When talking about cryptocurrencies, it's hard to avoid the topic of Bitcoin. As of February 2025, Bitcoin (BTC for short) has a Market size from about 1.9 trillion francs (that's more than Facebook) and is the undisputed leader of all cryptocurrencies.
For many, however, the topic is still a closed book, which we would like to open up for you today. We have endeavoured to simplify the technical jargon and hopefully explain Bitcoin in simple terms!
If you have any more questions on the topic, we look forward to an exchange in the comments!
Before we dive into the details, please take a look at the following graphic. Not everything there makes direct sense for Bitcoin newbies, but we will take up the individual topics later.
What is Bitcoin: Bitcoin is a digital currency that is traded between private individuals. No bank or service provider is in the middle, as is the case with our conventional monetary system. This is why Bitcoin is called a decentralized currency. No one can freeze your account, charge interest or impose a withdrawal limit on you.
Who invented Bitcoin? This is perhaps the most exciting question about Bitcoin. Because the founder of Bitcoin naturally has an enormous amount of bitcoins in his possession. To this day, he is only known under the pseudonym Satoshi Nakamoto. His true identity remains uncertain. All that is known is that the person is certainly highly intelligent and knows his way around the world of cryptography. The Bitcoin white paper is openly accessible to everyone and therefore absolutely transparent and open source. Satoshi put the idea of Bitcoin on paper in 2008 and brought it to life in 2009. At that time, the value of a Bitcoin was so low that Bitcoin beginners spent many hundreds of Bitcoins on a pizza. Today, this would be incredibly large sums of money.
So it would have been exciting to have a small Bitcoin addition to the equity portfolio to have.
If you simply explain Bitcoin to make it easier for beginners, there is no getting around the topic of the wallet:
How do you store and secure Bitcoin? Bitcoins are stored in a so-called wallet, i.e. a digital purse. There are many different types of wallet. We could write a multi-part article about this, but we would like to keep the title Bitcoin simply explained remain faithful. So just a quick word about the wallet:
You should keep the password (also known as the key) for your wallet in a safe place. It goes without saying that this should not necessarily be on your laptop. Perhaps in paper form or engraved in a piece of metal. No, that's not a joke. You can find such sets online, as such a key will not be destroyed in the event of a fire. Anyone who buys 0.0001 BTC today will laugh about it. But anyone who bought in around 2010 and is now sitting on a small fortune has certainly already thought about this.
Bitcoins are limited: Bitcoins are produced by so-called mining. This involves complex computing tasks being solved by special computers. This is done to such an extent that it is virtually impossible for hackers to attack or manipulate such a network. This brings a great deal of security to the Bitcoin system, for which the founder Satoshi Nakamoto receives great recognition today. In the Bitcoin founder's white paper, he described the Maximum number of bitcoins limited to 21 million. By the end of 2020, around 18 million BTC will have been produced, which means that all bitcoins will soon have been created. After that, it will no longer be possible to put any more Bitcoins into circulation. Supply and demand regulate the price and there can be no inflation.
In our fiat money system, as we use it today, the state can print money as it sees fit. We lose around 2-3% in the value of our money every year due to inflation. This does not happen with Bitcoin. Many call Bitcoin therefore as digital gold.
We have explained and demonstrated the functionality of Bitcoin in a simple way, even if the whole topic of block chaining has been left out for the time being. Bitcoin is a topic that we have on the screen for the long term and want to take up again and again. The topic is of course also controversial, because there are very divided opinions about the digital currency.
If you hold cryptocurrencies and are wondering how to easily report them on your tax return, you'll want to check out this Tax Guide find what you are looking for. If you want to buy your first cryptocurrencies, our Crypto exchanges comparison more.
You have more questions or suggestions about Bitcoin?
Leave us a comment there!
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Hello, thank you very much for the nice explanations! By the way, do you have to pay tax on crypto? Kind regards
Yes, see Details here.
Take a look at the products of 21shares. There is for example an ETP (ABBA) with which one participates at 84% in Bitcoin and 16% Etherum. For me a great thing
P.S. These products are listed on the CH stock exchange
Hey Richi
ETPs are an exciting topic that we have on our agenda.
What bothers me personally are the high fees for the products you mention. 1.5% to 2.5% per year in ongoing fees...
I personally prefer to buy Bitcoin and Ether directly (example) and pay a fee of perhaps 0.5 - 1% at an exchange once and then hold them for no ongoing annual fee.
Hi there
Maybe you have information on which pension fund in Switzerland - if any - provides bitcoin based pension funds?
I need to transfer my 2nd pillar, and all pension funds' yield is around 0.05%, i am looking for a bitcoin based fund.
Thanks in advance, Joe
Hi Joe
I just read that products from Bank Vontobel around cryptos are used by pension funds often. But don't know which funds are using them at the moment. If I find something, I will let you know!
Rather concise overview, especially about Swissquote: there I have to buy with USD or EUR, so first convert my CHF (which is also not free). Advantage: a very large number of CryptoCurrencies, compared to Mt Pelerin or Relai.
Thanks for the addition Gianni. The article Bitcoin simply also explained should remain simple and brief.
Dear greetings