Bitcoin

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Bitcoin is a decentralized digital currency created by developer Satoshi Nakamoto. It does not rely on a central server to process transactions or store funds. There are a maximum of 2,099,999,997,690,000 Bitcoin units (called satoshis), which are currently most commonly measured in units of 100,000,000 known as BTC. Stated another way, no more than 21 million BTC can ever be created.

As of December 2016, it is the most widely used alternative currency, now with the total market cap over 12 billion US dollars [1].

Bitcoin has no central issuer; instead, the peer-to-peer network regulates Bitcoins, transactions and issuance according to consensus in network software. Bitcoins are issued to various nodes that verify transactions through computing power; it is established that there will be a limited and scheduled release of no more than 21 million BTC worth of coins, which will be fully issued by the year 2140.

Internationally, Bitcoins can be exchanged and managed through various websites and software along with physical banknotes and coins.

History

Main article: History

A cryptographic system for untraceable payments was first described by David Chaum in 1982. In 1990 Chaum extended this system to create the first cryptographic anonymous electronic cash system., which became known as ecash.  In 1998 Wei Dai published a description of an anonymous, distributed electronic cash system which he called "b-money". Around the same time, Nick Szabo created bit gold. Like Bitcoin, Bit gold was a currency system where users would compete to solve a proof of work function, with solutions being cryptographically chained together and published via a distributed property title registry. A variant of Bit gold, called Reusable Proofs of Work, was implemented by Hal Finney.

In 2008, Satoshi Nakamoto published a paper on The Cryptography Mailing list at metzdowd.com describing the Bitcoin protocol.

The Bitcoin network came into existence on 3 January 2009 with the release of the first Bitcoin client, wxBitcoin, and the issuance of the first Bitcoins. A year after, the initial exchange rates for Bitcoin were set by individuals on the bitcointalk forums. The most significant transaction involved a 10,000 BTC pizza. Today, the majority of Bitcoin exchanges occur on the Bitstamp Bitcoin exchange.

In 2011, Wikileaks, Freenet, Singularity Institute, Internet Archive, Free Software Foundation and others, began to accept donations in Bitcoin. The Electronic Frontier Foundation did so for a while but has since stopped, citing concerns about a lack of legal precedent about new currency systems, and because they "generally don't endorse any type of product or service." Some small businesses had started to adopt Bitcoin. LaCie, a public company, accepts Bitcoin for its Wuala service.

In 2012, BitPay reports of having over 1000 merchants accepting Bitcoin under its payment processing service.

References

  1. Bitcoin Market Cap [1]