set up, you need to add some money. I started with a bank transfer because the fees were lower, but MAN was it slow. My first deposit took almost 5 days to clear! Later I tried a credit card deposit when prices were dipping fast and I wanted to buy quickly. The convenience cost me an extra 3.5% in fees, but at least I didn't miss the opportunity.

Actually buying your first Bitcoin is weirdly emotional. I remember staring at the "Confirm Purchase" button for like 10 minutes before finally clicking it. You've got two main options: you can buy at whatever the current price is (that's a "market order"), or you can set a specific price you're willing to pay and hope the market drops to meet it (a "limit order").

Should You Consider Mining Bitcoin?

Mining Bitcoin? Unless you've got access to basically free electricity, rethink it.

I visited my buddy Dave's mining setup in Wenatchee (eastern Washington) back in 2021 - one of those old fruit warehouses converted to a mining farm. His power bill was INSANE - like $32,458 for March 2022 alone (I saw the bill). The noise was unbearable - like standing behind a jet engine - and the heat was so intense that his beard would actually dry in seconds if he came in from the rain.

The whole place smelled like hot electronics and Dave's stale coffee. When I asked if it was all worth it, he just pointed to a laminated chart on the wall tracking Bitcoin's price vs. his operating costs, with big red sections and occasional green months. "That's my mood calendar," he said.

Where to Keep Your Bitcoin: Storage Options

Once you own some Bitcoin, you gotta figure out where to keep it. My first "wallet" was just leaving everything on Coinbase, which I later learned was pretty risky.

Bitcoin wallets come in two main flavors:

Hot wallets stay connected to the internet. They're super convenient but not super secure. I use Trust Wallet on my phone for small amounts - basically just what I might spend soon. Kinda like keeping spending cash in your actual wallet.

Cold storage means keeping your Bitcoin completely offline. After I nearly had a heart attack when Cryptopia got hacked in 2019 (lost about $340 worth of random altcoins), I finally bit the bullet and bought a Ledger hardware wallet.

The thing looks like a USB stick and cost me $119 with shipping that took FOREVER. The setup process was annoying - writing down that 24-word recovery phrase by hand, triple-checking every word, then doing a test recovery to make sure I hadn't screwed it up. But that first time transferring my Bitcoin off the exchange? Man, I literally slept better that night.

Hot wallet for speed, cold wallet for safety

I've long recommended keeping most Bitcoin in cold storage, but lately I'm rethinking this for small amounts. The convenience of having some Bitcoin readily accessible on a mobile wallet can outweigh the security risk, if we're talking about amounts you'd be comfortable carrying in cash. As I'm writing this, I'm realizing that perhaps my approach has been too cautious for everyday use cases.

Many Bitcoin owners use both as their holdings grow - a hot wallet for spending and a hardware wallet for their main investment. Match your storage method to your needs.

The Value Question: Why Does Bitcoin Have Worth?

The most common question I hear is why digital Bitcoin has any value at all. The answer comes down to three main things:

Real Scarcity in a Digital World

Bitcoin solved how to make something truly limited in the digital world. You can copy a photo endlessly, but Bitcoin's code ensures there will only ever be 21 million coins. This isn't a policy that might change. It's built into Bitcoin's core design.

When something useful is truly limited, it tends to hold value. Gold has been valuable for thousands of years largely because it's hard to make more of it. Bitcoin creates digital scarcity that seemed impossible before.

It Solves Real Problems for Real People

In Venezuela, where inflation hit 3,000% yearly, Bitcoin gave people a way to protect their savings when government policies destroyed the national currency. For millions worldwide dealing with unstable currencies, high fees, or limited banking access, Bitcoin offers a practical solution.

I once met a business owner in rural Montana who drives 70 miles to reach the nearest bank. This isn't unusual. Globally, 1.4 billion adults have no bank account at all. Bitcoin needs only a smartphone and internet connection, bringing financial services to people traditional banking has left behind.

No Central Point of Failure

The fact that Bitcoin runs without a boss might sound sketchy at first (I know I thought so). But it actually makes Bitcoin incredibly tough to shut down.

