Bitcoin is a payment system for peer-to -peer digital currency and presented as open source software in 2009 by Satoshi Nakamoto pseudonymous developer . It is a cryptocurrency , named because it uses cryptography to control the creation and transfer of money. Conventionally capitalized " Bitcoin " refers to technology and network while lowercase " bitcoins " refers to the coin.
Bitcoins are created by a process called mining in which participants verify and record payment for transaction fees and brand-new bitcoins . Users send and receive bitcoins wallet using software on a personal computer , mobile device or the web . Bitcoins can be obtained by mining or in exchange for goods, services or other currencies.
Bitcoin has been under scrutiny for ties to illegal activities. In 2013 the FBI closed the black market online Silk Road and seized 144,000 bitcoins worth $ 28.5 million at the time . In China, new rules restrict bitcoin exchange for the local currency, the European Banking Authority has warned that Bitcoin lacks consumer protection. Bitcoins can be stolen , and chargebacks are impossible.
Commercial use of Bitcoin , illegal or otherwise , is currently small compared to its use by speculators , which has fueled price volatility . Bitcoin as payment for products and services has seen the growth , however, and traders have an incentive to accept the currency due to transaction costs are less than 2 or 3 % typically imposed by credit card processors .
dealings
Users send payments for broadcasting digitally signed messages to the network. The transaction does not explicitly identify the payer and the recipient by name. Instead, a transaction transferring ownership of a Bitcoin address to another . Every ten minutes, a block of transactions confirmed a share called public record block chain . This confirmation process known as competitive mining carries a reward of 25 bitcoins per block. A collection of keys is called a wallet. Note that sometimes this term is used to mean the software itself in the sense of digital wallet. A Bitcoin transaction transfers ownership to a new address , an alphanumeric string of 1FfmbHfnpaZjKFvyi1okTjJJusN455paPH derived form of public key by applying a hash function and coding scheme . The corresponding private keys act as a safeguard , a message from an address valid payment must contain the associated public key and a digital signature proving possession of the associated private key. Because anyone with a private key can pass all the bitcoins sent to the appropriate address , the essence of safety is Bitcoin private key protection .
Theft of Bitcoins has happened numerous times, reduced risk of theft can generate keys offline on a computer without commitments and saving to external storage or paper prints .
Several vendors produce physical bitcoins , collectibles private key stored on paper, metal , wood or plastic . Images of physical bitcoins are ubiquitous in the coverage of media Bitcoin .
Chain Block
Integral part of Bitcoin is a public database and sequential record of all transactions , known as chain block , which records the current property of bitcoin , and at all points in the past. Keeping a record of all transactions , chain block prevents double spending. Those who maintain the block chain are called miners and are rewarded with newly created bitcoins as well as transaction costs. Work done by miners payment processing checks each transaction as valid and added to the block chain . Fees Bitcoin payment processing are optional and generally substantially lower than those of credit cards or money transfers . Today , making the payment processing work is rewarded with the newly created bitcoins , 25 for each block. The reward of the block to be halved to 12.5 bitcoins in 2017 and again about four years later. By 2140 there will be approximately 21 million bitcoins in existence and transaction processing to be fueled solely by transaction fees . Today , transactions are charged a fee can be processed more quickly.
exchanges
Through several swaps, bitcoins are bought and sold at a variable price against the value of other currencies . While there may be many seemingly exchanges regularly fail taking bitcoins customer with them. A study of published research showed that 40 Bitcoin exchange markets surveyed , 18 completed closure for a period of 3 years. Bitcoin prices are fragmented and widely vary across exchanges.
Lack of anonymity
The chain block provides a degree of anonymity, identified the receptors for Bitcoin addresses are not names of people . Track flow of bitcoins can give clues as to who is the owner , however. And while Bitcoin uses cryptography, it is not to protect the identity of its users. In addition , intermediaries like Bitcoin exchanges are required by law in many jurisdictions to collect customer data .
history
First mentioned in a 2008 paper published under the pseudonym " Satoshi Nakamoto " began operations in early 2009 with the launch of the first open source client or portfolio , Bitcoin - Qt and the issuance of the first bitcoins Bitcoin . The coin was first technical problems such as a 2009 that allowed the creation of unlimited exploit bitcoins . Bitcoin - Qt is sometimes referred to as the client reference that serves to define the Bitcoin protocol and acts as a standard for other implementations.
