Bitcoin is a peer-to-peer payment system and digital currency introduced as open source software in 2009 by pseudonymous developer Satoshi Nakamoto. It is a cryptocurrency, so-called because it uses cryptography to control the creation and transfer of money. Conventionally "Bitcoin" capitalized refers to the technology and network whereas lowercase "bitcoins" refers to the currency itself.
Bitcoins are created by a process called mining in which participants verify and record payments in exchange for transaction fees and newly minted bitcoins. Users send and receive bitcoins using wallet software on a personal computer, mobile device or on the web. Bitcoins can be obtained by mining or in exchange for products, services, or other currencies.
Bitcoin has been a subject of scrutiny due to ties with illicit activity. In 2013 the FBI shut down the Silk Road online black market and seized 144,000 bitcoins worth US$28.5 million at the time.In China, new rules restrict bitcoin exchange for local currency, and the European Banking Authority has warned that Bitcoin lacks consumer protections.Bitcoins can be stolen, and chargebacks are impossible.
Commercial use of Bitcoin, illicit or otherwise, is currently small compared to its use by speculators, which has fueled price volatility. Bitcoin as a form of payment for products and services has seen growth, however, and merchants have an incentive to accept the currency because transaction fees are lower than the 2–3% typically imposed by credit card processors.
