Bitcoin

Bitcoin

Bitcoin is a peer-to-peer payment system introduced as open source software in 2009 by developer Satoshi Nakamoto.[4] The digital currency created and used in the system is also called bitcoin[note 1] and is alternatively referred to as a virtual currency, electronic money, or cryptocurrency.[7] The bitcoin system is not controlled by a single entity, like a central bank, which has led the US Treasury to call bitcoin a decentralized currency.[8] Because bitcoins can be transferred directly from one person to another they are sometimes described as "digital cash".[9]

Bitcoins are created as a reward for payment processing work in which users who offer their computing power verify and record payments into a public ledger. Called mining, individuals engage in this activity in exchange for transaction fees and newly minted bitcoins.[10] Besides mining, bitcoins can be obtained in exchange for other currencies, products, and services.[11]Users can send and receive bitcoins electronically for a nominal fee[citation needed] using wallet software on a personal computer, mobile device, or a web application.

Bitcoin as a form of payment for products and services has seen growth,[12] and merchants have an incentive to accept the currency because transaction fees are lower than the 2–3% typically imposed by credit card processors.[13] The European Banking Authority has warned that bitcoin lacks consumer protections.[14] Bitcoins can be stolen and chargebacks are impossible.[15] Commercial use of bitcoin is currently small compared to its use by speculators, which has fueled price volatility.[16]

Bitcoin has been a subject of scrutiny amid concerns that it can be used for illegal activities.[17] In October 2013 the US FBI shut down the Silk Road online black market and seized 144,000 bitcoins worth US$28.5 million at the time.[18] The US is considered bitcoin-friendly compared to other governments, however.[19] In China, new rules have restricted bitcoin...