Major mining pool and bitcoin exchange Viabtc has announced the launch. Viabtc Launching Bitcoin Cash Token and. They can only mine bitcoins since the fork.

Prevailing bitcoin logo Denominations bitcoins ₿ BTC, XBT Subunits ​ 1⁄ 1000 millibitcoin ​ 1⁄ 1000000 bit [ ] ​ 1⁄ 100000000 satoshi Coins Unspent outputs of transactions (in multiples of a satoshi): ch. 5 Development Implementation(s) Initial release 0.1.0 / 9 January 2009 (9 years ago) ( 2009-01-09) 0.15.1 / 11 November 2017 (2 months ago) ( 2017-11-11) Website Ledger Ledger start 3 January 2009 (9 years ago) ( 2009-01-03) (partial hash inversion) Issuance Block reward Block reward ₿12.5 Block time 10 minutes Block explorer Circulating supply ₿16,770,512 (as of 29 December 2017 ) Supply limit ₿21,000,000 Valuation 14,516 (as of 29 December 2017 ) US$243.4 billion (as of 29 December 2017 ). • The symbol was encoded in version 10.0 at position U+20BF ₿ BITCOIN SIGN in the in June 2017. • Compatible with ISO 4217. • July 2016 to approximately June 2020, halved approximately every four years This article contains. Without proper, you may see.

Bitcoin is a and worldwide.: 3 It is the first decentralized, as the system works without a or single administrator.: 1 The network is and transactions take place between users directly, without an intermediary.: 4 These transactions are verified by network through the use of and recorded in a public called a. Bitcoin was invented by an unknown person or group of people under the name and released as in 2009. Bitcoins are created as a reward for a process known as. They can be exchanged for other currencies, products, and services. As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment. Research produced by the estimates that in 2017, there are 2.9 to 5.8 million unique users using a cryptocurrency wallet, most of them using bitcoin. Contents • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • Etymology The word bitcoin first occurred and was defined in the that was published on 31 October 2008.

It is a of the words and. The white paper frequently uses the shorter coin. There is no uniform convention for bitcoin capitalization. Some sources use Bitcoin, capitalized, to refer to the technology and and bitcoin, lowercase, to refer to the unit of account.,, and the advocate use of lowercase bitcoin in all cases, a convention followed throughout this article. Units The unit of account of the bitcoin system is bitcoin. Used to represent bitcoin are BTC and XBT. Its character is ₿.: 2 Small amounts of bitcoin used as alternative units are millibitcoin (mBTC), bit (ƀ) [ ] [ ] and satoshi (sat).

Named in homage to bitcoin's creator, a satoshi is the smallest amount within bitcoin representing 0.00000001 bitcoins, one hundred millionth of a bitcoin. A bit equals 0.000001 bitcoins, one millionth of a bitcoin or 100 satoshis.

A millibitcoin equals 0.001 bitcoins, one thousandth of a bitcoin or 100,000 satoshis. Main article: On 18 August 2008, the domain name 'bitcoin.org' was registered. In November that year, a link to a paper authored by titled Bitcoin: A Peer-to-Peer Electronic Cash System was posted to a cryptography mailing list.

Nakamoto implemented the bitcoin software as and released it in January 2009 on. The identity of Nakamoto remains unknown. In January 2009, the bitcoin network came into existence after Satoshi Nakamoto mined the first ever block on the chain, known as the genesis block. Embedded in the coinbase of this block was the following text: The Times 03/Jan/2009 Chancellor on brink of second bailout for banks. This note has been interpreted as both a timestamp of the genesis date and a derisive comment on the instability caused. [ ] The receiver of the first bitcoin transaction was, who created the first system (RPOW) in 2004.

Finney downloaded the bitcoin software the day it was released, and received 10 bitcoins from Nakamoto. Other early cypherpunk supporters were Wei Dai, creator of bitcoin predecessor b-money, and, creator of bitcoin predecessor. In the early days, Nakamoto is estimated to have mined 1 million bitcoins.

In 2010, Nakamoto handed the network alert key and control of the code repository over to, who later became lead developer at the. Nakamoto subsequently disappeared from any involvement in bitcoin. Andresen stated he then sought to decentralize control, saying: 'As soon as Satoshi stepped back and threw the project onto my shoulders, one of the first things I did was try to decentralize that. So, if I get hit by a bus, it would be clear that the project would go on.' This left opportunity for controversy to develop over the future development path of bitcoin.

The value of the first bitcoin transactions were negotiated by individuals on the bitcointalk forums with one notable transaction of 10,000 BTC used to indirectly purchase two pizzas delivered. On 6 August 2010, a major in the bitcoin protocol was spotted. Transactions were not properly verified before they were included in the blockchain, which let users bypass bitcoin's economic restrictions and create an indefinite number of bitcoins.

On 15 August, the vulnerability was exploited; over 184 billion bitcoins were generated in a single transaction, and sent to two addresses on the network. Within hours, the transaction was spotted and erased from the transaction log after the bug was fixed and the network forked to an updated version of the bitcoin protocol. On 1 August 2017, a of bitcoin was created, known as. Bitcoin Cash has a larger block size limit and had an identical blockchain at the time of fork. On 12 November another hard fork,, was created. Bitcoin Gold changes the proof-of-work algorithm used in mining.

