BIT-COIN - Gyan

Did U know About Bitcoin ?

Bitcoin is both a cryptocurrency and an electronic payment system invented by an unidentified programmer, or group of programmers, under the name of Satoshi Nakamoto. Bitcoin was introduced on 31 October 2008 to a cryptography mailing list, and released as open-source software in 2009. The identity of Nakamoto remains unknown, though many have claimed to know it.
The system is peer-to-peer, and transactions take place between users directly, without an intermediary. Bitcoin is often called the first cryptocurrency, although prior systems existed, and it is more correctly described as the first decentralized digital currency. Bitcoin is the largest of its kind in terms of total market value.
Bitcoins are created as a reward in a competition in which users offer their computing power to verify and record bitcoin transactions into the blockchain. This activity is referred to as mining and successful miners are rewarded with transaction fees and newly created bitcoins. Besides being obtained by mining, bitcoins can be exchanged for other currencies, products, and services. When sending bitcoins, users can pay an optional transaction fee to the miners. This may expedite the transaction being confirmed.
As of February 2015, over 100,000 merchants and vendors accept bitcoin as payment. Despite the fourfold increase in the number of merchants accepting bitcoin in 2014, the cryptocurrency did not have much momentum in retail transactions. The European Banking Authority Criminal activities are primarily focused on darknet markets and theft, though officials in countries such as the United States also recognize that bitcoin can provide legitimate financial services.
There is no uniform convention for bitcoin capitalization. Some sources use Bitcoin, capitalized, to refer to the technology and network and bitcoin, lowercase, to refer to the unit of account. The Wall Street Journal, The Chronicle of Higher Education, and the Oxford English Dictionary advocate use of lowercase bitcoin in all cases, which this article follows.

Blockchain  
The blockchain is a public ledger that records bitcoin transactions. A novel solution accomplishes this without any trusted central authority: maintenance of the blockchain is performed by a network of communicating nodes running bitcoin software. Transactions of the form payer X sends Y bitcoins to payee Z are broadcast 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 distributed database – to achieve independent verification of the chain of ownership of any and every bitcoin, each network node stores its own copy of the blockchain. Small amounts of bitcoin used as alternative units are millibitcoin, microbitcoin, and satoshi. Named in homage to bitcoin's creator, a satoshi is the smallest amount within bitcoin representing 0.00000001 bitcoin, one hundred millionth of a bitcoin. One microbitcoin equals to 0.000001 bitcoin, one millionth of a bitcoin.

A proposal was submitted to the Unicode Consortium in October 2015 to add a codepoint for the symbol., it is in the pipeline for position 20BF  in the Currency Symbols block.
Mining  

Mining is a record-keeping service. Miners keep the blockchain consistent, complete, and unalterable by repeatedly verifying and collecting newly broadcast transactions into a new group of transactions called a block. Each block contains a cryptographic hash of the previous block,
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  increases. which combine the computational resources of their members in order to increase the frequency of generating new blocks. The reward for each block is then split proportionately among the members, creating a more predictable stream of income for each miner without necessarily changing their long-term average income, although a fee may be charged for the service.

The competitive nature of mining has led to ever-more-specialized technology being utilized. The most efficient mining hardware makes use of custom designed application-specific integrated circuits, which outperform general-purpose CPUs while using less power. As of 2015, a miner who is not using purpose-built hardware is unlikely to earn enough to cover the cost of the electricity used in their efforts, even if they are a member of a pool.
Energy consumption
 
In 2013, Mark Gimein estimated electricity use to be about 40.9 megawatts . In 2014, Hass McCook estimated 80.7 megawatts . As of 2015, The Economist estimated that even if all miners used modern facilities, the combined electricity consumption would be 166.7 megawatts .
Journalist Matt O'Brien opined that it is not obvious whether bitcoin is lowering transaction costs, since the costs are transformed into pollution costs, which he characterizes as "environmental spillovers on everyone else, or what economists call negative externalities."
To lower the costs, bitcoin miners have set up in places like Iceland where geothermal energy is cheap and cooling Arctic air is free. Chinese bitcoin miners are known to use hydroelectric power in Tibet to reduce electricity costs.
Supply  

The successful miner finding the new block is rewarded with newly created bitcoins and transaction fees., 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.
In other words, bitcoin's inventor Nakamoto set a monetary policy based on artificial scarcity 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 circulation.

Wallets  
A wallet stores the information necessary to transact bitcoins. While wallets are often described as a place to hold or store bitcoins, and allows you to access  them. Bitcoin uses public-key cryptography, 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.), or a subset of the blockchain . Because of its size / complexity, the entire blockchain is not suitable for all computing devices.
Lightweight clients on the other hand consult a full client to send and receive transactions without requiring a local copy of the entire blockchain . This makes lightweight clients much faster to setup 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. When using a lightweight client, the server can not steal bitcoins, but it can report faulty values back to the user. 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. An example of such security breach occurred with Mt. Gox in 2011. Others are simply paper printouts. Another type of wallet called a hardware wallet keeps credentials offline while facilitating transactions.
Reference implementation  
The first wallet program was released in 2009 by Satoshi Nakamoto as open-source code. After the release of version 0.9, the software bundle was renamed Bitcoin Core to distinguish itself from the network. Today, other forks of Bitcoin Core exist such as Bitcoin XT, Bitcoin Classic, and Bitcoin Unlimited.

