Bitcoin is a worldwide cryptocurrency and digital payment system called the first decentralized digital currency, as the system works without a central repository or single administrator. It was invented by an unknown person or group of people
under the name Satoshi Nakamoto and released as open-source software in 2009. The system is peer-to-peer, and transactions take place between users directly, without an intermediary. These transactions are verified by network nodes and
recorded in a public distributed ledger called a blockchain.
Bitcoins are created as a reward for a process known as mining. Mining is the process of computers solving mathematical equations on a system called POW (Proof of Work). Proof of work is used to verify all bitcoin transactions before being
posted to the blockchain. Bitcoin can be exchanged for other currencies, products, and services on cryptocurrency exchanges. As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment. Bitcoin can also be held
as an investment. According to research produced by Cambridge University in 2017, there are 2.9 to 5.8 million unique users using a cryptocurrency wallet, most of them using bitcoin.
The word bitcoin first occurred and was defined in the white paper that was published on 31 October 2008. It is a compound of the words bit and coin. 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 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, a convention which this article follows.
The unit of account of the bitcoin system is bitcoin. As of 2014, tickers used to represent bitcoin are BTC and XBT. Its Unicode character is ₿. Small amounts of bitcoin used as alternative units are millibitcoin (mBTC) 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. A millibitcoin equals to 0.001 bitcoin, one thousandth of a bitcoin.
Brief Bitcoin History
On 18 August 2008, the domain name bitcoin.org was registered. In November that year, a link to a paper authored by Satoshi Nakamoto titled Bitcoin: A Peer-to-Peer Electronic Cash System was posted to a cryptography mailing list. Nakamoto
implemented the bitcoin software as open source code and released it in January 2009. The identity of Nakamoto remains unknown, though many have claimed to know it. 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, for a reward of 50 bitcoins. Embedded in the coinbase of this block was the following text:
The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.
One of the first supporters, adopters, contributor to bitcoin and receiver of the first bitcoin transaction was programmer Hal Finney. Finney downloaded the bitcoin software the day it was released, and received 10 bitcoins from Nakamoto in
the world's first bitcoin transaction. 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.
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 by Papa John's. On 6 August 2010, a major vulnerability
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 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 bitcoin split into two derivative digital currencies, the classic bitcoin (BTC) and a hard fork, Bitcoin Cash (BCH) and is faced with an upcoiming Hard-Fork for Bitcoin SegWit2x in November, 2017. Developer Jeff Garzik
has added BIP102 into the protocol, for the upcoming hard fork, which will essentially create a "flag day," and all the miners who signaled "intent" must put their hashrate where their mouth is.