Design Blockchain. Number of unspent transaction outputs The blockchain is a public that records bitcoin transactions. A novel solution accomplishes this without any trusted central authority: the maintenance of the blockchain is performed by a of communicating running bitcoin software. Transactions of the form payer X sends Y bitcoins to payee Z are to this network using readily available software applications. Network nodes can validate transactions, add them to their copy of the ledger, and then broadcast these ledger additions to other nodes. The blockchain is a – to achieve independent verification of the chain of ownership of any and every bitcoin amount, each network node stores its own copy of the blockchain.

Approximately six times per hour, a new group of accepted transactions, a block, is created, added to the blockchain, and quickly published to all nodes. This allows bitcoin software to determine when a particular bitcoin amount has been spent, which is necessary in order to prevent in an environment without central oversight. Whereas a conventional ledger records the transfers of actual or that exist apart from it, the blockchain is the only place that bitcoins can be said to exist in the form of unspent outputs of transactions.: ch. 5 Transactions. See also: Transactions are defined using a -like scripting language.: ch. 5 Transactions consist of one or more inputs and one or more outputs.

When a user sends bitcoins, the user designates each address and the amount of bitcoin being sent to that address in an output. To prevent double spending, each input must refer to a previous unspent output in the blockchain. The use of multiple inputs corresponds to the use of multiple coins in a cash transaction. Since transactions can have multiple outputs, users can send bitcoins to multiple recipients in one transaction.

As in a cash transaction, the sum of inputs (coins used to pay) can exceed the intended sum of payments. In such a case, an additional output is used, returning the change back to the payer. Any input satoshis not accounted for in the transaction outputs become the transaction fee. Transaction fees. Simplified chain of ownership. In reality, a transaction can have more than one input and more than one output. In the blockchain, bitcoins are registered to bitcoin addresses.

Creating a bitcoin address is 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 mathematically unfeasible and so users can tell others and 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 for that. To be able to spend the bitcoins, the owner must know the corresponding and the transaction.

The network verifies the signature using the.: ch. 5 If the private key is lost, the 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. A backup of his key(s) would have prevented this. Of relative mining difficulty Mining is a record-keeping service done through the use of computer. Miners keep the blockchain consistent, complete, and unalterable by repeatedly grouping newly broadcast transactions into a block, which is then broadcast to the network and verified by recipient nodes.

Each block contains a of the previous block, thus linking it to the previous block and giving the blockchain its name.: ch. 7 To be accepted by the rest of the network, a new block must contain a so-called. The system used is based on 's 1997 anti- scheme,. The PoW requires miners to find a number called a, such that when the block content is along with the nonce, the result is numerically smaller than the network's difficulty target.: ch. 8 This proof is easy for any node in the network to verify, but extremely time-consuming to generate, as for a secure cryptographic hash, miners must try many different nonce values (usually the sequence of tested values is the ascending natural numbers: 0, 1, 2, 3.: ch. 8) before meeting the difficulty target. Every 2,016 blocks (approximately 14 days at roughly 10 min per block), the difficulty target is adjusted based on the network's recent performance, with the aim of keeping the average time between new blocks at ten minutes.

In this way the system automatically adapts to the total amount of mining power on the network.: ch. 8 Between 1 March 2014 and 1 March 2015, the average number of nonces miners had to try before creating a new block increased from 16.4 quintillion to 200.5 quintillion. The proof-of-work system, alongside the chaining of blocks, makes modifications of the blockchain extremely hard, as an attacker must modify all subsequent blocks in order for the modifications of one block to be accepted. As new blocks are mined all the time, the difficulty of modifying a block increases as time passes and the number of subsequent blocks (also called confirmations of the given block) increases. Pooled mining. Total bitcoins in circulation.

The successful miner finding the new block is rewarded with newly created bitcoins and transaction fees. As of 9 July 2016, the reward amounted to 12.5 newly created bitcoins per block added to the blockchain.

To claim the reward, a special transaction called a coinbase is included with the processed payments.: ch. 8 All bitcoins in existence have been created in such coinbase transactions. The specifies that the reward for adding a block will be halved every 210,000 blocks (approximately every four years). Eventually, the reward will decrease to zero, and the limit of 21 million bitcoins will be reached 2140; the record keeping will then be rewarded by transaction fees solely. In other words, bitcoin's inventor Nakamoto set a based on at bitcoin's inception that there would only ever be 21 million bitcoins in total.

Their numbers are being released roughly every ten minutes and the rate at which they are generated would drop by half every four years until all were in. Trezor hardware wallet A wallet stores the information necessary to transact bitcoins. While wallets are often described as a place to hold or store bitcoins, due to the nature of the system, bitcoins are inseparable from the blockchain transaction ledger. A better way to describe a wallet is something that 'stores the digital credentials for your bitcoin holdings' and allows one to access (and spend) them. Bitcoin uses, in which two cryptographic keys, one public and one private, are generated. At its most basic, a wallet is a collection of these keys. There are several types of wallets.

