Bitcoin is a form of digital currency, created and held electronically. Bitcoin is not tied to the local economy of any specific country. It is free from regulation by governments or central banks. Bitcoin’s monetary policy is set by software which does mathematical computation on Bitcoin network servers that keep track of Bitcoin balances and transactions in the bitqt.
Bitcoin was first introduced in 2009 as an open-source project by developer Satoshi Nakamoto who developed it after working on the peer-to-peer file-sharing system BitTorrent. Bitcoin became the world’s first decentralized payment network with no single point of failure or decision-maker, because Bitcoin stores all its users’ transaction history on every computer simultaneously at every participant node within the Bitcoin network, making it more difficult for subversion.
Bitcoin is the first implementation of a concept called “cryptocurrency”, which was first described in 1998 by Wei Dai on the cypherpunks mailing list, suggesting the idea of a new form of money that uses cryptography to control its creation and transactions instead of a central authority. Bitcoin’s design solves an important problem in computer science – double-spending – without using a trusted authority or relying on physical appearance like gold and silver coins or cash that can be easily duplicated or destroyed. Bitcoin opened up possibilities for many more cryptocurrencies beyond Bitcoin such as Litecoin, Etherum, and hundreds of others still actively traded today
Criticism on Bitcoin
Bitcoin has been criticized for its use in illegal activities such as money laundering, drugging, tax evasion, and the purchase of illegal goods due to Bitcoin’s anonymity and inability to go through a third party for verification. Bitcoin transactions can be tracked with Bitcoin software, but its users are anonymous, denying access to Bitcoin activity data from the Bitcoin public ledger by governments or private citizens. Bitcoin is not completely untraceable as it may become easy enough to associate a user’s IP address with a Bitcoin wallet where all Bitcoin transactions are stored so that over time a profile of the Bitcoin owner may emerge according to the Bitcoin activity logs. Because Bitcoin provides faster transaction confirmations more suitable for small-size orders than wire transfers, it has been widely used for the purchase of services and goods online.
Bitcoin itself is secure from fraud because all Bitcoin transactions are final and irreversible once the Bitcoin network accepts them, but Bitcoin exchanges where users buy and sell Bitcoin for government currency can be hacked to mishandle client funds. On 6 August 2010, a major vulnerability in the Bitcoin protocol was spotted. Transactions weren’t properly verified before they were included in the transaction log or blockchain, which let users bypass Bitcoin’s economic restrictions and create an indefinite number of bitcoins. Stanford University and Concordia University researchers have also shown that bitcoin exchanges and other entities can prove assets, liabilities, and solvency without revealing their addresses using zero-knowledge proofs.
Starting with the Bitcoin whitepaper in 2008 many people helped develop Bitcoin network software (and later on more cryptocurrencies) since Satoshi Nakamoto handed over control of its source code repository in 2010. Bitcoin’s early users were libertarian anarchists who wanted to avoid being controlled by governments or large corporations.
In 2011 Bitcoin gained political attention amid the financial crises occurring in Cyprus. In 2012 Bitcoin started attracting venture capital investments from established financial institutions and diminishing Bitcoin’s reputation as a shady Internet scam. However, the price fell sharply after the arrest of Bitcoin Foundation founding member Charlie Shrem for money laundering with Bitcoin but later recovered its value after news of his conviction for aiding with selling over $1 million worth of bitcoins illegally on the now-defunct Silk Road black market website. It has been criticized as an electronic form of money laundering used for illegal activities due to its anonymity and decentralized nature that could easily be used to organize crime around the world. Bitcoin’s reputation has also suffered over time due to its association with black markets and illicit activities, despite Bitcoin being originally designed as a censorship-resistant cryptocurrency that allows anyone in the world to participate without needing permission from any authority.
As Bitcoin’s adoption and value grew over the years, more companies began accepting Bitcoin as payment, enabling users to spend Bitcoin at their retail locations if they choose to. Bitcoin debit cards became available in 2013. Bitcoin ATMs were released in 2014 by Robocoin to make Bitcoin purchases easier for worldwide users but have been banned in several countries because of concerns about safety and fraud. The first decentralized cryptocurrency exchange Bitsquare was introduced in 2015 making it even easier to buy and sell within the Bitcoin network without going through financial institutions.