Bitcoin is redefining its role in the global financial landscape, capturing the attention of investors, institutions, and everyday users alike. Since November, Bitcoin’s price has surged to new all-time highs—approaching $20,000—and has outperformed traditional assets with a year-to-date gain exceeding 170%, and a staggering 400% rise from its March lows. In a world where interest rates hover near zero, Bitcoin is increasingly seen not just as a speculative asset, but as a strategic hedge and store of value.
According to Grayscale’s Bitcoin Investor Report, over half of U.S. investors expressed interest in buying Bitcoin in 2020, and 83% of current crypto investors made purchases within the past year. A recent survey by OKEx Research found that nearly 80% of Chinese investors have heard of Bitcoin, with 15% showing strong interest in investing. While the sample size was limited, it reflects a growing mainstream curiosity.
But for many, Bitcoin remains mysterious. To bridge the knowledge gap, we’ve compiled and answered the 10 most frequently asked questions—offering clarity on what Bitcoin is, how it works, and why it matters.
What Is Bitcoin? Is It Legal?
Bitcoin was introduced in 2008 by an anonymous figure known as Satoshi Nakamoto through a whitepaper titled Bitcoin: A Peer-to-Peer Electronic Cash System. The goal? To enable direct online payments without relying on banks or intermediaries.
Unlike fiat currencies issued by central banks, Bitcoin is decentralized. It’s generated through complex algorithms and secured by a distributed network of computers (nodes) that validate and record transactions on a public ledger called the blockchain. Cryptography ensures security, prevents counterfeiting, and enables anonymous ownership transfers.
While not legal tender in most countries, Bitcoin’s status is evolving. Japan officially recognized it as a payment method under its Payment Services Act in 2017. In China, the People’s Bank of China classified Bitcoin as a “virtual commodity” in 2013, meaning individuals can legally hold it at their own risk. Furthermore, China’s Civil Code, effective January 2021, includes protections for digital assets—widely interpreted to cover cryptocurrencies like Bitcoin.
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Can You Invest in Bitcoin? How Does It Compare to Stocks or Gold?
Yes—Bitcoin is increasingly treated as an investment vehicle, similar in function to gold, stocks, or commodities—but with unique characteristics.
It trades 24/7, leading to higher volatility and risk compared to traditional markets. However, studies show low correlation with other assets. Fidelity’s research from 2015 to 2020 found Bitcoin’s average correlation with major asset classes was just 0.11—meaning its price movements are largely independent.
Bitcoin shares traits with several asset types:
- Like gold: It has a fixed supply cap of 21 million coins and undergoes halving events every four years, reducing inflation and enhancing scarcity.
- Like stocks: Investors can trade both spot Bitcoin and derivatives such as futures and options.
- Like forex: It’s traded globally across exchanges in various currency pairs.
This blend makes Bitcoin a compelling alternative investment for portfolio diversification.
Can You Use Bitcoin to Buy Things?
Absolutely. While not universally accepted, Bitcoin is used as payment by thousands of merchants worldwide. As of December, Coinmap reported over 18,673 businesses accepting Bitcoin—including major platforms in North America, Europe, Japan, South Korea, and Australia.
You can purchase:
- Physical goods (e.g., gold bars via APMEX)
- Real estate (via BitcoinRealEstate)
- Travel (flights on CheapAir or Expedia)
- Digital services (game credits on Steam via third-party resellers)
Bitcoin ATMs also allow users to convert cash into Bitcoin quickly—enhancing accessibility for non-technical users.
What Is Bitcoin Mining? Is It “Creating Money Out of Nothing”?
Bitcoin mining isn’t magic—it’s computational work. Miners use powerful hardware to solve complex mathematical puzzles that validate transactions and secure the network. The first miner to solve the puzzle adds a new block to the blockchain and receives newly minted Bitcoin as a reward.
This process is competitive and resource-intensive—requiring electricity, cooling systems, and specialized equipment (ASICs). The total supply is capped at 21 million, and rewards halve approximately every four years—a built-in mechanism to control inflation.
So no, mining doesn’t create value from nothing. It’s more like earning rewards for maintaining a global financial network—similar to how game players earn rare items by completing difficult challenges.
How Can普通人 Get One Bitcoin?