Software wallets connect to the network and allow spending bitcoins in addition to holding the credentials that prove ownership. Software wallets can be split further in two categories: full clients and lightweight clients. • Full clients verify transactions directly on a local copy of the blockchain (over 150 GB As of January 2018 ), They are the most secure and reliable way of using the network, as trust in external parties is not required. Full clients check the validity of mined blocks, preventing them from transacting on a chain that breaks or alters network rules.

Because of its size and complexity, storing the entire blockchain is not suitable for all computing devices. Some of the applications capable of running in a full client mode, are also capable of running in a lightweight 'pruned' mode. As of 2017, a 'pruned' subset of the blockchain is around half a gigabyte. • Lightweight clients, on the other hand, consult full clients to send and receive transactions without requiring a local copy of the entire blockchain (see – SPV).

This makes lightweight clients much faster to set up and allows them to be used on low-power, low-bandwidth devices such as smartphones. When using a lightweight wallet, however, the user must trust the server to a certain degree, as it can report faulty values back to the user.

Lightweight clients follow the longest blockchain and do not ensure it is valid, requiring trust in miners. With both types of software wallets, the users are responsible for keeping their private keys in a secure place. Besides software wallets, Internet services called online wallets offer similar functionality but may be easier to use. In this case, credentials to access funds are stored with the online wallet provider rather than on the user's hardware. As a result, the user must have complete trust in the wallet provider.

A malicious provider or a breach in server security may cause entrusted bitcoins to be stolen. How Much Ethereum Classic ETC Can I Mine. An example of such security breach occurred with in 2011.

Physical wallets store the credentials necessary to spend bitcoins offline. Examples combine a novelty coin with these credentials printed on metal. Paper wallets are simply paper printouts. Another type of wallet called a hardware wallet keeps credentials offline while facilitating transactions. Reference implementation. Further information: The first wallet program – simply named 'Bitcoin' – was released in 2009 by as code. Sometimes referred to as the 'Satoshi client', this is also known as the because it serves to define the bitcoin protocol and acts as a standard for other implementations.

In version 0.5 the client moved from the user interface toolkit to, and the whole bundle was referred to as Bitcoin-Qt. After the release of version 0.9, the software bundle was renamed Bitcoin Core to distinguish itself from the underlying network. Today, other of Bitcoin Core exist such as,, and Parity Bitcoin.

Decentralization Bitcoin was designed not to need a central authority and the bitcoin network is considered to be decentralized. However, researchers have pointed out a visible 'trend towards centralization' by the means of miners joining large to minimise the variance of their income. According to researchers, other parts of the ecosystem are also 'controlled by a small set of entities', notably online wallets and simplified payment verification (SPV) clients. Because transactions on the network are confirmed by miners, decentralization of the network requires that no single miner or mining pool obtains 51% of the hashing power, which would allow them to fully control the blockchain, including of coins, preventing certain transactions from being verified and preventing other miners from earning income. [ ] As of 2013 just six mining pools controlled 75% of overall bitcoin hashing power. In 2014 mining pool obtained 51% hashing power which raised significant controversies about the safety of the network. The pool has voluntarily capped their hashing power at 39.99% and called other pool to act responsibly for the benefit of the whole network.

Privacy Bitcoin is, meaning that funds are not tied to real-world entities but rather bitcoin addresses. Owners of bitcoin addresses are not explicitly identified, but all transactions on the blockchain are public. In addition, transactions can be linked to individuals and companies through 'idioms of use' (e.g., transactions that spend coins from multiple inputs indicate that the inputs may have a common owner) and corroborating public transaction data with known information on owners of certain addresses. Additionally, bitcoin exchanges, where bitcoins are traded for traditional currencies, may be required by law to collect personal information.

To heighten financial privacy, a new bitcoin address can be generated for each transaction. For example, hierarchical deterministic wallets generate 'rolling addresses' for every transaction from a single, while only requiring a single passphrase to be remembered to recover all corresponding private keys. Researchers at and have also shown that bitcoin exchanges and other entities can prove assets,, and without revealing their addresses using. Fungibility Wallets and similar software technically handle all bitcoins as equivalent, establishing the basic level of. Researchers have pointed out that the history of each bitcoin is registered and publicly available in the blockchain ledger, and that some users may refuse to accept bitcoins coming from controversial transactions, which would harm bitcoin's fungibility. Projects such as,, and aim to address these privacy and fungibility issues. Main article: The blocks in the blockchain are limited to one in size, [ ] which has created problems for bitcoin transaction processing, such as increasing transaction fees and delayed processing of transactions that cannot be fit into a block.

On 24 August 2017 (at block 481,824), went live, increasing maximum block capacity and making transaction IDs immutable. [ ] SegWit also allows implementation of the, a second-layer proposal for scalability with instantaneous transactions and near-zero fees. Main article: Classification Bitcoin is a designed by its inventor, Satoshi Nakamoto, to work as a currency. It is commonly referred to with terms like digital currency,: 1,,, or cryptocurrency. The question whether bitcoin is a or not is still disputed. Bitcoins have three useful qualities in a currency, according to The Economist in January 2015: they are 'hard to earn, limited in supply and easy to verify'.

