Bitcoin is a payment system introduced as open-source
software in 2009 by developer Satoshi Nakamoto. The payments in the system are
recorded in a public ledger using its own unit of account, which is also called
bitcoin. Payments work peer-to-peer without a central repository or single
administrator, which has led the US Treasury to call bitcoin a decentralized
virtual currency. Although its status as a currency is disputed, media reports
often refer to bitcoin as a cryptocurrency or digital currency.
Bitcoins are created as a reward for payment
processing work in which users offer their computing power to verify and record
payments into the public ledger. Called mining, individuals or companies engage
in this activity in exchange for transaction fees and newly created bitcoins.
Besides mining, bitcoins can be obtained in exchange for fiat money, products,
and services. Users can send and receive bitcoins electronically for an
optional transaction fee 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,and merchants have an incentive to accept the digital currency
because fees are lower than the 2-3% typically imposed by credit card
processors. The European Banking Authority has warned that bitcoin lacks
consumer protections. Unlike credit cards, any fees are paid by the purchaser
not the vendor. Bitcoins can be stolen and chargebacks are impossible.
Commercial use of bitcoin is currently small compared to its use by
speculators, which has fueled price volatility.
Bitcoin has been a subject of scrutiny amid concerns
that it can be used for illegal activities. 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. The US China
If you want to know more then
check out the full Bitcoin Wikipedia article.
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