Bitcoin is the world’s most recognised and widely adopted cryptocurrency1 — and the first form of internet-native money to gain widespread global adoption. Bitcoin allows for peer-to-peer transactions outside of central intermediaries like banks. There is no physical form of bitcoin; it is solely a digital currency.
THE BITCOIN BASICS
Bitcoin allows instant peer-to-peer transfer of value globally, without the need for intermediaries like banks and at next-to-no-cost. Its code is open for anyone to download, review and contribute. Unlike traditional money it also has a fixed supply – there will only ever be 21 million bitcoins.
Cryptocurrencies like bitcoin have enabled a way for secure transactions to be conducted directly between two parties without the need for an intermediary (e.g., a bank) anywhere in the world. It addresses three centuries-old problems that money and payment systems have faced:
Transacting across borders: bitcoin and its blockchain-based framework enabled a global “internet of value,” where assets can be moved quickly and seamlessly at low cost.
Open access financial system: bitcoin is available to anyone with a mobile phone and an internet connection. Its open access nature means that bitcoin can help enable more people to participate in the global financial system who may not have full access to traditional banking networks, or who are limited by their own country-specific infrastructure.
Fixed supply not subject to inflation: bitcoin is a scarce asset, with a supply fixed at 21 million units. Supply of traditional government-issued currencies can be arbitrarily increased, leading to inflation. Bitcoin’s supply grows at a predictable rate, and because of its decentralized nature, its supply is near impossible to alter.
Bitcoin is designed to serve as an alternative to traditional currency and is focused on facilitating transactions between individuals, so the blockchain technology it uses is intentionally simple to reduce technical risk. Other cryptocurrencies like Ethereum have more complex technology behind them that is built to constantly evolve and support other software applications.
HOW BITCOIN WORKS
Bitcoin’s code restricts its maximum supply to 21 million coins, and as of October 2025 there are 19.9 million coins in circulation3. New bitcoins are created in a process called ‘mining’ (see below question), and new issuance is cut in half approximately every four years so the scarcity of the currency can be maintained.
The process of creating new bitcoin is called mining and occurs when developers compete to solve complex mathematical puzzles that validate and secure transactions on the bitcoin network. The winning miner earns new bitcoins (called “block rewards”) and transaction fees.
According to the source code for bitcoin, the currency will reach its maximum supply in 2140. When this happens, the block reward for bitcoin miners will no longer exist, but they will still earn transaction fees through verifying transactions on the bitcoin network. As the demand for bitcoin transactions increases, transaction fees are expected to grow.
Bitcoin operates on a centralised network spread across the globe, and transactions are recorded on a public ledger called the blockchain, with each transaction producing a ‘digital fingerprint’. Altering any transaction would have a ripple effect on each of these fingerprints, meaning it’s extremely unlikely a hack could occur on the currency itself.
Individual storage of bitcoin is more susceptible to hacking, depending on the type of wallet where investors are holding their bitcoin. Hot wallets are generally more susceptible to being hacked than cold wallets, so best practice is to use a cold wallet for the long-term storage of cryptocurrencies.
Bitcoin ETFs store bitcoin on behalf of investors, so may eliminate some of the security challenges of direct bitcoin investment.
INVESTING IN BITCOIN
You can invest in bitcoin directly through a cryptocurrency ‘wallet’, or through ETFs which track the price of bitcoin. Wallets – which are a software application storing your digital key to access your bitcoin – can be either hot (with an internet connection) or cold (no internet connection). ETFs can provide exposure to bitcoin through the stock exchange, meaning you can hold your investment alongside the rest of your share portfolio.
You can also invest in bitcoin indirectly through bitcoin futures or individual shares in companies that mine bitcoin, although these options have typically not performed as well as bitcoin itself.4
A bitcoin exchange-traded fund (ETF) is an investment vehicle that provides exposure by investing directly in bitcoin. Bitcoin ETFs offer the ease of stock trading, low costs, and convenience.
Bitcoin only came into existence 16 years ago, so it’s perhaps no surprise that we’ve seen a lot of volatility in the bitcoin price as investors speculate about its future role in the global economy – particularly given its unique status as the world’s first widely adopted internet currency.
Since 2014, bitcoin has experienced three downturns of around 80%. After each of these, its price took more than three years to recover. While bitcoin’s volatility has lessened with time5, it is generally only considered appropriate for investors who are comfortable bearing the risk of rapid price plunges.
By and large, governments have recognised bitcoin is here to stay and needs regulation to protect investors, but development of a full regulatory framework around bitcoin and other cryptocurrencies remains a work in progress. The EU and the state of New York in the US are so far the only jurisdictions where cryptocurrency licensing regimes exist.
In Australia, most crypto exchanges will need to obtain a financial services license by 30 June 2026, but exchanges that trade exclusively in bitcoin and Ethereum will be exempt.6 Bitcoin ETFs fall under the listing rules of the relevant exchange (the ASX or Cboe).
What themes are driving bitcoin adoption?
Driving the demand for a bitcoin ETF is the fact that many investors view bitcoin as more than just a form of digital payment. There are certain trends accelerating bitcoin’s adoption as well:
Global monetary alternative
A scarce, decentralised, global monetary alternative that may benefit from increasing global disorder, and declining trust in institutions and government-issued fiat currencies.
Geopolitical and monetary hedge
An expression on increasing global disorder and declining trust in governments, banks, and fiat currencies.
Blockchain adoption
As the leading cyptoasset1, bitcoin’s performance is seen by many as a key indicator of overall blockchain adoption.