Economists define money as a, a, and a and agree that bitcoin has some way to go to meet all these criteria. It does best as a medium of exchange; as of February 2015 the number of merchants accepting bitcoin had passed 100,000. As of March 2014, the bitcoin market suffered from, limiting the ability of bitcoin to act as a stable store of value, and retailers accepting bitcoin use other currencies as their principal unit of account.

Liquidity (estimated, USD/year, logarithmic scale). According to research produced by, there were between 2.9 million and 5.8 million unique users using a cryptocurrency wallet, as of 2017, most of them using bitcoin. The number of users has grown significantly since 2013, when there were 300,000 to 1.3 million users. Acceptance by merchants In 2015, the number of merchants accepting bitcoin exceeded 100,000. Instead of 2–3% typically imposed by processors, merchants accepting bitcoins often pay fees under 2%, down to 0%. Firms that accepted payments in bitcoin as of December 2014 included,,, and. In 2017 bitcoin's acceptance among major online retailers included three out of the top 500 online merchants, down from five in 2016.

Reasons for this fall include high transaction fees due to bitcoin's scalability issues, long transaction times and a rise in value making consumers unwilling to spend it. In November 2017 accepted bitcoin at its Hong Kong office in exchange for providing advisory services to local companies who are specialists in blockchain technology and cryptocurrencies, the first time any Big Four accounting firm accepted the cryptocurrency as payment. Payment service providers Merchants accepting bitcoin ordinarily use the services of bitcoin payment service providers such as. When a customer pays in bitcoin, the payment service provider accepts the bitcoin on behalf of the merchant, converts it to the local currency, and sends the obtained amount to merchant's bank account, charging a fee for the service. Financial institutions Bitcoins can be bought on.

According to, a co-founder of, 'banks are scared to deal with bitcoin companies, even if they really want to'. In 2014, the closed accounts of businesses with ties to bitcoin, and refused to serve a hedge fund with links to bitcoin. Australian banks in general have been reported as closing down bank accounts of operators of businesses involving the currency; this has become the subject of an investigation by the. Nonetheless, Australian banks have trialled trading between each other using the blockchain technology on which bitcoin is based. In a 2013 report, Bank of America Merrill Lynch stated that 'we believe bitcoin can become a major means of payment for e-commerce and may emerge as a serious competitor to traditional money-transfer providers.' In June 2014, the first bank that converts deposits in currencies instantly to bitcoin without any fees was opened in Boston.

Plans were announced to include a bitcoin futures option on the in 2017. Trading in bitcoin futures was announced to begin on 10 December 2017.

As an investment Some Argentinians have bought bitcoins to protect their savings against high inflation or the possibility that governments could confiscate savings accounts. During the, bitcoin purchases in Cyprus rose due to fears that savings accounts would be confiscated or taxed. The have invested into bitcoins. In 2013 The Washington Post claimed that they owned 1% of all the bitcoins in existence at the time. Other methods of investment are bitcoin funds. The first regulated bitcoin fund was established in Jersey in July 2014 and approved by the Jersey Financial Services Commission.

Forbes started publishing arguments in favor of investing in December 2015. In 2013 and 2014, the and the (FINRA), a United States, warned that investing in bitcoins carries significant risks.

Forbes named bitcoin the best investment of 2013. In 2014, Bloomberg named bitcoin one of its worst investments of the year. In 2015, bitcoin topped Bloomberg's currency tables. According to bitinfocharts.com, in 2017 there are 9,272 bitcoin wallets with more than $1 million worth of bitcoins. The exact number of bitcoin millionaires is uncertain as a single person can have more than one bitcoin wallet.

Venture capital, such as 's, which invested 3 million in, do not purchase bitcoins themselves, instead funding bitcoin infrastructure like that provide payment systems to merchants, exchanges, wallet services, etc. In 2012, an incubator for bitcoin-focused start-ups was founded by Adam Draper, with financing help from his father, venture capitalist, one of the largest bitcoin holders after winning an auction of 30,000 bitcoins, at the time called 'mystery buyer'. The company's goal is to fund 100 bitcoin businesses within 2–3 years with $10,000 to $20,000 for a 6% stake. Investors also invest in bitcoin mining. According to a 2015 study by, bitcoin startups raised almost $1 billion in three years (Q1 2012 – Q1 2015). Price and volatility.

Price (left vertical axis, logarithmic scale) and volatility (right vertical axis) The price of bitcoins has gone through various cycles of appreciation and depreciation referred to by some as and busts. In 2011, the value of one bitcoin rapidly rose from about US$0.30 to US$32 before returning to US$2. In the latter half of 2012 and during the, the bitcoin price began to rise, reaching a high of US$266 on 10 April 2013, before crashing to around US$50. On 29 November 2013, the cost of one bitcoin rose to a peak of US$1,242. In 2014, the price fell sharply, and as of April remained depressed at little more than half 2013 prices. As of August 2014 it was under US$600.

