https://tests.bitcoin.it/w/api.php?action=feedcontributions&user=Anym&feedformat=atomBitcoin Wiki - User contributions [en]2024-03-28T19:07:42ZUser contributionsMediaWiki 1.30.0https://tests.bitcoin.it/w/index.php?title=Template:MainPage_Intro&diff=33764Template:MainPage Intro2012-12-14T20:45:41Z<p>Anym: </p>
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<div>[[Image:Bitcoin world map.png|left|200px|Bitcoin usage worldwide.]]<br />
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'''Bitcoin''' is an experimental, decentralized [[digital currency]] that enables instant payments to anyone, anywhere in the world. [[Bitcoin]] uses peer-to-peer technology to operate with no central authority: managing transactions and issuing money are carried out collectively by the network. <br />
<br />
The original Bitcoin software by [[Satoshi Nakamoto]] was released under the MIT license.<br />
Most client software, derived or "from scratch", also use open source licensing.<br />
<br />
Bitcoin is one of the first implementations of a concept called ''crypto-currency'' which was first described in 1998 by Wei Dai on the cypherpunks mailing list. Building upon the notion that money is any object, or any sort of record, accepted as payment for goods and services and repayment of debts in a given country or socio-economic context, Bitcoin is designed around the idea of using cryptography to control the creation and transfer of money, rather than relying on central authorities.<br />
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:''Sourced from [http://bitcoin.org Bitcoin.org] and [[wikipedia:Bitcoin|Wikipedia]].''<br />
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'''Bitcoin-Qt:'''<br />
{|style="background-color: inherit;"<br />
|<br />
* [http://sourceforge.net/projects/bitcoin/files/Bitcoin/bitcoin-0.7.2/bitcoin-0.7.2-win32-setup.exe/download '''Windows (exe)'''] 9.3 MB [http://sourceforge.net/projects/bitcoin/files/Bitcoin/bitcoin-0.7.2/bitcoin-0.7.2-win32.zip/download '''(zip)'''] 13 MB<br />
* [http://sourceforge.net/projects/bitcoin/files/Bitcoin/bitcoin-0.7.2/bitcoin-0.7.2-linux.tar.gz/download '''GNU/Linux'''] 12 MB<br />
* [http://sourceforge.net/projects/bitcoin/files/Bitcoin/bitcoin-0.7.2/bitcoin-0.7.2-macosx.dmg/download '''Mac OS X'''] 13 MB<br />
|}<br />
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[http://bitcoin.org/clients.html More Bitcoin Client Software]</div>Anymhttps://tests.bitcoin.it/w/index.php?title=Bitcoin&diff=33763Bitcoin2012-12-14T20:44:39Z<p>Anym: Undo revision 33747 by Luke-jr (talk)</p>
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<div><br />
'''Bitcoin''' is a decentralized [[digital currency]] created by developer [[Satoshi Nakamoto]]. It does not rely on a central server to process transactions or store funds. Each Bitcoin is divisible up to 100-million units, allowing the currency to adapt in cases of high valuation.<br />
<br />
It is the most widely used alternative currency,<ref name="Quantitative Analysis of the Full Bitcoin Transaction Graph">{{cite web|title=Quantitative Analysis of the Full Bitcoin Transaction Graph|url=http://eprint.iacr.org/2012/584.pdf|publisher=Cryptology ePrint Archive|accessdate=18 October 2012|author=Ron Dorit|coauthors=Adi Shamir|page=17|quote=The Bitcoin system is the best known and most widely used alternative payment scheme,...}}</ref> with the total market cap at over 100 million US dollars.<ref>{{cite web|last=Koch|first=Rüdiger|title=Bitcoin - a Means for Redistribution of Wealth|url=http://ieet.org/index.php/IEET/more/koch20120927|publisher=Institute for Ethics & Emerging Technologies|accessdate=27 October 2012|quote=We’re currently at 50,000 users and a market cap of $100 Million.}}</ref><ref>{{cite web|title=Market Capitalization|url=http://blockchain.info/charts/market-cap|publisher=Blockchain.info|accessdate=28 October 2012}}</ref><ref name="Mt.Gox data">{{Cite web|title=Mt.Gox data|url=http://bitcoincharts.com/markets/mtgoxUSD.html|publisher=Bitcoincharts}}</ref> <br />
