Bitcoin (₿) is a decentralized digital currency , without a central bank or single administrator, that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries. Transactions are verified by network nodes through cryptography and recorded in a public disturbed ledger called a blockchain . The cryptocurrency was invented in 2008 by an unknown person or group of people using the name Satoshi Nakamoto .The currency began use in 2009 . when its implementation was released as open-source software .
Bitcoins are created as a reward for a process known as mining . They can be exchanged for other currencies, products, and services, but the real-world value of the coins is extremely volatile. Research produced by the university of Cambridge estimated that in 2017, there were 2.9 to 5.8 million unique users using a cryptocurrency wallet , most of them using bitcoin. Users choose to participate in the digital currency for a number of reasons: ideologies such as commitment to anarchism, decentralization and libertarianism, convenience, using the currency as an investment and pseudonymity of transactions. Increased use has led to a desire among governments for regulation in order to tax, facilitate legal use in trade and for other reasons (such as investigations for money laundering and price manipulate .
Bitcoin has been criticized for its use in illegal transactions, the large amount of electricity (and thus carbon footprint ) used by mining,price volatility and thefts from exchanges. Some economists and commentators have characterized it as a speculative bubble at various times. Bitcoin has also been used as an investment, although several regulatory agencies have issued investor alerts about bitcoin.
The word bitcoin was defined in a white paper published on 31 October 2008. It is a compound of the words bit and coin . No uniform convention for bitcoin capitalization exists; some sources use Bitcoin, capitalized, to refer to the technology and network and bitcoin, lowercase, for the unit of account the wall street journal , The chronicle of higher education , and the Oxford English dictionary advocate the use of lowercase bitcoin in all cases.
2020–present
On 13 March 2020, bitcoin fell below $4000 during a broad market selloff, after trading above $10,000 in February 2020. On 11 March 2020, 281,000 bitcoins were sold, held by owners for only thirty days. This compared to ₿4,131 that had laid dormant for a year or more, indicating that the vast majority of the bitcoin volatility on that day was from recent buyers. During the week of 11 March 2020, cryptocurrency exchange kraken experienced an 83% increase in the number of account signups over the week of bitcoin's price collapse, a result of buyers looking to capitalize on the low price. These events were attributed to the onset of the covid-19 .
In August 2020, Microstrategy invested $250 million in bitcoin as a treasury reserve asset. In October 2020, square , Inc . placed approximately 1% of total assets ($50 million) in bitcoin. In November 2020, pay pal announced that US users could buy, hold, or sell bitcoin. On 30 November 2020, the bitcoin value reached a new all-time high of $19,860, topping the previous high of December 2017. Alexander vinnik founder of BTC-e, was convicted and sentenced to five years in prison for money laundering in France while refusing to testify during his trial. In December 2020 Massachusetts mutual life insurance company announced a bitcoin purchase of USD $100 million, or roughly 0.04% of its general investment account.
On 19 January 2021, Elon musk placed the handle #Bitcoin in his twitter profile, tweeting "In retrospect, it was inevitable", which caused the price to briefly rise about $5000 in an hour to $37,299. On 25 January 2021 Microstrategy announced that it continued to buy bitcoin and as of the same date it had holdings of ₿70,784 worth $2.38 billion. On 8 February 2021 Tesla's announcement of a bitcoin purchase of USD $1.5 billion and the plan to start accepting bitcoin as payment for vehicles, pushed the bitcoin price to $44,141. On 18 February 2021, Elon Musk stated that "owning bitcoin was only a little better than holding conventional cash, but that the slight difference made it a better asset to hold".
In September 2020, the cnaton of zug , Switzerland , announced to start to accepting tax payments in bitcoin by February 2021.
In June 2021, the Legislative Assembly of El Salvador voted legislation to make Bitcoin legal tender in El Salvador The law will take effect on September 7.
In the same month, a bitcoin network software upgrade called "taproot ", which adds support for Schnorr signatures , and improved functionality of smart contacts and Lightning Network , was approved with the actual change to the network scheduled for November 2021.
Ownership
In the blockchain, bitcoins are registered to bitcoin addresses. Creating a bitcoin address requires nothing more than picking a random valid private key and computing the corresponding bitcoin address. This computation can be done in a split second. But the reverse, computing the private key of a given bitcoin address, is practically unfeasible. Users can tell others or make public a bitcoin address without compromising its corresponding private key. Moreover, the number of valid private keys is so vast that it is extremely unlikely someone will compute a key-pair that is already in use and has funds. The vast number of valid private keys makes it unfeasible that brute force could be used to compromise a private key. To be able to spend their bitcoins, the owner must know the corresponding private key and digitaly sign the transaction. The network verifies the signature using the public key ; the private key is never revealed.
If the private key is lost, the bitcoin network will not recognize any other evidence of ownership; the coins are then unusable, and effectively lost. For example, in 2013 one user claimed to have lost 7,500 bitcoins, worth $7.5 million at the time, when he accidentally discarded a hard drive containing his private key. About 20% of all bitcoins are believed to be lost -they would have had a market value of about $20 billion at July 2018 prices.
To ensure the security of bitcoins, the private key must be kept secret.If the private key is revealed to a third party, e.g. through a data breach , the third party can use it to steal any associated bitcoins . As of December 2017, around 980,000 bitcoins have been stolen from cryptocurrency exchanges .
Regarding ownership distribution, as of 16 March 2018, 0.5% of bitcoin wallets own 87% of all bitcoins ever mined.
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