According to, as of 2014, bitcoin has seven times greater than gold, eight times greater than the, and 18 times greater than the US dollar. According to Forbes, there are uses where volatility does not matter, such as online gambling, tipping, and international remittances. In January 2015, noting that the bitcoin price had dropped to its lowest level since spring 2013 – around US$224 – suggested that '[w]ith no signs of a rally in the offing, the industry is bracing for the effects of a prolonged decline in prices. In particular, bitcoin mining companies, which are essential to the currency's underlying technology, are flashing warning signs.' Also in January 2015, reported that drug dealers were 'freaking out' as they lost profits through being unable to convert bitcoin revenue to cash quickly enough as the price declined – and that there was a danger that dealers selling reserves to stay in business might force the bitcoin price down further.

According to an article in The Wall Street Journal, as of 19 April 2016, bitcoin had been more stable than gold for the preceding 24 days, and it was suggested that its value might be more stable in the future. On 3 March 2017, the price of a bitcoin surpassed the market value of an ounce of for the first time as its price surged to an all-time high of $1,268. A study in Electronic Commerce Research and Applications, going back through the network's historical data, showed the value of the bitcoin network as measured by the price of bitcoins, to be roughly proportional to the square of the number of daily unique users participating on the network, i.e.

That the network is 'fairly well modeled by the '. Ponzi scheme and pyramid scheme concerns Various journalists, economists, and the central bank of Estonia have voiced concerns that bitcoin is a. In 2013,, a law professor at the University of Chicago, stated that 'a real Ponzi scheme takes fraud; bitcoin, by contrast, seems more like a collective delusion.' A 2014 report by the concluded that bitcoin was not a deliberate Ponzi scheme.: 7 The Swiss: 21 examined the concerns that bitcoin might be a pyramid scheme; it concluded that 'Since in the case of bitcoin the typical promises of profits are lacking, it cannot be assumed that bitcoin is a pyramid scheme.' In July 2017, billionaire referred to bitcoin as a. On 12 September 2017,, CEO of, called bitcoin a 'fraud' and said he would fire anyone in his firm caught trading it.

Claimed that the same day Dimon made his statement, JP Morgan also purchased a large amount of bitcoins for its clients. In a January 2018 interview Dimon voiced regrets about his earlier remarks, and said 'The blockchain is real. You can have cryptodollars in yen and stuff like that. You got to look at every one individually.'

Speculative bubble dispute. Main article: Bitcoin has been labelled a by many including former and economist.

Laureate said that bitcoin 'exhibited many of the characteristics of a speculative bubble'. Journalist Matthew Boesler in 2013 rejected the speculative bubble label and saw bitcoin's quick rise in price as nothing more than normal economic forces at work. Lee, in a 2013 piece for The Washington Post pointed out that the observed cycles of appreciation and depreciation don't correspond to the definition of speculative bubble. How To Make Money Mining Nexus NXS 2018. On 14 March 2014, the American business magnate said, 'Stay away from it.

It's a mirage, basically.' Two lead software developers of bitcoin, and Mike Hearn, have warned that bubbles may occur. David Andolfatto, a vice president at the, stated, 'Is bitcoin a bubble? Yes, if bubble is defined as a liquidity premium.'

According to Andolfatto, the price of bitcoin 'consists purely of a bubble,' but he concedes that many assets 'have bubble component to their price'.: 21 Speculation in bitcoin has been compared to the of seventeenth-century Holland. Comparisons have been made by the vice-president of the,, by chief, by hedge fund manager Ken Griffin of Citadel, and by former president of the Dutch Central Bank,.

In 2013, Wellink remarked, 'This is worse than the tulip mania [.] At least then you got a tulip [at the end], now you get nothing.' On 13 September 2017, Jamie Dimon compared bitcoin to a bubble, saying it was only useful for drug dealers and countries like. On 22 September 2017, a hedge fund named Blockswater subsequently accused JP Morgan of market manipulation and filed a market abuse complaint with.,, and compared bitcoin to bubbles such as the, the, the and the.

Legal status, tax and regulation. Main article: Because of bitcoin's decentralized nature, nation-states cannot shut down the network or alter its technical rules. However, the use of bitcoin can be criminalized, and shutting down exchanges and the peer-to-peer economy in a given country would constitute a 'de facto ban'. The legal status of bitcoin varies substantially from country to country and is still undefined or changing in many of them. While some countries have explicitly allowed its use and trade, others have banned or restricted it. Regulations and bans that apply to bitcoin probably extend to similar cryptocurrency systems. Energy consumption.

A mining farm in Bitcoin has been criticized for the amounts of electricity consumed by mining. As of 2015, The Economist estimated that even if all miners used modern facilities, the combined electricity consumption would be 166.7 megawatts (1.46 terawatt-hours per year). At the end of 2017, the global bitcoin mining activity was estimated to consume between 1 and 4 gigawatts of electricity (between 9 and 35 TWh a year), with 1.2 GW as the theoretical lower bound assuming that everyone is using the most energy-efficient mining hardware available. To lower the costs, bitcoin miners have set up in places like Iceland where is cheap and cooling air is free. Bitcoin miners are known to use in,, and to reduce electricity costs.