<br />
Bitcoin has no central issuer; instead, the peer-to-peer network regulates Bitcoins, transactions and issuance according to consensus in network software.<br />
Bitcoins are issued to various nodes that verify transactions through computing power;<br />
it is established that there will be a limited and scheduled release of no more than 21 million BTC worth of coins, which will be fully issued by the year 2140.<br />
<br />
Internationally, Bitcoins can be exchanged and managed through various websites and [[software]] along with physical banknotes and coins.<ref>{{Cite web|title=Physical Bitcoins by Casascius|url=https://www.casascius.com/|publisher=Casascius Coins|accessdate=29 September 2012}}</ref><ref>{{Cite web|title=Bitbills|url=http://www.bitbills.com/|publisher=Bitbills|accessdate=29 September 2012}}</ref><br />
<br />
==History==<br />
:Main article: [[History]]<br />
<br />
A cryptographic system for untraceable payments was first described by David Chaum in 1982.<ref>[http://blog.koehntopp.de/uploads/Chaum.BlindSigForPayment.1982.PDF David Chaum, Blind signatures for untraceable payments], Advances in Cryptology - Crypto '82, Springer-Verlag (1983), 199–203.</ref> In 1990 Chaum extended this system to create the first cryptographic anonymous electronic cash system.,<ref>{{cite journal|journal=Lecture Notes in Computer Science|last1=Chaum|first1=David|last2=Fiat|first2=Amos|last3=Naor|first3=Moni|title=Untraceable Electronic Cash|url=http://blog.koehntopp.de/uploads/chaum_fiat_naor_ecash.pdf}}</ref> which became known as ecash.<br />
<ref>{{cite web|url=http://www.wired.com/wired/archive/2.12/emoney.html|publisher=Wired|title=E-Money (That's What I Want)|date=1994–2012|author=Steven Levy}}</ref> In 1998 Wei Dai published a description of an anonymous, distributed electronic cash system which he called "b-money".<ref>{{cite web|title=B-Money|url=http://www.weidai.com/bmoney.txt|author=Wei Dai|year=1998}}</ref> Around the same time, Nick Szabo created ''bit gold''.<ref>{{cite web|url=http://spectrum.ieee.org/computing/software/bitcoin-the-cryptoanarchists-answer-to-cash/0|title=Bitcoin: The Cryptoanarchists’ Answer to Cash|publisher=IEEE Spectrum|quote=Around the same time, Nick Szabo, a computer scientist who now blogs about law and the history of money, was one of the first to imagine a new digital currency from the ground up. Although many consider his scheme, which he calls “bit gold,” to be a precursor to Bitcoin}}</ref><ref name="bitgold">{{cite web|title=Bit gold|url=http://unenumerated.blogspot.co.uk/2005/12/bit-gold.html|author=Nick Szabo|quote=My proposal for bit gold is based on computing a string of bits from a string of challenge bits, using functions called variously "client puzzle function," "proof of work function," or "secure benchmark function.". The resulting string of bits is the proof of work.... The last-created string of bit gold provides the challenge bits for the next-created string.}}</ref> Like Bitcoin, ''Bit gold'' was a currency system where users would compete to solve a [[proof of work]] function, with solutions being cryptographically chained together and published via a distributed property title registry. A variant of ''Bit gold'', called ''Reusable Proofs of Work'', was implemented by Hal Finney.<ref name="bitgold"/><br />
<br />
In 2008, Satoshi Nakamoto published a paper<ref name="whitepaper">{{cite web<br />
|last= Nakamoto<br />
|first= Satoshi<br />
|title= Bitcoin: A Peer-to-Peer Electronic Cash System<br />
|url= http://www.cs.kent.edu/~JAVED/class-P2P12F/papers-2012/PAPER2012-p2p-bitcoin-satoshinakamoto.pdf<br />
|accessdate = 14 December 2010<br />
|date= 24 May 2009<br />
|postscript=<br />
}}</ref><ref>{{cite web<br />
