Bitcoin Hits New High — What Is It and How Does It Work?

June 3, 2025

With Bitcoin reaching a new all-time high, more investors are asking what it is and whether it belongs in their portfolio.

Bitcoin is a type of digital money, but unlike dollars or coins, it isn’t printed or created electronically by a government. Instead, it operates on a global computer network — a bit like a group project where thousands of people each keep a copy of the same notebook. Every time someone spends or sends Bitcoin, that transaction is recorded in this digital notebook, which everyone can see but no one can erase or rewrite. This notebook is what we call the Blockchain, and each page added is a new block.

But before a new page can be added to this notebook, something important has to happen: the transactions on that page need to be confirmed as real. This is where mining comes in.

Imagine a giant math puzzle that needs to be solved to unlock the next page. The first computer to solve it earns the right to add the next page of transactions to the notebook and gets rewarded with newly created Bitcoin. But here’s the key: before that computer can submit the page, the rest of the network checks every transaction on it. If anything looks fake, like someone trying to spend the same Bitcoin twice, the page is rejected. Only when all the transactions pass the test does the new page get added. This more or less is how new blocks get added to the Bitcoin blockchain.

This process of solving, submitting, and verifying is what keeps the Bitcoin network secure. It’s extremely hard to cheat, because you’d have to trick thousands of computers at once and burn a lot of computing power to do it.

Because Bitcoin has a limited supply, only 21 million will ever exist, some compare it to gold. But since it’s fully digital, it’s easier to store, divide, and send. That’s why some investors call it “digital gold”, potentially more flexible and portable than the real thing.

Still, it’s important to remember: Bitcoin remains a highly volatile asset. Prices can swing sharply in short periods of time, which can make it unsuitable for investors seeking stability or lower-risk portfolios. For those curious about it, we generally suggest keeping any position modest, typically no more than 3–5% of your overall investments, and only as part of a well-diversified portfolio.

As always, we’re here to help you evaluate where, or if, something like Bitcoin fits into your long-term financial strategy.