Miners are attracted to suppliers such as that have energy surpluses. According to a study, much of bitcoin mining is done in China, where electricity is subsidized by the government. Criminal activity. See also: The use of bitcoin by criminals has attracted the attention of financial regulators, legislative bodies, law enforcement, and the media. The FBI prepared an intelligence assessment, the SEC has issued a pointed warning about investment schemes using virtual currencies, and the US Senate held a hearing on virtual currencies in November 2013. Several news outlets have asserted that the popularity of bitcoins hinges on the ability to use them to purchase illegal goods.

In 2014, researchers at the University of Kentucky found 'robust evidence that computer programming enthusiasts and illegal activity drive interest in bitcoin, and find limited or no support for political and investment motives.' In popular culture Academia In September 2015, the establishment of the ( ) was announced. It will cover studies of cryptocurrencies and related technologies, and is published by the.

The journal encourages authors to a of submitted papers, which will then be into the bitcoin. Authors are also asked to include a personal bitcoin address in the first page of their papers. Film The documentary film, (late 2014), features interviews with people who use bitcoin, such as a computer programmer and a drug dealer. Literature In ' science fiction novel,, 'bitcoin' (a modified version) is used as the universal payment system. Television In November 2017, the American sitcom,, dedicated an episode on bitcoins called '. In the episode, after hearing the price of a bitcoin had risen to $5,000, friends try to track down bitcoins they mined seven years earlier. • As of 2014, BTC is a commonly used code.

It does not conform to as BT is the country code of Bhutan, and ISO 4217 requires the first letter used in global commodities to be 'X'. • As of 2014, XBT, a code that conforms to ISO 4217 though is not officially part of it, is used by,, and. • Relative mining difficulty is defined as the ratio of the difficulty target on 9 January 2009 to the current difficulty target. • It is misleading to think that there is an analogy between gold mining and bitcoin mining. The fact is that gold miners are rewarded for producing gold, while bitcoin miners are not rewarded for producing bitcoins; they are rewarded for their record-keeping services.

• The exact number is 20,999,999.9769 bitcoins.: ch. 8 • ^ The price of 1 bitcoin in US dollars. • Volatility is calculated on a yearly basis.

Number of bitcoin transactions per month (logarithmic scale) The bitcoin network is a that operates on a. Users send and receive, the units of currency, by broadcasting digitally signed messages to the network using bitcoin software. Transactions are recorded into a distributed, replicated public known as the, with consensus achieved by a system called mining., the designer of bitcoin claimed that design and coding of bitcoin begun in 2007. The project was released in 2009 as. The network requires minimal structure to share transactions.

An decentralized network of volunteers is sufficient. Messages are broadcast on a basis, and nodes can leave and rejoin the network at will. Upon reconnection, a node downloads and verifies new blocks from other nodes to complete its local copy of the blockchain. The best chain consists of the longest series of transaction records from the genesis block to the current block or record. Orphaned records exist outside of the best chain.

A bitcoin is defined by a sequence of transactions that began with the bitcoin's creation, as a block reward. The owner of a bitcoin transfers it by digitally signing it over to the next owner using a bitcoin transaction, much like endorsing a traditional. A payee can examine each previous transaction to verify the chain of ownership. Unlike traditional check endorsements, bitcoin transactions are irreversible, which eliminates risk of.

Although it is possible to handle bitcoins individually, it would be unwieldy to require a separate transaction for every bitcoin in a transaction. Transactions are therefore allowed to contain multiple inputs and outputs, [ ] allowing bitcoins to be split and combined. Common transactions will have either a single input from a larger previous transaction or multiple inputs combining smaller amounts, and one or two outputs: one for the payment, and one returning the change, if any, to the sender. Any difference between the total input and output amounts of a transaction goes to miners as a transaction fee.

Lancelot -based mining board, 2013 To form a distributed timestamp server as a peer-to-peer network, bitcoin uses a. This work is often called bitcoin mining. The signature is discovered rather than provided by knowledge. This process is. Electricity can consume more than 90% of operating costs for miners. A data center in China, planned mostly for bitcoin mining, is expected to require up to 135 of power. Requiring a proof of work to provide the signature for the blockchain was Satoshi Nakamoto's key innovation.

The mining process involves identifying a block that, when hashed twice with, yields a number smaller than the given difficulty target. While the average work required increases in inverse proportion to the difficulty target, a hash can always be verified by executing a single round of double SHA-256. For the bitcoin timestamp network, a valid proof of work is found by incrementing a until a value is found that gives the block's hash the required number of leading zero bits. Once the has produced a valid result, the block cannot be changed without redoing the work.

As later blocks are chained after it, the work to change the block would include redoing the work for each subsequent block. Majority consensus in bitcoin is represented by the longest chain, which required the greatest amount of effort to produce. If a majority of computing power is controlled by honest nodes, the honest chain will grow fastest and outpace any competing chains. To modify a past block, an attacker would have to redo the proof-of-work of that block and all blocks after it and then surpass the work of the honest nodes. The probability of a slower attacker catching up diminishes exponentially as subsequent blocks are added.

Mining difficulty has increased significantly To compensate for increasing hardware speed and varying interest in running nodes over time, the difficulty of finding a valid hash is adjusted roughly every two weeks. If blocks are generated too quickly, the difficulty increases and more hashes are required to make a block and to generate new bitcoins. Difficulty [ ] Bitcoin mining is a competitive endeavor.

