The Download »
Breaking down Bitcoin bit by bit
Once doubted, now unstoppable—reshaping how we see value
By Farhaan Tipu
Not many noticed when a mysterious figure by the name Satoshi Nakamoto rolled out Bitcoin to the world in 2009. During that time, it was brushed off as an internet experiment, too radical to succeed — an internet-born currency, designed to move freely without being tied to central banks or political authorities. Fifteen years on, Bitcoin is still here—it’s been cheered, cursed, regulated, banned, and still refuses to disappear from our view. Yet for many people, the question arises: What is Bitcoin and why must we know about it? So, Vibe decided to take a closer look and unpack it in simple terms for you.
What is Bitcoin?
Bitcoin is money that only exists in digital form. Unlike our rupees or dollars, it is not printed or issued by a central bank. Rather than sitting idle in one place, it runs on a vast worldwide network of computers linked together using a technology called Blockchain.
You can imagine the blockchain as a very big open notebook that accounts for each and every Bitcoin transaction that has ever occurred. This ‘notebook’ is not housed in one location—it’s duplicated on thousands of computers all over the world. It’s almost impossible to modify, and it keeps any single authority from controlling the system.
The downside is that Bitcoin is not perfect. Some of its greatest challenges are:
Price volatility:
Its price can shoot up or plummet in huge swings within hours, and therefore, it cannot be used on a daily basis. In November 2021, Bitcoin came close to ₹50 lakh per coin, but came down below ₹15 lakh by June 2022, erasing massive wealth of investors.
Heavy energy consumption:
It requires huge amounts of electricity, which leads to environmental issues. Operating a single high-powered Bitcoin mining rig in India may drive your monthly electricity cost well in excess of ₹20,000–₹25,000, depending upon prevailing charges.
Regulatory confusion:
There are governments that favour it, and governments that ban or restrict it, leading to confusion. Governments in the US, Japan, and the UK permit Bitcoin with regulations in place, whereas China, Bangladesh, and Nepal have outrightly banned it.
Scams and fraud:
Ponzi schemes and unsecure trading sites have cost individuals considerable amounts. The notorious GainBitcoin fraud in India reportedly defrauded investors of more than ₹20,000 crore, while the Mt. Gox exchange hack on the world stage in 2014 resulted in an estimated 850,000 Bitcoins disappearing overnight.
How does it function?
There are two main processes that make Bitcoin keep running: Mining and Keys.
Mining: Special computers, owned by people called miners, compete to solve complex mathematical problems. The winner earns new Bitcoins and also verifies recent transactions, ensuring the system is secure.
Keys: Rather than your PIN or a personal signature, Bitcoin employs two computer digital codes named keys. A public key that operates similar to your bank account number—other people can use it in order to send you money. And a private key, which is more like a password—only you should be knowing it, since it lets you spend your Bitcoin. If you lose this private key, it is impossible to get your money back.
Why do people care about it?
What’s interesting about Bitcoin is that it defies the conventional norms of money. There is no Reserve Bank printing more of it, no state determining how much should be put out. The supply is capped at 21 million coins—forever. That scarcity leads to people using it somewhat like digital gold, something valuable because it’s scarce.
It’s also quick. Imagine this: Sending cash to a friend in London from Delhi. Going through a bank, it might take days and cost loads of money to make the transaction. But with Bitcoin, it might be virtually instantaneous and less expensive. This borderless flow is one of its world-wide attractions.
And in areas where the local money isn’t stable or where there aren’t even banking services, Bitcoin can be a lifeline. For others, it’s not speculation or investment—it’s simply having some means of holding and transferring money that isn’t subject to bail-in institutions.
The future of Bitcoin
Some expect that eventually, it’ll be used for everyday purchases across the board. Others see it settling into a position more akin to gold—a value store, not something you pay for food with. And some believe its greatest legacy is not Bitcoin itself, but the blockchain technology that it made mainstream, and that is now being utilized to secure supply chains, identities, and more.
Nobody knows for certain. What is certain though is that Bitcoin isn’t going away. It has already redefined the rules of the game of money, whether or not we comprehend it.
Up for it?
For beginners, Bitcoin may be a little confusing, even overwhelming. But if you just get an idea of the fundamentals — how it works, why it exists, where it can fail — it becomes easier to see the bigger picture. Of course, Bitcoin won’t replace money in the foreseeable future, but it has changed how people perceive value, ownership, and trust in today’s digital world. And the best way to get to know this, is to do it at your own pace — bit by bit.