Not that I'm expecting my government to freeze my accounts, but after seeing how banks fail in 2008, I do sleep better knowing some of my money exists outside that system.

Bitcoin as an Investment: Balancing Opportunity and Risk

I've seen investors both make and lose fortunes with Bitcoin. Traditional advisors typically recommend stocks, bonds, and real estate, but many now suggest putting a small percentage into Bitcoin too. At CoinMinutes, our analysis team has observed this shift in investment strategy across both institutional and retail markets over the past few years.

What Makes Bitcoin Unique as an Investment

Financial advisors often call Bitcoin "digital gold" because it shares key traits with precious metals while adding new abilities:

Store of value

Bitcoin's fixed supply contrasts with paper currencies that lose purchasing power through inflation. When governments printed more money during recent crises, each dollar became worth less. Bitcoin's supply limit means it could preserve wealth over time.

Moves independently

Bitcoin often behaves differently from traditional markets. When stocks crashed in March 2020, Bitcoin initially dropped too but then followed its own recovery path. This independence can add valuable diversity to your portfolio.

Highly divisible

Another thing I love about Bitcoin: you don't need deep pockets to get started. My nephew wanted to invest last year but only had $25 to spare. No problem! Each Bitcoin divides into 100 million tiny pieces called "satoshis" (named after Bitcoin's creator). He bought about 40,000 satoshis, or 0.0004 Bitcoin, and was thrilled to have skin in the game.

How Bitcoin Stacks Up Against Other Investments

I've tried pretty much everything over the years - stocks, some rental property with my brother-in-law (nightmare), gold coins during my brief prepper phase, and way too many bonds in my 20s when I was being "responsible."

How Bitcoin compares traditional investments

Bitcoin makes all of them look boring in terms of volatility. My worst Bitcoin day saw a 26% drop. I remember because it was my birthday in 2021 and I had to turn off my phone to enjoy dinner. Stocks might have a bad day at 2-3% down. My rental property's value barely changes month to month (though the tenant complaints sure do).

Returns are where Bitcoin shines. Nothing else has delivered anything close. My best stock picks (mostly boring index funds) have done maybe 12-15% in good years. My Bitcoin? Up over 400% in 2020 alone. Though let's be honest - it's also dropped 70%+ during bear markets, which my heart medication definitely noticed.

Liquidity is interesting - I can sell Bitcoin instantly, 24/7/365. Try selling a house that quickly! Even stocks are only tradable during market hours. Gold is technically liquid but a pain to actually sell (learned that the hard way with those coins).

Risk? Bitcoin's still the wild west compared to bonds or CDs. I wouldn't put money there that I need next month. But I also think keeping everything in dollars is its own kind of risk these days.

Practical Investment Strategies for Different Risk Appetites

After watching thousands of investors, I've noticed clear patterns in what works for different people. Here are three approaches based on how much volatility you can handle:

Dollar-Cost Averaging (My Personal Favorite)

Instead of trying to guess when Bitcoin will go up or down (which I'm TERRIBLE at), I just buy a fixed amount every month, no matter the price.

I've been putting in $200 monthly since 2017, which means sometimes I bought at $60K (ouch) and sometimes at $16K (score!). It all averages out over time.

Why this works for me: I don't have to stress about timing. No more staying up till 3 AM watching price charts or panic-selling during crashes (did that once in 2018 - huge mistake). I just set up an automatic purchase and forget about it. I sleep better at night knowing I'm not trying to outsmart a market that's outsmarted countless "experts."

Consider putting 2-5% of your portfolio into this strategy. I personally lean toward the higher end of that range, but that's because I've spent years studying this market and have a higher risk tolerance than most.

HODL (Hold On for Dear Life)

The simplest approach is often the best: buy some Bitcoin and forget about it for a few years. I accidentally became a HODLer in 2014 when I lost the password to a wallet containing about 0.7 Bitcoin. By the time I recovered it in 2017 (through a password manager backup I'd forgotten about), its value had increased about 30x. Best mistake I ever made!

