Bitcoin (₿) is a cryptocurrency, a form of electronic cash. It is a decentralized digital currency without a central bank or single administrator.[7] Bitcoins can be sent from user to user on the peer-to-peer bitcoin network directly, without the need for intermediaries. Transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain. Bitcoin was invented by an unknown person or group of people using the name Satoshi Nakamoto[9] and released as open-source software in 2009.[10] Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies,[11] products, and services. Research produced by the University of Cambridge estimates that in 2017, there were 2.9 to 5.8 million unique users using a cryptocurrency wallet, most of them using bitcoin.[12]
Bitcoin
Prevailing bitcoin logo
Prevailing bitcoin logo
Denominations
Plural
bitcoins
Symbol
₿[a]
Ticker symbol
BTC, XBT[b]
Subunits
1⁄1000
millibitcoin
1⁄100000000
satoshi[2]
Coins
Unspent outputs of transactions (in multiples of a satoshi)[3]:ch. 5
Development
Original author(s)
Satoshi Nakamoto
White paper
"Bitcoin: A Peer-to-Peer Electronic Cash System"[5]
Implementation(s)
Bitcoin Core
Initial release
0.1.0 / 9 January 2009 (9 years ago)
Latest release
0.16.2 / 29 July 2018 (18 days ago)[4]
Website
bitcoin.org
Ledger
Ledger start
3 January 2009 (9 years ago)
Timestamping scheme
Proof-of-work (partial hash inversion)
Hash function
SHA-256
Issuance
Decentralized (block reward)[7][8]
Block reward
₿12.5[c]
Block time
10 minutes
Block explorer
www.blockchain.com
Circulating supply
₿16,858,762 (as of 11 February 2018)
Supply limit
₿21,000,000 [6]
The symbol was encoded in Unicode version 10.0 at position U+20BF ₿ BITCOIN SIGN in the Currency Symbols block in June 2017.[1]
Compatible with ISO 4217.
July 2016 to approximately June 2020, halved approximately every four years
This article contains special characters. Without proper rendering support, you may see question marks, boxes, or other symbols.
Bitcoin has been criticized for its use in illegal transactions, its high electricity consumption, price volatility, thefts from exchanges, and the possibility that bitcoin is an economic bubble.[13] Bitcoin has also been used as an investment, although several regulatory agencies have issued investor alerts about bitcoin.[14]
History
Main article: History of bitcoin
Creation
The domain name "bitcoin.org" was registered on 18 August 2008.[15] In November 2008, a link to a paper authored by Satoshi Nakamoto titled Bitcoin: A Peer-to-Peer Electronic Cash System[5] was posted to a cryptography mailing list. Nakamoto implemented the bitcoin software as open source code and released it in January 2009.[16][17][10] The identity of Nakamoto remains unknown.[9]
In January 2009, the bitcoin network was created when Nakamoto mined the first block of the chain, known as the genesis block.[18][19] Embedded in the coinbase of this block was the following text:
The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.[10]
This note has been interpreted as both a timestamp and a comment on the instability caused by fractional-reserve banking.[20]:18
The receiver of the first bitcoin transaction was cypherpunk Hal Finney, who created the first reusable proof-of-work system (RPOW) in 2004.[21] Finney downloaded the bitcoin software on its release date, and received 10 bitcoins from Nakamoto.[22][23] Other early cypherpunk supporters were creators of bitcoin predecessors: Wei Dai, creator of b-money, and Nick Szabo, creator of bit gold.[24]
Nakamoto is estimated to have mined 1 million bitcoins[25] before disappearing in 2010, when he handed the network alert key and control of the code repository over to Gavin Andresen. Andresen later became lead developer at the Bitcoin Foundation.[26][27] Andresen then sought to decentralize control. This left opportunity for controversy to develop over the future development path of bitcoin.[28][27]
2011–2012
After early "proof-of-concept" transactions, the first major users of bitcoin were black markets, such as Silk Road. During its 30 months of existence, starting in February 2011, Silk Road exclusively accepted bitcoins as payment, transacting 9.9 million in bitcoins, worth about $214 million.[29]:222
In 2011, price started at $0.30 per bitcoin, growing to $5.27 for the year. Price rose to $31.50 on 8 June. Within a month the price fell to $11.00. The next month if fell to $7.80, and in another month to $4.77.[30]
Litecoin was an early bitcoin spin-off or altcoin, starting in October 2011.[31] Many altcoins have been created since.[32]