Ownership  
Ownership of bitcoins implies that a user can spend bitcoins associated with a specific address. To do so, a payer must digitally sign the transaction using the corresponding private key. Without knowledge of the private key, the transaction cannot be signed and bitcoins cannot be spent. The network verifies the signature using the public key.
Decentralization  
Bitcoin creator Satoshi Nakamoto designed it to not need a central authority. Per sources such as the academic Mercatus Center, U.S. Treasury, Reuters, The Washington Post, The Daily Herald, The New Yorker, and others, bitcoin is decentralized.
There is also a minority opinion published in an article that appeared in IEEE Security & Privacy magazine, in which it is stated that "contrary to widespread belief, it isn’t truly decentralized as it's deployed and implemented today."
Governance  
Bitcoin is an open source software which was initially led by Satoshi Nakamoto. Nakamoto stepped back in 2010 and handed the network alert key to Gavin Andresen. Andresen stated he subsequently sought to decentralize control stating: "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."

Privacy  
Bitcoin is pseudonymous, 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"  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 pseudorandom "rolling addresses" for every transaction from a single seed, while only requiring a single passphrase to be remembered to recover all corresponding private keys. Additionally, "mixing" and CoinJoin services aggregate multiple users' coins and output them to fresh addresses to increase privacy. Researchers at Stanford University and Concordia University have also shown that bitcoin exchanges and other entities can prove assets, liabilities, and solvency without revealing their addresses using zero-knowledge proofs.
According to Dan Blystone, "Ultimately, bitcoin resembles cash as much as it does credit cards."
Fungibility  
Wallets and similar software technically handle all bitcoins as equivalent, establishing the basic level of fungibility. 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 Zerocoin and Dark Wallet aim to address these privacy and fungibility issues.

History
Bitcoin was created Other early supporters were Wei Dai, creator of bitcoin predecessor b-money, and Nick Szabo, creator of bitcoin predecessor bit gold.
In the early days, Nakamoto is estimated to have mined 1 million bitcoins. Before disappearing from any involvement in bitcoin, Nakamoto in a sense handed over the reins to developer Gavin Andresen, who then became the bitcoin lead developer at the Bitcoin Foundation, the 'anarchic' bitcoin community's closest thing to an official public face.

Based on bitcoin's open source code, other cryptocurrencies started to emerge in 2011.
In 2013 some mainstream websites began accepting bitcoins. WordPress had started in November 2012, followed by OKCupid in April 2013, TigerDirect Newegg and Dell in July 2014, and Microsoft in December 2014. stopped accepting them in June 2011, and began again in May 2013.
In May 2013, the Department of Homeland Security seized assets belonging to the Mt. Gox exchange. The U.S. Federal Bureau of Investigation  shut down the Silk Road website in October 2013.

In October 2013, Chinese internet giant Baidu had allowed clients of website security services to pay with bitcoins. During November 2013, the China-based bitcoin exchange BTC China overtook the Japan-based Mt. Gox and the Europe-based Bitstamp to become the largest bitcoin trading exchange by trade volume. On 19 November 2013, the value of a bitcoin on the Mt. Gox exchange soared to a peak of US$900 after a United States Senate committee hearing was told by the FBI that virtual currencies are a legitimate financial service. On the same day, one bitcoin traded for over RMB¥6780  in China. On 5 December 2013, the People's Bank of China prohibited Chinese financial institutions from using bitcoins. After the announcement, the value of bitcoins dropped, and Baidu no longer accepted bitcoins for certain services. Buying real-world goods with any virtual currency has been illegal in China since at least 2009.

The first bitcoin ATM was installed in October 2013 in Vancouver, British Columbia, Canada.
With about 12 million existing bitcoins in November 2013, the new price increased the market cap for bitcoin to at least US$7.2 billion. By 23 November 2013, the total market capitalization of bitcoin exceeded US$10 billion for the first time.

In the U.S., two men were arrested in January 2014 on charges of money-laundering using bitcoins; one was Charlie Shrem, the head of now defunct bitcoin exchange BitInstant and a vice chairman of the Bitcoin Foundation. Shrem allegedly allowed the other arrested party to purchase large quantities of bitcoins for use on black-market websites. suspended withdrawals citing technical issues. By the end of the month, Mt. Gox had filed for bankruptcy protection in Japan amid reports that 744,000 bitcoins had been stolen. Months before the filing, the popularity of Mt. Gox had waned as users experienced difficulties withdrawing funds.

On 18 June 2014, it was announced that bitcoin payment service provider BitPay would become the new sponsor of St. Petersburg Bowl under a two-year deal, renamed the Bitcoin St. Petersburg Bowl. Bitcoin was to be accepted for ticket and concession sales at the game as part of the sponsorship, and the sponsorship itself was also paid for using bitcoin.

