What can you do with Bitcoin?

Bitcoin (BTC) is the world’s largest digital currency and is now owned by millions of people globally.

When the protocol first launched in 2009, Bitcoin’s anonymous creator(s) Satoshi Nakmoto aimed to deliver “a peer-to-peer electronic cash system.”

This means that unlike traditional currencies, Bitcoin’s public network allows “online payments to be sent directly from one party to another without going through a financial institution” as described in the Bitcoin white paper.

While the cryptocurrency has grown into one of the world’s largest assets by market capitalization, some still see Bitcoin purely as a speculative investment vehicle.

In reality, many people don’t only buy and hold bitcoin.

Today, people around the world are actively using Bitcoin not as a speculative bet but as a normal part of their everyday lives.

From straight forward use cases like transacting value, to emerging use cases like data storage, Bitcoin is far more than a bet.

Bitcoin is a tool that can empower people with a more efficient way to connect and transact.

Bitcoin can be used to quickly send or receive international payments for a comparatively low cost. 

Have you ever tried to send money from one country to another? Millions of people do it every day. 

Those that have sent cross-border payments will know that the process is:

• Costly - intermediaries typically charge a large fee to send the transaction, before charging an exchange rate fee for changing one currency to another.

• Time consuming - payments can take several days, and can only be processed when the bank or payment service is open for business.

• Intrusive - a large amount of highly personal information needs to be collected in order to send money that rightfully belongs to you.

• Confusing - dozens of intermediaries are typically involved in the process, each with their own unique set of criteria.

Compared to some existing cross border payment service options, sending value via Bitcoin transactions can offer a significantly cheaper alternative.

One research paper reported that transferring $200 worldwide via bitcoin was 30 times cheaper than using a bank.

This is because Bitcoin’s decentralized infrastructure involves far fewer intermediaries than traditional payments.

While an overseas payment might pass through several banks or service providers that each charge a fee, only one bitcoin miner processes new transactions at a time.

Additionally, Bitcoin transactions are typically finalized in about an hour. Traditional international payment providers can take up to five days. This is because unlike banks and money transmitting services, the Bitcoin network operates 24/7. 

Whether it’s a national holiday, weekend or late evening — Bitcoin never stops operating. 

For individuals looking to send transactions without having to first receive approval from a third party, Bitcoin can be an attractive option as well.

Once an individual purchases crypto from a platform like Kraken and transfers it to their own Web3 wallet, it is theirs to spend how they wish.

With Bitcoin, there are no transaction minimums, maximums or other limitations that dictate how a person can or can’t spend their coins.

Sound valuable to you?

Get started by signing up for your Kraken account and buying as little as $10 worth of bitcoin.

Understanding Bitcoin’s “pseudonymous” nature can be an abstract exercise for some. 

On one hand, transactions appear completely anonymous. There’s no identifying information attached to any transactions sent over the network, just public wallet addresses comprising strings of alphanumeric code.

But on the other hand, all transactions are completely transparent for all to see. The are posted to a globally accessible blockchain network where anyone in the world can reviews the details of every Bitcoin tranaction that has ever taken place.

So which is it?

In order to access traditional financial services, many institutions require customers to turn over their highly-sensitive personal information. These intermediaries then collect, store and analyze every detail about how people choose to spend their money.

Meanwhile, bitcoin users can download various free crypto wallets without needing to submit any sort of personal information. These services allow users to interact directly with the Bitcoin blockchain. 

Once downloaded, users can freely hold, spend and receive bitcoin or other types of cryptocurrencies without ever revealing their personal information to the public network. This provides a high degree of privacy, but not total anonymity.

Public crypto wallet addresses might only contain strings of alphanumeric code. You can learn more about this in our Kraken Learn Center article, How do cryptocurrencies use cryptography?

While it may be challenging for the average individual to track Bitcoin transactions, modern forensic techniques and financial regulations have enabled law enforcement to isolate individual crypto wallets and identify their underlying users.

It is also important to understand that certain anti-money-laundering and anti-terorrism laws require centralized exchanges like Kraken to collect and record information about its clients.

In circumstances where fraud or criminal activity has taken place, the blockchain can turn into a clear and reliable way of tracking that behavior, rather than obfuscating it.

Even still, no personal identifying information is stored on the bitcoin blockchain — meaning coins that have not been associated with an individual can be transacted in a private way.

Mining is the process that secures the Bitcoin network. 

During the mining process, volunteers compete against each other using powerful computers to win a cryptography-based competition that repeats roughly once every ten minutes.

Winning miners earn the right to propose new blocks and receive a block reward consisting of newly-minted BTC. They are also rewarded with any fees attached to the transactions that include in their proposed block.

Bitcoin mining can be very expensive and difficult to do without the proper equipment and technical knowledge. However, there are ways novice Bitcoin users can enjoy some of the benefits of mining without committing substantial amounts of capital and time.

Lottery miners, joining mining pools or using cloud mining services are just some of the ways beginners can access the world of bitcoin mining in a more cost-effective way.

For more information, check out our Kraken Learn Center article What is Bitcoin mining?

Wrapped Bitcoin (WBTC) allows users to gain exposure to the world’s largest cryptocurrency on blockchains where actual Bitcoin can’t exist. Custodians hold Bitcoin on its network and then mint WBTC on chains like Ethereum. 

Check out the Kraken Learn Center artcle, What are wrapped crypto assets? to learn more.

Wrapped Bitcoin allows individuals to use Bitcoin for different purposes across a variety of decentralized finance (DeFi) applications, including yield farming, borrowing against Bitcoin collateral and more.

It’s important to note that using WBTC adds “custodian risk” to your DeFi activities, because it relies on centralized third parties to hold the bitcoin that backs each WBTC coin until they’re redeemed. 

Check out our article, How to stay safe in DeFi, if you want to learn more about the different types of risks you may encounter.

As of 2024, the Bitcoin network has the ability to mint and store unique pieces of information on satoshis — which are the smallest units of Bitcoin. This capability, referred to as Bitcoin Ordinals, unlocks similar functionality as non-fungible tokens (NFTs) directly on the Bitcoin blockchain.

Ordinals are created by embedding, or “inscribing,” data in specific satoshis. The inscribed data can represent NFTs or new tokens on Bitcoin’s network. 

A user can inscribe virtually any kind of data into a satoshi, which has more recently led to increased activity around trading and creating infrastructure for Ordinals.

Stablecoins, bridges with other chains, staking functionality and more are all developed or in development using Ordinals.

Check out our Kraken Learn Center article Bitcoin NFTs: What are Ordinals? to learn more.

Thanks to BitVM and Ordinals, Bitcoin’s network can now also mint and trade crypto tokens besides BTC and run DeFi decentralized applications (dApps) like DEXes. 

Increasingly, it appears that everything you can do within Web3 may eventually be possible to do directly with the Bitcoin blockchain.

Whether you’re looking to transfer crypto to a loved one in another country, take full custody of your own digital assets or experiment with Ordinals, Bitcoin offers a solution.

Kraken offers a trusted place to get started with crypto and buy bitcoin today.

*Peer-to-peer transfers are not available on the Kraken platform.