Bitcoin and cryptocurrency have gone from a niche technology experiment to a mainstream investment asset class. Before you invest, here are the facts you need to know.

What Is Bitcoin?

Bitcoin is a decentralized digital currency that operates on a peer-to-peer network without a central authority. It was created in 2009 by an anonymous person or group known as Satoshi Nakamoto. Transactions are recorded on a public ledger called the blockchain, which is maintained by a network of computers around the world.

The Investment Case for Bitcoin

Proponents argue that Bitcoin is a store of value similar to gold, with a fixed supply of 21 million coins that protects against inflation. Its decentralized nature makes it resistant to government interference. Institutional adoption has increased significantly, with major corporations and financial institutions now holding Bitcoin on their balance sheets.

The Risks You Need to Know

Bitcoin is highly volatile — it has experienced multiple drawdowns of 80% or more from its peak. It is also subject to regulatory risk, as governments around the world are still determining how to regulate cryptocurrency. Tax treatment is complex, with the IRS treating Bitcoin as property subject to capital gains tax. Never invest more than you can afford to lose.