(Disclaimer: Most of this is taken from the official Gravity Falls Wikia page,thanks to the author of the Bill CIpher page!)
Bill Cipher is a dream demon formerly only existed in the dreamscape,who deeply wanted to enter the real world. He has been running amok in Gravity Falls, Oregon since being summoned by Stanford Pines over thirty years ago. He is known for his mysterious demeanor and sadistic humor.
BACKGROUND Trillions of years prior to the events of the series, Bill Cipher originated from the second dimension. Bill despised living there, describing it as a dimension of "flat minds in a flat world with flat dreams." He "liberated" his dimension by plunging it into burning chaos, along with everyone he'd ever known, including his own parents. He eventually took over a boiling, shifting intergalactic foam between dimensions: a lawless, unstable crawlspace known as the Nightmare Realm. However, due to the Nightmare Realm's lawlessness and lack of any consistent physics or rules, it was fated to collapse into itself eventually. After coming to learn of a prophecy that stated he would merge the Nightmare Realm with the third dimension, Bill started coming into contact with humans to accomplish this. (Check out the rest on the official page.)
Although Bill was erased from existence by Ford and Stan, it is strongly implied that he can revive himself somehow, as shortly before disappearing he relays a distorted message that when reversed says "A-X-O-L-O-T-L! My time has come to burn! I invoke the ancient power that I may return!"
Bill is a cunning, eccentric, insane, psychopathic, and physically irreverent demon who finds most things amusing. He's outrageous and outlandish, as well as a quick talker and thinker. Though he may come across as simply annoying, he shouldn't be underestimated; for when he is angered, he's a force to be reckoned with as he will unleash his near-omnipotent powers on those unfortunate enough to make him angry. When accused of being insane, Bill proudly agrees with the statement.
Bill is not one who believes in rules. Instead, he follows his own selfish philosophy which means doing whatever he wants without care for the consequences. He thinks of laws and physics as senseless and displays an irresistible urge to break those rules down by causing absolute chaos however he can. The lives he ruins hold no merit to him and he finds amusement in tormenting and turning people's worlds upside-down. He also sees reality as an "illusion," and values its destruction.
When possessing Dipper's body, Bill is shown to be rather masochistic, hurting himself in various ways for the thrill of it, exclaiming that "pain is hilarious". He seems to have little knowledge about the human body, specifically its physical limits. This comes back at him when he fights Mabel over Journal 3, falling down exhausted.
In "Weirdmageddon Part 1," he shows sadistic tendencies, such as when he shuffles "the function of every hole in Preston Northwest's face" and in "Weirdmageddon 3: Take Back The Falls" when he decides to kill one of the Pines twins "just for the heck of it."