Bitcoin

Bitcoin
(abbreviation: BTC; sign: ₿) is a decentralized digital currency that can be transferred on

the peer-to-peer bitcoin network.[5] Bitcoin transactions are verified by
network nodes through cryptography and recorded in a public distributed ledger called
a blockchain. The cryptocurrency was invented in 2008 by an unknown person or group of
people using the name Satoshi Nakamoto.[10] The currency began use in 2009,[11] when its
implementation was released as open-source software.[7]: ch. 1
The word bitcoin was defined in a white paper published on 31 October 2008.[3][12] It is
a compound of the words bit and coin.[13]
The legality of bitcoin varies by region. Nine countries have fully banned bitcoin use, while a
further fifteen have implicitly banned it. A few governments have used bitcoin in some
capacity. El Salvador has adopted Bitcoin as legal tender, although use by merchants remains
low. Ukraine has accepted cryptocurrency donations to fund the resistance to the 2022 Russian
invasion. Iran has used bitcoin to bypass sanctions.
Bitcoin has been described as an economic bubble by at least eight recipients of the Nobel
Memorial Prize in Economic Sciences.[14] The environmental impact of bitcoin is significant.[citation
needed]
Its proof-of-work algorithm for bitcoin mining is designed to be computationally difficult,
which requires the consumption of increasing quantities of electricity, the generation of which has
contributed to climate change.[15][16] According to the University of Cambridge, bitcoin has emitted
an estimated 200 million tonnes of carbon dioxide since its launch.[17]
Contents
 1Design
o 1.1Units and divisibility
o 1.2Blockchain
o 1.3Transactions
o 1.4Ownership
 2Mining
 3Supply
 4Decentralization
 5Privacy and fungibility
 6Wallets
o 6.1Software wallets
o 6.2Cold storage
o 6.3Hardware wallets
o 6.4Paper wallets
 7History
o 7.1Creation
o 7.22011–2012
o 7.32013–2016
o 7.42017–2019
o 7.52020–present
 8Associated ideologies
o 8.1Austrian economics roots
o 8.2Anarchism and libertarianism
 9Economics
o 9.1Acceptance by merchants
o 9.2Financial institutions
o 9.3As an investment
o 9.4Venture capital
o 9.5Price and volatility
 10Legal status, tax and regulation
o 10.1Regulatory warnings
o 10.2Price manipulation investigation
o 10.3Use by governments
 11Economic and legal concerns
o 11.1Use in illegal transactions
 12Environmental impact
 13Software implementation
 14In popular culture
o 14.1Term "HODL"
o 14.2Literature
o 14.3Film
o 14.4Music
o 14.5Academia
 15See also
 16Notes
 17References
 18External links
Design
Units and divisibility
The unit of account of the bitcoin system is the bitcoin. Currency codes for representing bitcoin
are BTC[a] and XBT.[b][21]: 2 Its Unicode character is ₿.[1] One bitcoin is divisible to eight decimal
places.[7]: ch. 5 Units for smaller amounts of bitcoin are the millibitcoin (mBTC), equal to 1⁄1000 bitcoin,
and the satoshi (sat), which is the smallest possible division, and named in homage to bitcoin's
creator, representing 1⁄100000000 (one hundred millionth) bitcoin.[2] 100,000 satoshis are one mBTC.[22]
Blockchain
Data structure of blocks in the ledger
Number of bitcoin transactions per month, semilogarithmic plot[23]

Number of unspent transaction outputs[24]
The bitcoin blockchain is a public ledger that records bitcoin transactions.[25] It is implemented as

a chain of blocks, each block containing a cryptographic hash of the previous block up to the
genesis block[c] in the chain. A network of communicating nodes running bitcoin software
maintains the blockchain.[26]: 215–219 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. To achieve independent verification of the chain
of ownership, each network node stores its own copy of the blockchain.[27] At varying intervals of
time averaging to every 10 minutes, a new group of accepted transactions, called a block, is
created, added to the blockchain, and quickly published to all nodes, without requiring central
oversight. This allows bitcoin software to determine when a particular bitcoin was spent, which is
needed to prevent double-spending. A conventional ledger records the transfers of
actual bills or promissory notes that exist apart from it, but the blockchain is the only place where
bitcoins can be said to exist in the form of unspent outputs of transactions.[7]: ch. 5
Individual blocks, public addresses, and transactions within blocks can be examined using a
blockchain explorer.[citation needed]
Transactions
See also: Bitcoin network
Transactions are defined using a Forth-like scripting language.[7]: 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.[28] 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.
[28]
Any input satoshis not accounted for in the transaction outputs become the transaction fee.[28]
Though transaction fees are optional, miners can choose which transactions to process and
prioritize those that pay higher fees.[28] Miners may choose transactions based on the fee paid
relative to their storage size, not the absolute amount of money paid as a fee. These fees are
generally measured in satoshis per byte (sat/b). The size of transactions is dependent on the
number of inputs used to create the transaction and the number of outputs.[7]: ch. 8
The blocks in the blockchain were originally limited to 32 megabytes in size. The block size limit
of one megabyte was introduced by Satoshi Nakamoto in 2010. Eventually, the block size limit of
one megabyte created problems for transaction processing, such as increasing transaction fees
and delayed processing of transactions.[29] Andreas Antonopoulos has stated Lightning Network is
a potential scaling solution and referred to lightning as a second-layer routing network.[7]: ch. 8
Ownership
Simplified chain of ownership as illustrated in the bitcoin whitepaper.[3] In practice, a transaction can have
more than one input and more than one output.[28]
In the blockchain, bitcoins are registered to bitcoin addresses. Creating a bitcoin address
requires 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 practically unfeasible.[7]: ch. 4 Users can tell others or 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 to compromise a private key. To be able to spend their
bitcoins, the owner must know the corresponding private key and digitally sign the transaction.
[d]
The network verifies the signature using the public key; the private key is never revealed.[7]: ch. 5
If the private key is lost, the bitcoin network will not recognize any other evidence of ownership;
[26]
the coins are then unusable, and effectively lost. For example, in 2013 one user claimed to
have lost ₿7,500, worth $7.5 million at the time, when he accidentally discarded a hard drive
containing his private key.[32] About 20% of all bitcoins are believed to be lost—they would have
had a market value of about $20 billion at July 2018 prices.[33]
To ensure the security of bitcoins, the private key must be kept secret.[7]: ch. 10 If the private key is
revealed to a third party, e.g. through a data breach, the third party can use it to steal any
associated bitcoins.[34] As of December 2017, around ₿980,000 have been stolen
from cryptocurrency exchanges.[35]
Regarding ownership distribution, as of 16 March 2018, 0.5% of bitcoin wallets own 87% of all
bitcoins ever mined.[36]

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Bitcoin

(abbreviation: BTC; sign: ₿) is a decentralized digital currency that can be transferred on

Data structure of blocks in the ledger

Number of bitcoin transactions per month, semilogarithmic plot[23]

The bitcoin blockchain is a public ledger that records bitcoin transactions.[25] It is implemented as

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