|url= http://article.gmane.org/gmane.comp.encryption.general/12588/<br />
|title= Bitcoin P2P e-cash paper<br />
}}</ref> on The Cryptography Mailing list at metzdowd.com<ref>[http://www.mail-archive.com/search?l=cryptography@metzdowd.com&q=from:%22Satoshi+Nakamoto%22 Satoshi's posts to Cryptography mailing list]</ref> describing the Bitcoin protocol.<br />
<br />
The Bitcoin network came into existence on 3 January 2009 with the release of the first Bitcoin client, [[wxBitcoin]], and the issuance of the first Bitcoins.<ref>{{cite web |title=Block 0 – Bitcoin Block Explorer |url=http://blockexplorer.com/block/000000000019d6689c085ae165831e934ff763ae46a2a6c172b3f1b60a8ce26f }}</ref><ref>{{cite web |url=http://www.mail-archive.com/cryptography@metzdowd.com/msg10142.html |title=Bitcoin v0.1 released}}</ref><ref>{{cite web |url=http://sourceforge.net/news/?group_id=244765 |title=SourceForge.net: Bitcoin}}</ref><br />
A year after, the initial exchange rates for Bitcoin were set by individuals on the bitcointalk forums.{{Citation needed|date=October 2012}} The most significant transaction involved a 10,000 BTC pizza.<ref>{{cite web|title=The Rise and Fall of Bitcoin|url=http://www.wired.com/magazine/2011/11/mf_bitcoin/|publisher=Wired|accessdate=13 October 2012}}</ref><br />
Today, the majority of Bitcoin exchanges occur on the [[MtGox]] Bitcoin exchange.<br />
<br />
In 2011, Wikileaks,<ref>{{cite news<br />
|last= Greenberg<br />
|first= Andy<br />
|url= http://blogs.forbes.com/andygreenberg/2011/06/14/wikileaks-asks-for-anonymous-bitcoin-donations/<br />
|title= WikiLeaks Asks For Anonymous Bitcoin Donations – Andy Greenberg – The Firewall – Forbes<br />
|publisher= Blogs.forbes.com<br />
|date= 2011-06-14<br />
|accessdate = 2011-06-22<br />
}}</ref> [[Freenet]],<ref>{{cite web<br />
|url= https://freenetproject.org/donate.html<br />
|title= /donate<br />
|publisher= The Freenet Project<br />
|date=<br />
|accessdate = 2011-06-22<br />
}}</ref> Singularity Institute,<ref>[http://singinst.org/donate/ SIAI donation page]</ref> Internet Archive,<ref>[http://www.archive.org/donate/index.php Internet Archive donation page]</ref> Free Software Foundation<ref>[https://my.fsf.org/donate/other/ Other ways to donate]</ref> and others, began to accept donations in Bitcoin. The Electronic Frontier Foundation did so for a while but has since stopped, citing concerns about a lack of legal precedent about new currency systems, and because they "generally don't endorse any type of product or service."<ref>{{cite web<br />
|url= https://www.eff.org/deeplinks/2011/06/eff-and-bitcoin<br />
|title= EFF and Bitcoin &#124; Electronic Frontier Foundation<br />
|publisher= Eff.org<br />
|date= 2011-06-14<br />
|accessdate = 2011-06-22<br />
}}</ref> Some small businesses had started to adopt Bitcoin. LaCie, a public company, accepts Bitcoin for its Wuala service.<ref>{{Cite web|url=http://www.wuala.com/en/bitcoin |title=Secure Online Storage – Backup. Sync. Share. Access Everywhere |publisher=Wuala |date= |accessdate = 2012-01-24}}</ref><br />
<br />
In 2012, BitPay reports of having over 1000 merchants accepting Bitcoin under its payment processing service.<ref>{{cite web|title=BitPay Signs 1,000 Merchants to Accept Bitcoin Payments|url=http://www.americanbanker.com/issues/177_176/bitpay-signs-1000-merchants-to-accept-bitcoin-payments-1052538-1.html|publisher=American Banker|accessdate=12 October 2012}}</ref><br />
<br />
==Administration==<br />
Bitcoin is administered through a decentralized peer-to-peer network.<ref name="whitepaper"/> Cryptographic technologies and the peer-to-peer network of computing power enables users to make and verify irreversible, instant online Bitcoin payments, without an obligation to trust and use centralized banking institutions and authorities. Dispute resolution services are not made directly available. Instead it is left to the users to verify and trust the parties they are sending money to through their choice of methods. <br />
