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Crypto

What is Bitcoin and how does it work?

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Short answer

Bitcoin is a digital currency that runs on a public network of computers instead of a bank or government. Transactions are recorded on a shared ledger called the blockchain, and new coins are created on a fixed schedule capped at 21 million in total. Its price is set purely by supply and demand, which makes it extremely volatile. In Pakistan it is legal to own but is not legal tender.

How Bitcoin works, in four ideas

  • Blockchain: every transaction is grouped into blocks roughly every ten minutes and added to a public chain that anyone can check.
  • Mining: computers compete to add the next block by solving a puzzle (proof of work); the winner receives newly created bitcoin plus fees.
  • Keys and wallets: you control bitcoin with a private key. Whoever has the key controls the coins — lose it, and they are gone.
  • Fixed supply: the reward for mining halves about every four years. The last halving, in April 2024, cut it to 3.125 BTC per block; the next is expected around 2028.

Key facts

ItemDetail
LaunchedJanuary 2009, by the pseudonymous Satoshi Nakamoto
Maximum supply21,000,000 BTC
Smallest unit1 satoshi = 0.00000001 BTC
Block timeAbout 10 minutes
Regulated investment productsUS spot Bitcoin ETFs approved in January 2024

What moves the price

  • Global liquidity and US interest rates — Bitcoin has tended to rise when money is cheap and fall when rates rise.
  • Flows into exchange-traded funds and purchases by companies and governments.
  • The four-year halving cycle, which reduces new supply.
  • Regulation and exchange failures — crackdowns or hacks have caused sharp falls.
  • Leverage: liquidations on futures exchanges often turn a 5% move into a 15% crash within hours.

Bitcoin in Pakistan

Owning and trading bitcoin is not illegal in Pakistan. The Virtual Assets Act, 2026 made PVARA the regulator that licenses crypto service providers, and since April 2026 banks may serve PVARA-approved firms. The rupee remains the only legal tender. Pakistanis typically buy bitcoin through exchange P2P markets with bank or wallet transfers; gains are taxable income. Religiously, the June 2026 Darul Uloom Karachi fatwa ruled buying and selling cryptocurrencies, including bitcoin, impermissible, while other scholars disagree.

The risks to understand

  • Volatility: falls of 50% or more from a peak have happened several times.
  • Custody: exchanges can freeze accounts or fail; self-custody means you alone are responsible for your keys.
  • Scams: fake "bitcoin mining" or "doubling" schemes are common in Pakistan.
  • No deposit insurance and no regulator to refund losses.

Roman Urdu mein jawab

Bitcoin kya hai?

Bitcoin ek digital currency hai jo bank ke bajaye computers ke public network par chalti hai. Har transaction blockchain par record hoti hai aur kul supply 21 million coins tak mehdood hai. Qeemat sirf demand aur supply se banti hai is liye bohat tez upar neeche hoti hai. Pakistan mein rakhna legal hai lekin legal tender nahi.

Frequently asked questions

Can I buy a fraction of a bitcoin?

Yes. Bitcoin divides into 100 million satoshis, so you can buy a small amount worth a few hundred rupees.

What is the bitcoin price in Pakistani rupees?

It is the dollar price multiplied by the USD/PKR rate, and on P2P markets usually a little higher. It changes every second; check a live exchange quote.

Is bitcoin mining legal in Pakistan?

Mining is not banned for individuals, but it uses a lot of electricity, and power theft or illegal commercial connections are offences. Large operations need regulatory approvals.

Is bitcoin a good investment?

It is a high-risk, speculative asset. Many advisers suggest that anyone who buys it should keep it to a small share of savings they can afford to lose.

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Sources

  1. Satoshi Nakamoto — Bitcoin: A Peer-to-Peer Electronic Cash System
  2. US SEC — Statement on the approval of spot bitcoin exchange-traded products (Jan 2024)
  3. CoinDesk — Pakistan lets banks serve licensed virtual asset providers

This article is general education, not financial, legal or religious advice. Rules change; check the linked primary sources and consult a qualified adviser or scholar before acting. Trading can lose you more than you expect.