For getting started, just throw a tiny amount in. My brother finally bought some last year - literally just $50 worth to start. "It's beer money," he said, "if it goes to zero, who cares?" Smart approach. He's added more since then, but that mental trick of starting tiny made it much easier for him to pull the trigger.

I won't complicate this strategy with fancy explanations because its beauty lies in its simplicity. Buy, hold and wait. That's about it.

Active Approaches

Some people (not me!) have the stomach for more active approaches. My friend Marcus keeps about 75% of his Bitcoin in long-term storage but actively trades the remaining 25% to capitalize on Bitcoin's wild price swings. He's done remarkably well, though he also spends HOURS every day analyzing charts and following market news.

The Legal Landscape: Navigating Bitcoin Regulations

The legal situation is all over the place globally.

How the Legal Landscape Looks from a Glance

Some places love Bitcoin. Japan's probably the friendliest. I bought ramen with Bitcoin there in 2018 and the shop owner didn't even blink. Germany, the US, and Singapore are pretty open too, though each has their own weird tax rules.

Other countries are more hot-and-cold about it. My friend in India has complained twice about this. His government kept flip-flopping between proposing outright bans and creating heavily taxed frameworks.

As for the rest of the regulatory landscape... that's honestly a topic for another day. The details get complicated quickly, and regulations change frequently. If you're planning to use Bitcoin internationally, always check the current laws for your specific destination.

How Bitcoin Taxes Actually Work

Bitcoin gains and income bring tax bills

I tried doing my crypto taxes myself in 2021 and nearly lost my mind. The basic rule seems simple: HODL = no taxes, sell/trade = yes taxes.

Capital Gains

If you sell Bitcoin for more than you paid, you'll owe tax on the profit. How much depends on how long you held it and your income level. In many countries, including the US, holding Bitcoin for more than a year gets you better tax rates.

Income

Bitcoin received for work or services counts as regular income. If someone pays you $500 worth of Bitcoin for freelance work, you owe income tax on that $500, calculated at Bitcoin's value when you received it. The same applies to mining. Any Bitcoin earned counts as income at its current market value.

Crypto-to-Crypto Trades

In most places, trading one cryptocurrency for another counts as a taxable event, even though no "real" money changed hands. This surprises many people, as it feels like you're just swapping digital assets.

Record-Keeping Challenges

The reality for us is, however, usually a nightmare of cost basis calculations and missing records. The IRS wants to know precisely when I bought each fraction of a Bitcoin, at what exact price, and when I sold it. I've made hundreds of transactions across multiple platforms over the years - some of which don't even EXIST anymore. My accountant literally laughed when I dumped my attempted spreadsheet on her desk. "This is... creative," she said, which I'm pretty sure was professional-speak for "completely wrong."

Specialized crypto tax software like CoinTracker, Koinly, and TaxBit can automatically import your transactions and generate tax reports, well worth the cost compared to the hours of frustration they save.

Security Considerations: Protecting Your Bitcoin

While the Bitcoin network itself has never been hacked, the surrounding ecosystem has plenty of security risks. Understanding these risks and taking basic precautions can prevent costly mistakes.

What Could Go Wrong? Common Bitcoin Security Risks

Exchange problems

Sometimes, the companies that let you buy and sell Bitcoin run into serious trouble. Mt. Gox - where I fortunately had only a tiny amount stored - was once the largest Bitcoin exchange in the world. Then in 2014, hackers stole hundreds of thousands of Bitcoins, and the company collapsed. I remember refreshing the page over and over, hoping it was just temporary. It wasn't.

More recently, QuadrigaCX imploded in 2019 when its founder unexpectedly died, apparently taking the only password to $190 million in customer funds to his grave. These disasters taught me a valuable lesson: never keep significant amounts on exchanges.

Fake websites and emails

I've had at least three heart-stopping moments with fake websites and emails. The most convincing was a perfect clone of Coinbase's login page that arrived in my inbox claiming there was "unusual activity" on my account. The only tell? The URL had an extra letter that I almost missed.

Malicious software

Some of these programs specifically target crypto by either stealing your private keys or - even more deviously - secretly changing recipient addresses when you copy-paste them. Now I'm paranoid about keeping my computer clean and only download software directly from official websites.