Less than one year after the collapse of Mt. Gox, United Kingdom-based exchange Bitstamp announced that their exchange would be taken offline while they investigate a hack which resulted in about 19,000 bitcoins  being stolen from their hot wallet. The exchange remained offline for several days amid speculation that customers had lost their funds. Bitstamp resumed trading on 9 January after increasing security measures and assuring customers that their account balances would not be impacted.

The bitcoin exchange service Coinbase launched the first regulated bitcoin exchange in 25 US states on 26 January 2015. At the time of the announcement, CEO Brian Armstrong stated that Coinbase intends to expand to thirty countries by the end of 2015. A spokesperson for Benjamin M. Lawsky, the superintendent of New York state's Department of Financial Services, stated that Coinbase is operating without a license in the state of New York. Lawsky is responsible for the development of the so-called 'BitLicense', which companies need to acquire in order to legally operate in New York.
In August 2015 Barclays announced that they would become the first UK high street bank to start accepting bitcoin, with a plan to facilitate users to make charitable donations using the cryptocurrency outside their systems. They partnered in April 2016 with mobile payment startup Circle Internet Financial.

A major bitcoin exchange, Bitfinex, was hacked and nearly 120,000 BTC  was stolen in 2016.
On 2 March 2017 the price of 1 bitcoin surpassed the spot price of an ounce of gold for the first time.

Economics Classification  
Bitcoin is a digital asset designed by its inventor, Satoshi Nakamoto, to work as a currency. It is commonly referred to with terms like: digital currency, virtual currency, 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".

Classification of bitcoin by the United States government is to date unclear with multiple conflicting rulings. In 2013 Judge Amos L. Mazzant III of the United States District Court for the Eastern District of Texas stated that "Bitcoin is a currency or form of money". In July 2016, Judge Teresa Mary Pooler of Eleventh Judicial Circuit Court of Florida cleared Michell Espinoza in State of Florida v. Espinoza in money-laundering charges he faced involving his use of bitcoin. Judge Pooler stated "Bitcoin may have some attributes in common with what we commonly refer to as money, but differ in many important aspects, they are certainly not tangible wealth and cannot be hidden under a mattress like cash and gold bars." In September 2016, a ruling by Judge Alison J. Nathan of United States District Court for the Southern District of New York contradicted the Florida Espinoza ruling stating "Bitcoins are funds within the plain meaning of that term.— Bitcoins can be accepted as a payment for goods and services or bought directly from an exchange with a bank account. They therefore function as pecuniary resources and are used as a medium of exchange and a means of payment."

The Commodity Futures Trading Commission classifies bitcoin as a commodity, and the Internal Revenue Service classifies it as an asset. while others call bitcoin real money. The Wall Street Journal declared it a commodity in December 2013. A Forbes journalist referred to it as digital collectible. Two University of Amsterdam computer scientists proposed the term "money-like informational commodity". In a 2016 Forbes article, bitcoin was characterized as a member of a new asset class.
The People's Bank of China has stated that bitcoin "is fundamentally not a currency but an investment target".

In addition to the above, bitcoin is also characterized as a payment system. Exchanges have since implemented measures to provide proof of reserves in an effort to convey transparency to users. Offline, bitcoins may be purchased directly from an individual or at a bitcoin ATM. Bitcoin machines are not however traditional ATMs. Bitcoin kiosks are machines connected to the Internet, allowing the insertion of cash in exchange for bitcoins. Bitcoin kiosks do not connect to a bank and may also charge transaction fees as high as 7% and exchange rates $50 over rates from elsewhere.
As of 2016 it was estimated there were over 800 bitcoin ATMs operating globally, the majority  being in the United States.

Price and volatility  
According to Mark T. Williams,, bitcoin has volatility seven times greater than gold, eight times greater than the S&P 500, and eighteen times greater than the U.S. dollar.

Attempting to explain the high volatility, a group of Japanese scholars stated that there is no stabilization mechanism. The Bitcoin Foundation contends that high volatility is due to insufficient liquidity, while a Forbes journalist claims that it is related to the uncertainty of its long-term value, and the high volatility of a startup currency makes sense, "because people are still experimenting with the currency to figure out how useful it is." As of 2014, pro-bitcoin venture capitalists argued that the greatly increased trading volume that planned high-frequency trading exchanges would generate is needed to decrease price volatility. 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 2012–13 Cypriot financial crisis, 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 the all-time peak of US$1,242. In 2014, the price fell sharply, and as of April remained depressed at little more than half 2013 prices. it was under US$600. In January 2015, noting that the bitcoin price had dropped to its lowest level since spring 2013 – around US$224 – The New York Times suggested that "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, Business Insider reported that deep web 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.

On 4 November 2015, bitcoin had risen by more than 20%, exceeding $490. The Financial Times associated the rapid growth with the popularity of "socio-financial networks" MMM operated by Russian businessman Sergei Mavrodi.

According to The Wall Street Journal,, bitcoin is starting to look slightly more stable than gold.