An ' has been observed through the various hashing technologies that have been used to mine bitcoins: basic, high-end common in many, s and all have been used, each reducing the profitability of the less-specialized technology. Bitcoin-specific ASICs are now the primary method of mining bitcoin and have surpassed GPU speed by as much as 300 fold.

As bitcoins have become more difficult to mine, computer hardware manufacturing companies have seen an increase in sales of high-end ASIC products. Computing power is often bundled together or to reduce variance in miner income. Individual mining rigs often have to wait for long periods to confirm a block of transactions and receive payment.

In a pool, all participating miners get paid every time a participating server solves a block. This payment depends on the amount of work an individual miner contributed to help find that block. Bitcoin prefer to keep a low profile, are dispersed around the world and tend to cluster around the availability of cheap electricity. Energy consumption [ ]. A mining farm in In 2013, Mark Gimein estimated electricity consumption to be about 40.9 megawatts (982 megawatt-hours a day).

In 2014, Hass McCook estimated 80.7 megawatts (80,666 kW). As of 2015, The Economist estimated that even if all miners used modern facilities, the combined electricity consumption would be 166.7 megawatts (1.46 terawatt-hours per year). To lower the costs, bitcoin miners have set up in places like where is cheap and cooling air is free. Chinese bitcoin miners are known to use in to reduce electricity costs. ASICMINER ASIC-based mining device A rough overview of the process to mine bitcoins is: • New transactions are broadcast to all nodes.

• Each miner node collects new transactions into a block. • Each miner node works on finding a proof-of-work code for its block. • When a node finds a proof-of-work, it broadcasts the block to all nodes. • Receiving nodes validate the transactions it holds and accept only if all are valid. • Nodes express their acceptance by moving to work on the next block, incorporating the hash of the accepted block. Mined bitcoins [ ].

Diagram showing how bitcoin transactions are verified By convention, the first transaction in a block is a special transaction that produces new bitcoins owned by the creator of the block. This is the incentive for nodes to support the network. It provides the way to move new bitcoins into circulation. The reward for mining halves every 210,000 blocks. It started at 50 bitcoin, dropped to 25 in late 2012 and to 12.5 bitcoin in 2016. This halving process is programmed to continue for 64 times before new coin creation ceases. Security [ ] Various potential attacks on the bitcoin network and its use as a payment system, real or theoretical, have been considered.

The bitcoin protocol includes several features that protect it against some of those attacks, such as unauthorized spending, double spending, forging bitcoins, and tampering with the blockchain. Other attacks, such as theft of private keys, require due care by users. Unauthorized spending [ ] Unauthorized spending is mitigated by bitcoin's implementation of public-private key cryptography. For example; when Alice sends a bitcoin to Bob, Bob becomes the new owner of the bitcoin. Eve observing the transaction might want to spend the bitcoin Bob just received, but she cannot sign the transaction without the knowledge of Bob's private key. Double spending [ ] A specific problem that an internet payment system must solve is, whereby a user pays the same coin to two or more different recipients. An example of such a problem would be if Eve sent a bitcoin to Alice and later sent the same bitcoin to Bob.

The bitcoin network guards against double-spending by recording all bitcoin transfers in a ledger (the blockchain) that is visible to all users, and ensuring for all transferred bitcoins that they haven't been previously spent.: 4 Race attack [ ] If Eve offers to pay Alice a bitcoin in exchange for goods and signs a corresponding transaction, it is still possible that she also creates a different transaction at the same time sending the same bitcoin to Bob. By the rules, the network accepts only one of the transactions.

This is called a, since there is a race which transaction will be accepted first. Alice can reduce the risk of race attack stipulating that she will not deliver the goods until Eve's payment to Alice appears in the blockchain. A variant race attack (which has been called a Finney attack by reference to Hal Finney) requires the participation of a miner.

Instead of sending both payment requests (to pay Bob and Alice with the same coins) to the network, Eve issues only Alice's payment request to the network, while the accomplice tries to mine a block that includes the payment to Bob instead of Alice. There is a positive probability that the rogue miner will succeed before the network, in which case the payment to Alice will be rejected. As with the plain race attack, Alice can reduce the risk of a Finney attack by waiting for the payment to be included in the blockchain. History modification [ ] Each block that is added to the blockchain, starting with the block containing a given transaction, is called a confirmation of that transaction. Ideally, merchants and services that receive payment in bitcoin should wait for at least one confirmation to be distributed over the network, before assuming that the payment was done.

The more confirmations that the merchant waits for, the more difficult it is for an attacker to successfully reverse the transaction in a blockchain—unless the attacker controls more than half the total network power, in which case it is called a 51% attack. Deanonymisation of clients [ ] is a strategy in data mining in which anonymous data is cross-referenced with other sources of data to re-identify the anonymous data source. Along with transaction graph analysis, which may reveal connections between bitcoin addresses (pseudonyms), there is a possible attack which links a user's pseudonym to its. If the peer is using, the attack includes a method to separate the peer from the Tor network, forcing them to use their real IP address for any further transactions. The attack makes use of bitcoin mechanisms of relaying peer addresses and anti- protection. The cost of the attack on the full bitcoin network is under €1500 per month.