There are several practical ways:
- Buy on a crypto exchange – Platforms like OKX allow users to purchase fractions of a Bitcoin (as little as $10 worth).
- Use payment apps – PayPal enables users to buy, hold, and sell Bitcoin directly.
- Bitcoin ATMs – Physical kiosks that accept cash in exchange for Bitcoin.
- Earn through services – Some freelancers accept Bitcoin as payment.
Mining is technically possible but often unprofitable for individuals due to high setup costs and energy consumption.
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What Gives Bitcoin Its Value?
Bitcoin’s value stems from three pillars:
- Scarcity: With only 21 million ever to exist, it's rarer than gold.
- Decentralization: No single entity controls it—resistant to censorship and manipulation.
- Global Consensus: Millions trust and use it, reinforcing its network effect.
Born after the 2008 financial crisis, Bitcoin emerged as a response to centralized banking failures. Over time, its underlying technology—blockchain—has gained recognition beyond finance, further legitimizing its long-term potential.
How Big Is Bitcoin’s Market Compared to Traditional Assets?
Though still niche compared to stocks or bonds, Bitcoin’s market cap exceeded $340 billion in December—surpassing that of Tesla and even Kweichow Moutai on China’s A-share market.
Its growing adoption by institutional investors (like MicroStrategy and Square) signals increasing credibility. As liquidity improves and regulatory clarity emerges, Bitcoin is transitioning from fringe curiosity to mainstream asset class.
Does Bitcoin Have Reporting Standards Like Stocks?
Unlike public companies, Bitcoin doesn’t issue quarterly earnings reports—but transparency is baked into its design.
All transactions are recorded on a public, immutable ledger. Anyone can use blockchain explorers to view:
- Active wallet addresses
- Transaction volume
- Hash rate (network security)
- Supply distribution
This open-book model offers real-time insight without relying on corporate disclosures.
Are There Bitcoin Derivatives for Different Risk Levels?
Yes. Investors can choose based on risk appetite:
- Spot trading: Buying actual Bitcoin—lower risk.
- Futures & perpetual contracts: Leverage-enabled trading—higher risk/reward.
- Bitcoin ETFs and trusts (e.g., Grayscale GBTC): Offer exposure without custody concerns—ideal for conservative investors.
These instruments make Bitcoin accessible to diverse investor profiles—from day traders to long-term holders.
How Does Digital RMB Differ From Bitcoin?
China’s Digital RMB (DCEP) is a central bank digital currency (CBDC), fundamentally different from Bitcoin:
| Aspect | Digital RMB | Bitcoin |
|---|---|---|
| Issuance | Centralized (PBOC) | Decentralized |
| Supply | Unlimited (controlled by state) | Capped at 21 million |
| Legal Status | Legal tender (M0) | Virtual commodity |
| Anonymity | Controllable (privacy-balanced) | Fully anonymous |
| Offline Use | Supported | Not supported |
| Volatility | Stable (pegged to CNY) | Highly volatile |
They serve different purposes: DCEP enhances monetary policy efficiency; Bitcoin offers financial sovereignty.
Frequently Asked Questions
Q: Is Bitcoin legal in China?
A: Yes—while trading is restricted, holding Bitcoin as a virtual asset is permitted under personal risk.
Q: Can Bitcoin crash to zero?
A: Theoretically possible—but unlikely given its entrenched network effects and growing institutional adoption.
Q: How do I store Bitcoin safely?
A: Use hardware wallets (cold storage) for large amounts; reputable exchanges with strong security for active trading.
Q: Is now a good time to invest?
A: Timing the market is risky. Dollar-cost averaging (DCA) helps reduce volatility impact over time.
Q: Does Bitcoin harm the environment?
A: Mining consumes energy—but increasing use of renewable sources and technological efficiency are mitigating concerns.
Q: Will governments ban Bitcoin?
A: Some may restrict usage, but global decentralization makes a full ban nearly impossible.
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Bitcoin is more than digital money—it’s a paradigm shift in how we think about value, ownership, and trust. Whether you're drawn by its scarcity, technological innovation, or potential returns, understanding its fundamentals is the first step toward informed participation. As adoption grows and infrastructure matures, one thing is clear: Bitcoin isn’t going away.