<br />
Bitcoins are issued according to rules agreed to by the majority of the computing power within the Bitcoin network. The core rules describing the predictable issuance of Bitcoins to its verifying servers, a voluntary and competitive transaction fee system and the hard limit of no more than 21 million BTC issued in total.<ref name="whitepaper"/><br />
<br />
Bitcoin does not require a central bank, State,<ref>{{cite web<br />
|url= http://spectrum.ieee.org/computing/software/bitcoin-the-cryptoanarchists-answer-to-cash/3<br />
|title= Bitcoin: The Cryptoanarchists' Answer to Cash<br />
|publisher= IEEE.org<br />
|date= June 2012<br />
|accessdate = 2012-06-05<br />
}}</ref> or incorporated backers.<br />
<br />
==Services==<br />
:Main article: [[Wallet]]<br />
<br />
Bitcoins are sent and received through software and websites called wallets. They send and confirm transactions to the network through Bitcoin addresses, the identifiers for users' Bitcoin wallets within the network.<ref name="whitepaper"/><br />
<br />
===Bitcoin addresses===<br />
:Main article: [[Address]]<br />
<br />
Payments are made to Bitcoin "addresses": human-readable strings of numbers and letters around 33 characters in length, always beginning with the digit 1 or 3, as in the example of ''31uEbMgunupShBVTewXjtqbBv5MndwfXhb''.<br />
<br />
Users obtain new Bitcoin addresses from their Bitcoin software. Creating a new address can be a completely offline process and require no communication with the Bitcoin network.<br />
<br />
===Transaction fees===<br />
:Main article: [[Transaction fees]]<br />
Transaction fees may be included with any transfer of Bitcoins. {{As of|2012}} many transactions are processed in a way which makes no charge for the transaction. For transactions which consume or produce many coins (and therefore have a large data size), a small transaction fee is usually expected.<br />
<br />
===Confirmations===<br />
:Main article: [[Confirmation]]<br />
<br />
The network's software confirms a transaction when it records it in a block. Further blocks of transactions confirm it even further. After six confirmations/blocks, a transaction is confirmed beyond reasonable doubt.<br />
<br />
The network must store the whole transaction history inside the blockchain, which grows constantly as new records are added and never removed. Nakamoto conceived that as the database became larger, users would desire applications for Bitcoin that didn't store the entire database on their computer. To enable this, the blockchain uses a [[merkle tree]] to organize the transaction records in such a way that client software can locally delete portions of its own database it knows it will never need, such as earlier transaction records of Bitcoins that have changed ownership multiple times.<br />
<br />
==Economics==<br />
<br />
===Initial distribution===<br />
<br />
Bitcoin has no centralized issuing authority.<ref name="ars-06-08-11"><br />
{{Cite news<br />
|first= Thomas<br />
|last= Lowenthal<br />
|title= Bitcoin: inside the encrypted, peer-to-peer digital currency<br />
|newspaper= Ars Technica<br />
|date= 8 June 2011<br />
|url= http://arstechnica.com/tech-policy/news/2011/06/bitcoin-inside-the-encrypted-peer-to-peer-currency.ars<br />
}}</ref><ref>{{cite news<br />
|author= Sponsored by<br />
|url= http://www.economist.com/blogs/babbage/2011/06/virtual-currency<br />
|title= Virtual currency: Bits and bob<br />
|publisher= The Economist<br />
|date=<br />
|accessdate = 2011-06-22<br />
}}</ref><ref>{{cite web<br />
|last= Geere<br />
|first= Duncan<br />
|url= http://www.wired.co.uk/news/archive/2011-05/16/bitcoin-p2p-currency<br />
|title= Peer-to-peer currency Bitcoin sidesteps financial institutions (Wired UK)<br />