Payment verification [ ]. Main article: Each miner can choose which transactions are included in or exempted from a block. A greater number of transactions in a block does not equate to greater computational power required to solve that block. Upon receiving a new transaction a node must validate it: in particular, verify that none of the transaction's inputs have been previously spent. To carry out that check the node needs to access the blockchain. Any user who does not trust his network neighbors, should keep a full local copy of the blockchain, so that any input can be verified.

As noted in Nakamoto's whitepaper, it is possible to verify bitcoin payments without running a full network node (simplified payment verification, SPV). A user only needs a copy of the block headers of the longest chain, which are available by querying network nodes until it is apparent that the longest chain has been obtained. Then, get the Merkle branch linking the transaction to its block. Linking the transaction to a place in the chain demonstrates that a network node has accepted it, and blocks added after it further establish the confirmation. Data in the blockchain [ ] While it is possible to store any digital file in the blockchain, the larger the transaction size, the larger any associated fees become. Various items have been embedded, including URLs to child pornography, an image of, material from the, prayers from bitcoin miners, and the original bitcoin whitepaper. Criminal activity [ ].

Main article: The use of bitcoin by criminals has attracted the attention of financial regulators, legislative bodies, law enforcement, and the media. The FBI prepared an intelligence assessment, the SEC has issued a pointed warning about investment schemes using virtual currencies, and the U.S. Senate held a hearing on virtual currencies in November 2013. Several news outlets have asserted that the popularity of bitcoins hinges on the ability to use them to purchase illegal goods. In 2014, researchers at the University of Kentucky found 'robust evidence that computer programming enthusiasts and illegal activity drive interest in bitcoin, and find limited or no support for political and investment motives.'

Black markets [ ]. Main article: A researcher estimated that in 2012, 4.5% to 9% of all transactions on all exchanges in the world were for drug trades on a single drugs market,. Child pornography, murder-for-hire services, and weapons are also allegedly available on black market sites that sell in bitcoin. Due to the anonymous nature and the lack of central control on these markets, it is hard to know whether the services are real or just trying to take the bitcoins. Several deep web black markets have been shut by authorities. In October 2013 Silk Road was shut down by U.S.

Law enforcement leading to a short-term decrease in the value of bitcoin. In 2015, the founder of the site was sentenced to life in prison. Alternative sites were soon available, and in early 2014 the reported that the closure of Silk Road had little impact on the number of Australians selling drugs online, which had actually increased. In early 2014, Dutch authorities closed Utopia, an online illegal goods market, and seized 900 bitcoins. In late 2014, a joint police operation saw European and American authorities seize bitcoins and close 400 deep web sites including the illicit goods market Silk Road 2.0. Law enforcement activity has resulted in several convictions.

In December 2014, Charlie Shrem was sentenced to two years in prison for indirectly helping to send $1 million to the Silk Road drugs site, and in February 2015, its founder,, was convicted on drugs charges and faces a life sentence. Some black market sites may seek to steal bitcoins from customers. The bitcoin community branded one site, Sheep Marketplace, as a scam when it prevented withdrawals and shut down after an alleged bitcoins theft. In a separate case, escrow accounts with bitcoins belonging to patrons of a different black market were hacked in early 2014.

According to the, a UK-based charity, bitcoin is used to purchase child pornography, and almost 200 such websites accept it as payment. Bitcoin isn't the sole way to purchase child pornography online, as Troels Oertling, head of the cybercrime unit at, states, 'Ukash and Paysafecard. Have [also] been used to pay for such material.' However, the Internet Watch Foundation lists around 30 sites that exclusively accept bitcoins.

Some of these sites have shut down, such as a deep web website that aimed to fund the creation of new child porn. [ ] Furthermore, hyperlinks to child porn websites have been added to the blockchain as arbitrary data can be included when a transaction is made. Money laundering [ ] Bitcoins may not be ideal for money laundering, because all transactions are public. Authorities, including the the FBI, and the of the have expressed concerns that bitcoin may be used for money laundering. In early 2014, an operator of a U.S.

Bitcoin exchange, Charlie Shrem, was arrested for money laundering. Subsequently, he was sentenced to two years in prison for 'aiding and abetting an unlicensed money transmitting business'. Alexander Vinnik, an alleged owner of BTC-e was arrested in Greece July 25 of 2017 on $4 bln money laundering charges for flouting anti-money laundering (AML) laws of US. A report by UK's and named 'UK national risk assessment of money laundering and terrorist financing' (2015 October) found that, of the twelve methods examined in the report, bitcoin carries the lowest risk of being used for money laundering, with the most common money laundering method being the banks. Ponzi scheme [ ] In a that utilized bitcoins, The Bitcoin Savings and Trust promised investors up to 7 percent weekly interest, and raised at least 700,000 bitcoins from 2011 to 2012. In July 2013 the U.S. Securities and Exchange Commission charged the company and its founder in 2013 'with defrauding investors in a Ponzi scheme involving bitcoin'.

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