In May 2011, the interest in Bitcoin was growing, as were concerns . A report by Jason Calacanis included statements such as " Bitcoin may be the most dangerous technological project since the internet itself ."
The price of bitcoins has fluctuated wildly since its inception , through several cycles of assessment , which have been described as "Bubbles ." In 2011 the value of a bitcoin rose rapidly from about $ 0.30 to € 26 reached parity with the greenback for the first time in February 2011
After the most attention in the second half of 2012 and the Cyprus Financial Crisis 2012-2013, the price of bitcoin started up early 2013 to a maximum of U.S. $ 266 on April 10 before crashing to around $ 50
In March 2013 a technical error caused a chain fork block with one half of the network by adding blocks to a version of the chain and the other half to add another . For six hours actually there were two Bitcoin networks running simultaneously , each with its own version of the history of the transaction. The kernel developers call for a temporary high transactions , causing heavy selling . Normality was restored when most network degrade the Bitcoin software version 0.7 of the erroneous version 0.8 .
In 2013 some conventional services began to accept as a form of payment . Certain nonprofit groups or promotion as the Electronic Frontier Foundation also began to accept bitcoin donations .
2013 also saw the first interventions by law enforcement . Property belonging to exchange Mt.Gox were seized and the drugs trade route was closed web silk .
During November 2013, the exchange BTC Bitcoin in China exceeded Mt.Gox based in Japan and Europe Bitstamp to become the largest Bitcoin exchange trade trade volume . The November 19, 2013 , the value of a bitcoin exchange in Mt.Gox to a maximum of $ 900 following a Committee of the U.S. Senate , in which the Committee was informed that virtual currencies were shot up legitimate financial service. The same day, a bitcoin changed over ¥ 6780 RMB in China. With approximately 12 million bitcoins in existence since November 2013, the price rose again the Bitcoin market capitalization of at least $ 7.2 trillion.
From November 23, 2013 the total market capitalization of all bitcoins in existence topped $ 10 trillion for the first time .
On December 5, 2013 , the Bank of China announced that it was popular Chinese financial institutions prohibit the use of bitcoins . Chinese internet giant Baidu and reversed its policy of accepting bitcoins for certain services. From October 2013 , Baidu had been allowing clients website security services pay with bitcoins . Buy real estate with any virtual currency has been illegal in China since at least 2009.
economy
Growth of the money supply is preset Bitcoin protocol Bitcoin , Bitcoin Foundation argues that this is due to the low liquidity and volatility decrease if its popularity continues to increase . Volatility has little effect on the utility of Bitcoin as a payment processing system .
Currently viewing Bitcoin used as currency, and as of November 2013 there were about 1,000 brick and mortar companies willing to accept payment in bitcoins . In addition , there are over 35,000 online merchants accept bitcoin .
Alternative to national currencies
Some have suggested that Bitcoin is gaining popularity in countries with national currencies plagued with problems like can be used to circumvent international sanctions , inflation and capital controls. Bitcoins are used by some Argentines as an alternative to official currency , which is blocked by inflation and strict capital controls .
Analysts and financial journalists have suggested that there was a link between the increased use of Bitcoin in Spain and Cyprus 2012-2013 financial crisis .
Others believe that distrust in traditional financial institutions and central banks promoted by the Financial crisis of 2007-08 has helped enhance the popularity of Bitcoin .
intrinsic Value
Bitcoin has been described by journalist Jack Hough as no intrinsic value because its value is not backed by the full faith and credit of a sovereign government, also stating that its value depends only on the will of others to recognize their value and to accept exchange of goods, services or other currencies.
Austrian economists entirely refute the notion of intrinsic value.
Speculation and bubbles
Bitcoin is often quoted as an investment by speculators who expect the currency value as its popularity increases widens. The European Banking Authority has warned that the risks of engaging in such speculation beyond the possibility that the value of Bitcoin drops . Vulnerability to hacking and theft makes questionable use as an investment.
Partly as a result of such speculation , the value of bitcoin has been volatile , with repeated subsidence and rapid rises . Many have called Bitcoin a speculative bubble , including former Federal Reserve Chairman , Alan Greenspan , two leading software developers of Bitcoin , Gavin Andresen and Mike Hearn , and economist John Quiggin . Reuters reporter Felix Salmon correctly predicted the bursting of such a bubble Bitcoin in April 2013 . Nick Colas, market strategist for ConvergEx Group, is among those who consider the rapid rise of Bitcoin in price than normal economic forces at work.