|publisher= Wired.co.uk<br />
|date=<br />
|accessdate = 2011-06-22<br />
}}</ref> The network is programmed to increase the money supply as a geometric series until the total number of Bitcoins reaches 21 million BTC.<ref name="Quantitative Analysis of the Full Bitcoin Transaction Graph"/> {{As of|2012|10}} slightly over 10 million of the total 21 million BTC had been created; the current total number created is available online.<ref>{{cite web<br />
|title= Total Number of Bitcoins in Existence<br />
|url= http://blockexplorer.com/q/totalbc<br />
|work= Bitcoin Block Explorer<br />
|accessdate = 2012-10-03<br />
}}</ref> By 2013 half of the total supply will have been generated, and by 2017, three-quarters will have been generated. To ensure sufficient granularity of the [[money supply]], clients can divide each BTC unit down to eight decimal places (a total of 2.1&nbsp;×&nbsp;10<sup>15</sup> or 2.1 quadrillion units).<ref name="lwn">{{Cite news<br />
|author= Nathan Willis<br />
|date= 2010-11-10<br />
|title= Bitcoin: Virtual money created by CPU cycles<br />
|publisher= LWN.net<br />
|url= http://lwn.net/Articles/414452/<br />
}}</ref><br />
<br />
The network {{As of|2012|lc=on}} required over one million times more work for confirming a block and receiving an award (25 BTC {{As of|2012|2|lc=on}}) than when the first blocks were confirmed.<br />
The difficulty is automatically adjusted every 2016 blocks based on the time taken to find the previous 2016 blocks such that one block is created roughly every 10 minutes.<br />
<br />
Those who chose to put computational and electrical resources toward mining early on had a greater chance at receiving awards for block generations. This served to make available enough processing power to process blocks. Indeed, without miners there are no transactions and the Bitcoin economy comes to a halt.<br />
<br />
===Exchange rate===<br />
Prices fluctuate relative to goods and services more than more widely accepted currencies;<br />
the price of a Bitcoin is not static.<br />
<br />
In August 2012, 1 BTC traded at around $10.00 USD. Taking into account the total number of Bitcoins mined, the monetary base of the Bitcoin network stands at over 110 million USD.<ref>[http://www.bitcoinwatch.com/ http://www.bitcoinwatch.com/] Bitcoin statistics</ref><br />
<br />
== Security ==<!--Please keep as starting template--><br />
:Main article: [[Weaknesses]]<br />
<br />
In the history of bitcoin, there have been a few [[incidents]], caused by problematic as well as malicious transactions. In the worst such incident, and the only one of its type, a person was able to pretend that he had a practically infinite supply of bitcoins, for almost 9 hours.<br />
<br />
Bitcoin relies, among other things, on [http://en.wikipedia.org/wiki/Public-key_cryptography public key cryptography] and thus may be vulnerable to [http://en.wikipedia.org/wiki/Elliptic_curve_cryptography#Quantum_computing_attacks quantum computing attacks] if and when practical quantum computers can be constructed.<br />
<br />
If multiple different software packages, whose usage becomes widespread on the Bitcoin network, disagree on the protocol and the rules for transactions, this could potentially cause a fork in the block chain, with each faction of users being able to accept only their own version of the history of transactions. This could influence the price of bitcoins.<br />
<br />
A global, organized campaign against the currency or the software could also influence the demand for bitcoins, and thus the exchange price.<br />
<br />
==Bitcoin mining==<br />
:Main article: [[Mining]]<br />
<br />
Bitcoin mining nodes are responsible for managing the Bitcoin network.<br />
<br />