Social engineering

Scammers are masters of manipulation. A guy in my crypto meetup group lost $12,000 to someone posing as Coinbase technical support. The scammer called him, knew details about his recent transactions (probably from social media posts), and convinced him to "verify his wallet" by sharing his recovery phrase. Within minutes, his Bitcoin was gone. Legitimate services will NEVER ask for your private keys or recovery phrases - like EVER.

Lost access

Perhaps the most preventable cause of Bitcoin loss is simply forgetting passwords, misplacing devices, or losing recovery phrases. Countless people have Bitcoin they can't access because they lost their keys.

Simple Steps to Keep Your Bitcoin Safe

For protection, you don't need to be a tech genius, just paranoid enough. Our security team at CoinMinutes has developed a simple checklist we recommend to all readers:

Layered steps keep your Bitcoin secure

Two-factor auth saved my *ss when someone tried getting into my Coinbase at 3:14am from somewhere in Russia (seriously, got the alert on my phone). I use Google Authenticator because my phone number got SIM-swapped in 2020 in a different hack attempt. Some guy convinced T-Mobile he was me and transferred my number to his device. Couldn't access anything connected to SMS verification for almost 2 days. Nightmare.

I'm neurotic about different passwords now. Use this password manager called Bitwarden to generate random garbage like "x8$kL!pQ@vT7" for each exchange. Can't remember a single one of my passwords anymore, which is probably good.

Your recovery phrase is EVERYTHING. Write those 12-24 words on paper (never digitally) and store copies in different physical locations.

I've also started using a completely separate email address for anything crypto-related. This creates an additional security layer between my regular online life and my Bitcoin holdings.

Be suspicious of ANY email about your crypto accounts. I've gotten some incredibly convincing phishing attempts - one even included my actual account balance, which really freaked me out. Turns out they'd scraped that info from a Reddit comment I'd made (lesson learned about oversharing online!). My personal rule now: NEVER click links in crypto-related emails. If Coinbase or anyone else claims there's an "urgent account issue," I manually type the website address in my browser or use my previously bookmarked link.

Update your devices. Those annoying update notifications that always pop up at the worst time? Install them. They often fix security holes that hackers exploit.

This one's embarrassing, but I once lost $40 in Bitcoin because I typed an address wrong. Just... gone forever into the digital void. Since then, I ALWAYS send a tiny test amount first - like $5 worth - before sending any larger transaction. Yes, you pay the network fee twice, but it's worth it for peace of mind.

And please, please don't keep all your crypto in one place. Keeping your Bitcoin on different platforms means if one gets compromised, you won't lose everything.

Is Bitcoin Right for You?

Bitcoin isn't for everyone. Some of my smartest friends have chosen to skip Bitcoin entirely, and I respect that choice.

First, look honestly at your financial situation. When my brother asked about buying Bitcoin, I learned he didn't even have an emergency fund yet. I told him to come back after saving six months of expenses. Bitcoin's wild price swings mean you should never invest money you might need soon. The money you put into Bitcoin should be funds you can leave untouched for years.

You don't need to be a tech wizard either. I certainly wasn't when I started, but you should feel comfortable trying new things on your computer or phone. If technology generally frustrates you, either find a patient friend to help or stick with more traditional investments.

Why I Started CoinMinutes (And Why You Might Actually Want to Check It Out)

CoinMinutes was born out of my own expensive mistakes and weird chart obsession. We're not Bloomberg or anything fancy - used to just be me and two other crypto degens who spend wayyy too much time analyzing this stuff.

Our newsletter is kinda like this article but weekly, and includes:

• Market updates that don't suck (I write these usually half-caffeinated at 6am)

• Where money's actually flowing (not just what CT influencers are shilling)

• "FOMO Check" sections when I notice everyone getting too excited about garbage

• Security warnings

• Deep dives on projects that aren't being hyped yet

If you've read this far, you're probably the kind of person who'd enjoy our slightly unhinged but hopefully useful takes.

Check us out at https://coinminutes.com/ if you want, or don't - I'm not your dad. But our free Friday emails are pretty good, just saying. Hope to see you there!