In 2012 bitcoin prices started at $5.27 growing to $13.30 for the year.[30] By 9 January the price had risen to $7.38, but then crashed by 49% to $3.80 over the next 16 days. The price then rose to $16.41 on 17 August, but fell by 57% to $7.10 over the next three days.[33]
The Bitcoin Foundation was founded in September 2012 to promote its development and uptake.[34]
2013–2016
In 2013 prices started at $13.30 rising to $770 by 1 January 2014.[30]
In March 2013 the blockchain temporarily split into two independent chains with different rules. The two blockchains operated simultaneously for six hours, each with its own version of the transaction history. Normal operation was restored when the majority of the network downgraded to version 0.7 of the bitcoin software.[35] The Mt. Gox exchange briefly halted bitcoin deposits and the price dropped by 23% to $37[36][37] before recovering to previous level of approximately $48 in the following hours.[38]
The US Financial Crimes Enforcement Network (FinCEN) established regulatory guidelines for "decentralized virtual currencies" such as bitcoin, classifying American bitcoin miners who sell their generated bitcoins as Money Service Businesses (MSBs), that are subject to registration or other legal obligations.[39][40][41]
In April, exchanges BitInstant and Mt. Gox experienced processing delays due to insufficient capacity[42] resulting in the bitcoin price dropping from $266 to $76 before returning to $160 within six hours.[43]
The bitcoin price rose to $259 on 10 April, but then crashed by 83% to $45 over the next 3 days.[33]
On 15 May 2013, the US authorities seized accounts associated with Mt. Gox after discovering that it had not registered as a money transmitter with FinCEN in the US.[44][45]
On 23 June 2013, the US Drug Enforcement Administration listed 11.02 bitcoins as a seized asset in a United States Department of Justice seizure notice pursuant to 21 U.S.C. § 881.[46] This marked the first time a government agency seized bitcoin.[47][48]
The FBI seized about 26,000 bitcoins in October 2013 from darknet website Silk Road during the arrest of Ross William Ulbricht.[49][50][51]
Bitcoin's price rose to $755 on 19 November and crashed by 50% to $378 the same day. On 30 November 2013 the price reached $1,163 before starting a long-term crash, declining by 87% to $152 in January 2015.[33]
On 5 December 2013, the People's Bank of China prohibited Chinese financial institutions from using bitcoins.[52] After the announcement, the value of bitcoins dropped,[53] and Baidu no longer accepted bitcoins for certain services.[54] Buying real-world goods with any virtual currency had been illegal in China since at least 2009.[55]
In 2014 prices started at $770 and fell to $314 for the year.[30]
In February 2014 the Mt. Gox exchange, the largest bitcoin exchange at the time, said that 850,000 bitcoins had been stolen from its customers, amounting to almost $500 million. Bitcoin's price fell by almost half, from $867 to $439 (a 49% drop). Prices remained low until late 2016.
In 2015 prices started at $314 and rose to $434 for the year. In 2016 prices rose to $998 on 1 January 2017.[30]
2017–2018
In 2017 prices started at $998 and rose to $13,412.44 on 1 January 2018.[30] On 17 December bitcoin's price reached an all time high of $19,666 and then fell 70% to $5,920 on 6 February 2018.[33]
China banned trading in bitcoin, with the first steps taken in September 2017, and a complete ban starting 1 February 2018. Bitcoin prices then fell from $9,052 to $6,914 on 5 February 2018. The percentage of bitcoin trading in renminbi fell from over 90% in September 2017 to less than 1% in June.[56]
Throughout the rest of the first half of 2018, bitcoin's price fluctuated between $11,480 and $5,848. On 1 July 2018 bitcoin's price was $6,469.[57][58]
Bitcoin prices were negatively affected by several hacks or thefts from cryptocurrency exchanges, including thefts from Coincheck in January 2018, Coinrail and Bithumb in June, and Bancor in July. For the first six months of 2018, $761 million worth of cryptocurrencies was reported stolen from exchanges.[59] Bitcoin's price was affected even though other cryptocurrencies were stolen at Coinrail and Bancor, as investors worried about the security of cryptocurrency exchanges.[60][61][62]
Forks
See also: Fork (blockchain) and List of bitcoin forks
On 1 August 2017, a hard fork of bitcoin was created, known as Bitcoin Cash.[63] Bitcoin Cash has a larger block size limit and had an identical blockchain at the time of fork. On 24 October 2017 another hard fork, Bitcoin Gold, was created. Bitcoin Gold changes the proof-of-work algorithm used in mining, as the developers felt that mining had become too specialized.[64]
Design
Ideology
Economics