Bitcoins are awarded to Bitcoin nodes known as "miners" for the solution to a difficult [[proof-of-work]] problem which confirms transactions and prevents double-spending. This incentive, as the Nakamoto white paper describes it, encourages "nodes to support the network, and provides a way to initially distribute coins into circulation, since no central authority issues them."<ref name="whitepaper" /><br />
<br />
Nakamoto compared the generation of new coins by expending CPU time and electricity to gold miners expending resources to add gold to circulation.<ref name="whitepaper"/><br />
<br />
===Node operation===<br />
<br />
The node software for the Bitcoin network is based on peer-to-peer networking, digital signatures and cryptographic proof to make and verify transactions. Nodes broadcast transactions to the network, which records them in a public record of all transactions, called the ''blockchain'', after validating them with a [[proof-of-work|proof-of-work system]].<br />
<br />
Satoshi Nakamoto designed the first Bitcoin node and mining software<ref name="processors">{{Cite news<br />
|last= Davis<br />
|first= Joshua<br />
|title= The Crypto-Currency<br />
|url= http://www.wired.com/magazine/2011/11/mf_bitcoin/all<br />
|accessdate = 11 November 2011<br />
|newspaper= Wired Magazine<br />
|date= 10 November 2011<br />
}}</ref> and developed the majority of the first implementation, Bitcoind, from 2007 to mid-2010.<ref name="code_start">{{cite web<br />
|url= https://bitcointalk.org/index.php?topic=13.msg46#msg46<br />
|title= Questions about Bitcoin<br />
|publisher= Bitcoin forum<br />
|date= 2009-12-10<br />
}}</ref><br />
<br />
Node implementations include core software such as Bitcoind/Bitcoin-Qt, [[libbitcoin]], [[cbitcoin]]<ref>{{Cite web|title=cbitcoin|url=https://github.com/MatthewLM/cbitcoin|accessdate=3 October 2012}}</ref> and BitCoinJ.<ref>{{cite web<br />
|url= http://news.slashdot.org/story/11/03/23/0210207/Google-Engineer-Releases-Open-Source-Bitcoin-Client<br />
|title= Google Engineer Releases Open Source Bitcoin Client<br />
|author= angry tapir, timothy<br />
|date= 23 March 2011<br />
|publisher= Slashdot<br />
|accessdate = 2011-05-18<br />
}}</ref><ref>{{cite web<br />
|url= http://www.javaworld.com/javaworld/jw-01-2012/120110-bitcoin-for-beginners-3.html?page=1<br />
|title= Bitcoin for beginners: The BitcoinJ API<br />
|author= Dirk Merkel<br />
|date= 10 January 2012<br />
|publisher= JavaWorld<br />
|accessdate = 2012-08-03<br />
}}</ref><br />
<br />
Every node in the Bitcoin network collects all the unacknowledged transactions it knows of in a file called a ''block'', which also contains a reference to the previous valid block known to that node. It then appends a [[nonce]] value to this previous block and computes the SHA-256 cryptographic hash of the block and the appended nonce value. The node repeats this process until it adds a nonce that allows for the generation of a hash with a value lower than a specified ''target''. Because computers cannot practically reverse the hash function, finding such a nonce is hard and requires on average a predictable amount of repetitious trial and error. This is where the ''[[proof-of-work]]'' concept comes in to play. When a node finds such a solution, it announces it to the rest of the network. Peers receiving the new solved block validate it by computing the hash and checking that it really starts with the given number of zero bits (i.e., that the hash is within the target). Then they accept it and add it to the chain.<br />
<br />
===Mining rewards===<br />
In addition to receiving the pending transactions confirmed in the block, a generating node adds a ''generate'' transaction, which awards new Bitcoins to the operator of the node that generated the block. The system sets the payout of this generated transaction according to its defined inflation schedule. The miner that generates a block also receives the fees that users have paid as an incentive to give particular transactions priority for faster confirmation.<br />
