21 Questions About Bitcoin

1. Is Bitcoin legal?

Bitcoin is legal in most of the developed world. Its ownership, purchase, and sale are freely available to ordinary citizens and businesses. Today, bans on cryptocurrencies appear very difficult to enforce and, from a technological standpoint, practically unachievable. How can you ban something that knows no borders and does not exist in one specific location?

Bitcoin is decentralized, and there is no way to "turn it off" or block it like a website. Attempts at strict regulation often end in failure or lead to an outflow of investment and innovation to countries with more approachable legislation.

A major factor strengthening Bitcoin's legitimacy is Bitcoin ETF funds. These allow major financial players like BlackRock or Fidelity to purchase Bitcoin (indirectly) through traditional financial instruments. When Wall Street enters the game, it is hard to call it an "illegal" or "marginal" asset. Furthermore, these funds are regulated and approved by authorities such as the U.S. Securities and Exchange Commission (SEC).

Therefore, you can hold Bitcoin legally, buy it on regulated exchanges, or transfer it between your own wallets. However, tax laws vary by country – in some places, you must pay capital gains tax upon selling, while in others, Bitcoin profits are tax-exempt after a certain period.

While some progressive nations (such as Germany, Portugal, or Czechia) are introducing favorable conditions and reducing or completely abolishing taxes on crypto holdings, other countries are hitting a brick wall. For example, China or, unfortunately, Slovakia are trying to either strictly limit cryptocurrencies or ignore their potential. Bitcoin attracts interesting investments that sensible countries welcome. Banning Bitcoin only causes people and capital to move elsewhere.

2. Why is the maximum number of Bitcoins 21 million?

Interestingly, the code does not literally say: "There shall only be 21 million Bitcoins." Instead, this limit naturally emerges from a mathematical algorithm and the principle of halving, which is hardcoded into the protocol. Satoshi Nakamoto initially set the block reward at 50 BTC. Approximately every 4 years (specifically every 210,000 blocks), this reward is cut in half. This process repeats until all Bitcoins are mined – which is expected to happen around the year 2140.

Currently (in 2026), the reward per block is only 3.125 BTC, and at the time of the next halving (expected in 2028), it will drop to 1.5625 BTC. Looking 20 years ahead, around 2045, the reward will be less than 0.1 BTC. The rewards will continue to divide until they approach zero.

Why did Satoshi set the algorithm this way? To be honest, I don't know. In my opinion, Satoshi himself did not anticipate the massive success Bitcoin would achieve. It was created as an alternative to the financial system after the 2008 crisis. When Bitcoin reached a value of 1 dollar, the community celebrated it as a huge milestone. No one then imagined it would one day be worth tens of thousands of dollars. This is why many Bitcoins were lost or sold for tiny amounts – many did not realize its potential back then.

Is the maximum supply of 21 million sufficient? I believe so, and the reason is simple – Bitcoin is extremely divisible. Currently, 1 BTC consists of 100 million satoshis (sats). This means even if the price of one Bitcoin reached a million dollars, it would still be possible to perform transactions worth less than 1 cent. If needed in the future, the protocol can be technically updated to divide Bitcoin into even smaller units. We can divide Bitcoin indefinitely, so the final total doesn't matter; 21 million BTC is more than enough.

3. Why is the price of Bitcoin so volatile?

Bitcoin's price fluctuations are mainly due to two factors. The first is market size. At the time of writing, Bitcoin's total market capitalization is in the hundreds of billions of dollars. For comparison, the market cap of Apple or funds like the S&P 500 ETF exceeds several trillion dollars. Apple alone has a market cap 3x larger than the entire Bitcoin network. In the case of the S&P 500, it is 40x more!

This means even relatively small buy or sell volumes can cause significant swings in Bitcoin's price. The market is simply smaller and thus reacts more sensitively. However, as adoption grows and larger investors enter, this volatility is gradually decreasing. While in the past it was common for Bitcoin's price to drop by dozens of percent in a single day, today such swings are becoming rarer. As the market grows, its stability is expected to increase.

The second factor is the continuous operation of the network and exchanges. Traditional stock exchanges, like the NYSE, operate only during business days. Bitcoin exchanges, however, operate 24 hours a day, 7 days a week – without breaks, including holidays. This means any news can impact the price immediately, allowing people to act more impulsively. For instance, if important news breaks over a weekend, traders react instantly. Instead of "sleeping on it," many sell in panic or buy in euphoria.

Volatility is a natural part of a young asset's development. It is nothing to fear; in my view, it provides more opportunities for traders on exchanges.

4. Do criminals use Bitcoin?

Yes, they do. Just as criminals use cash, kitchen knives, cars, mobile phones, or the internet. However, this doesn't mean the technologies themselves are evil. Bitcoin is a neutral tool, and like any tool, it can be used for both good and bad purposes. It is wrong to judge it solely by how a tiny fraction of people use it. Bitcoin enables true freedom for everyone, regardless of gender, race, religion, or nationality.

Unlike cash, Bitcoin is transparent – all transactions are publicly recorded on the blockchain and can be analyzed retroactively. This is why many experts argue that Bitcoin is not ideal for organized crime, as all money movements remain visible forever. At the same time, Bitcoin gives people something vital – freedom and sovereignty over their own money. This is especially significant in countries with heavy censorship or autocratic regimes.

A state can freeze your bank account, but it cannot get to your Bitcoins if you own your private keys. We don't have to look far for an example. In 2022, when Russia invaded Ukraine, both countries restricted cash withdrawals. The internet was flooded with photos of endless lines at ATMs. In that chaos, Bitcoin saved lives – those who managed to transfer their savings to Bitcoin had them immediately available and could quickly leave the country with their wealth in a digital form that no one could take away.

Bitcoin is not a weapon, but a tool. And like a weapon, it can protect or harm – it all depends on who uses it and how. Its potential to help people in a world of limited freedom, war, or economic uncertainty far outweighs the risk of its misuse.