Bitcoins have attracted the attention of some Wall Street types with Peter Thiel and Founders Fund invests millions Winklevoss twins makes 1 million personal investment and try to start a Bitcoin ETF .
reception
Economists have had a mixed reaction to Bitcoin . Some have responded positively , including François R. Velde, an economist at the Federal Reserve Bank of Chicago , who described it as " an elegant solution to the problem of creating a digital currency." Others have been critical . Economists Paul Krugman and Brad DeLong found flaws in Bitcoin for numerous reasons, including that bitcoins are not a reliable store of value and there is no word on the value of bitcoins to prevent deflation. Economist and Professor John Quiggin called Bitcoin "ultimate refutation of the efficient market hypothesis ."
PayPal President David A. Marcus called Bitcoin "a great place to put assets" but says it will not be a coin until the price volatility is reduced.
Acceptance by merchants famous name
Large companies , established online bitcoins are the Sacramento Kings , Overstock.com and Zynga. In November 2013 Richard Branson announced that Virgin Galactic would allow payments in bitcoins .
State and legal issues
Bitcoin -related criminal activity has focused largely for theft of money, the use of botnets for mining and the fact that some accept bitcoins in exchange of illegal goods or services. Some states in the nation may feel that its use in circumventing capital controls and gambling are also undesirable . While some governments have adopted a hands-off approach , others have moved to regulate Bitcoin and similar private currencies . This may be due to a perceived association with criminal activity, the ability of Bitcoin to evade capital controls and the fact that the coin has no consumer protection.
black market
Several media have claimed that Bitcoin 's popularity is based on the ability to use it to buy illegal substances. In 2013 , The Guardian reported that the money was mainly used to buy illegal drugs and to online gambling and The Huffington Post, said that " online gambling represents a huge portion of Bitcoin activity. " C. 2013 legitimate transactions were thought to be much smaller than the number involved in the purchase of medicines and about half of all transactions were by Bitcoin bets placed on a single website online game. In 2012 , a scholar at the Carnegie Mellon CyLab and the Information Networking Institute estimated that 4.5 to 9% of bitcoins were processed for the purchase of drugs in a single online marketplace Silk Road . Like most Bitcoin transactions at this time speculative in nature, the academic said that drugs are a much higher percentage of the goods and services purchased with the coin , however.
criminal Activity
Bitcoin association with criminal activity has historically hampered the widespread currency commonly used to achieve and has attracted the attention of financial regulators , legislative bodies and law enforcement . The Washington Post had marked " the currency of choice for online sordid activities " and CNN called Bitcoin a "shadow online currency starts to gain legitimacy in certain parts of the world . " Their links with criminal activities have prompted scrutiny by the FBI , the Senate and the state of New York. The FBI stated in a 2012 report " bitcoins probably continue to attract cyber criminals who see it as a means to move or steal funds." Bitcoins are not currently illegal in the United States , however. FBI Special Agent Christopher Tarbell said that " bitcoins are not illegal in and of themselves and have known legitimate uses ."
legal Status
Many governments have made ​​announcements about Bitcoin , and it is also likely that these decisions affect other treatment cryptocurrencies too.
Some, including Australia , Canada, Finland and Germany have made ​​it clear just normal income rules apply to Bitcoin . Other states reject the label of the coin but taxes charged Bitcoin transactions , such as Norway.
Even more have issued statements asserting that Bitcoin is not regulated in their jurisdictions , such as Singapore and Poland. Denmark is among those who, from 2013 , have claimed future regulations may be imposed . New York State has considered the possibility of regulating the Bitcoin .
Money Laundering
Some regulators and the law enforcement authorities , including the European Banking Authority , feel Bitcoin can be used for money laundering . A 2012 report by the FBI acknowledged these concerns but said there were no known cases of this happening . Some say a barrier bitcoins be widely used for money laundering is that all transactions are public. During a hearing of the U.S. Senate in 2013 , Jennifer Shasky Calvery , director of financial crimes network Treasury Department's application stated, " Cash is probably still the best way to launder money."
Mining unauthorized
In June 2011 , Symantec warned of the possibility of participating in covert botnets mining bitcoins . Some malware uses parallel processing