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What is Bitcoin?

Bitcoin is a digital asset[13] and a payment system[14]:3 invented[14]:3,4[15] by an unidentified programmer, or group of programmers,[16] under the name of Satoshi Nakamoto.[17] Bitcoin was introduced on 31 October 2008 to a cryptography mailing list,[18] and released as open-source software in 2009.[15] There have been various claims and speculation concerning the identity of Nakamoto, none of which are confirmed.[17] The system is peer-to-peer and transactions take place between users directly, without an intermediary.[14]:4 These transactions are verified by network nodes and recorded in a public distributed ledger called theblockchain,[19] which uses bitcoin as its unit of account. Since the system works without a central repository or single administrator, the U.S. Treasury categorizes bitcoin as a decentralized virtual currency.[10] Bitcoin is often called the first cryptocurrency,[20][21][22]although prior systems existed[note 4] and it is more correctly described as the first decentralized digital currency.[14][26] Bitcoin is the largest of its kind in terms of total market value.[27]


Bitcoins are created as a reward for payment processing work in which users offer their computing power to verify and record payments into a public ledger. This activity is referred to as mining and miners are rewarded with transaction fees and newly created bitcoins.[14] Besides being obtained by mining, bitcoins can be exchanged for other currencies,[28] products, and services.[29] When sending bitcoins, users can pay an optional transaction fee to the miners.[30]


In February 2015, the number of merchants accepting bitcoin for products and services passed 100,000.[31] Instead of 2–3% typically imposed by credit card processors, merchants accepting bitcoins often pay fees in the range from 0% to less than 2%.[32]Despite the fourfold increase in the number of merchants accepting bitcoin in 2014, the cryptocurrency did not have much momentum in retail transactions.[33] The European Banking Authority[34] and other sources[14]:11 have warned that bitcoin users are not protected by refund rights or chargebacks. The use of bitcoin by criminals has attracted the attention of financial regulators,[35]legislative bodies,[36] law enforcement,[37] and media.[38] Criminal activities are primarily centered around darknet markets and theft, though officials in countries such as the United States also recognize that bitcoin can provide legitimate financial services.[36]