<br />
The network never creates more than a 50&nbsp;BTC reward per block and this amount will decrease over time towards zero, such that no more than 21 million BTC will ever exist.<ref name="lwn" /> As this payout decreases, the incentive for users to run block-generating nodes is intended to change to earning [[#Transaction fees|transaction fees]].<br />
<br />
===Mining pools===<br />
:Main article: [[Pooled mining]]<br />
<br />
Bitcoin users often pool computational effort to increase the stability of the collected fees and subsidy they receive.<ref name="We Use Coins Mining">{{cite web|title=About Bitcoin Mining|url=http://www.weusecoins.com/mining-guide.php|publisher=We Use Coins|accessdate=18 October 2012}}</ref><br />
<br />
===Mining difficulty===<br />
:Main article: [[Difficulty]]<br />
<br />
In order to throttle the creation of blocks, the difficulty of generating new blocks is adjusted over time. If mining output increases or decreases, the difficulty increases or decreases accordingly.<br />
<br />
The adjustment is done by changing the threshold that a hash is required to be less than. A lower threshold means fewer possible hashes can be accepted, and thus a higher degree of difficulty. The target rate of block generation is one block every 10 minutes, or 2016 blocks every two weeks. Bitcoin changes the difficulty of finding a valid block every 2016 blocks, using the difficulty that would have been most likely to cause the prior 2016 blocks to have taken two weeks to generate, according to the timestamps on the blocks. Technically, this is done by modeling the generation of Bitcoins as Poisson process. All nodes perform and enforce the same difficulty calculation.<br />
<br />
Difficulty is intended as an automatic stabilizer allowing mining for Bitcoins to remain profitable in the long run for the most efficient miners, independently of the fluctuations in demand of Bitcoin in relation to other currencies.<br />
<br />
===Mining hardware===<br />
:Main article: [[Mining Hardware Comparison]]<br />
<br />
Bitcoins used to be mined through Intel/AMD CPUs. {{As of | 2012}}, mining has gradually moved to [[GPU]] and [[FPGA]] hardware.<ref name="bitcoinmag-butterfly" /> [[Application-specific integrated circuit|ASIC]]-based hardware for Bitcoin mining has been announced by several manufacturers who intend to ship products from late 2012 to early 2013.<ref name="bitcoinmag-butterfly">{{Cite web|title=Bitpay Breaks Daily Volume Record with Butterfly ASIC mining release|url=http://bitcoinmagazine.net/bitpay-breaks-daily-volume-record-with-butterfly-asic-mining-release/|publisher=Bitcoin Magazine}}</ref><br />
<br />
==Concerns==<br />
<br />
===As an investment===<br />
Bitcoin describes itself as an experimental digital currency. Reuben Grinberg has noted that Bitcoin's supporters have argued that Bitcoin is neither a security or an investment because it fails to meet the criteria for either category.<ref name="grinberg">{{cite web | url=http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1817857 | title=Bitcoin: An Innovative Alternative Digital Currency | publisher=SSRN | date=9 December 2011 | accessdate=4 December 2012 | author=Grinberg, Reuben}}</ref> Although it is a virtual currency, some people see it as an investment<ref name="cnbc">{{cite web | url=http://www.cnbc.com/id/45030812/The_Pros_And_Cons_Of_Biting_on_Bitcoins | title=The Pros And Cons Of Biting on Bitcoins | publisher=CNBC | date=23 November 2011 | accessdate=4 December 2012 | author=Gustke, Constance}}</ref> or accuse it of being a form of investment fraud known as a Ponzi scheme.<ref>{{cite web |url=http://www.theregister.co.uk/2011/06/08/bitcoin_under_attack/ |title=US senators draw a bead on Bitcoin |last1=Chirgwin |first1=Richard |date=8 June 2011 |publisher=The Register |accessdate=14 November 2012}}</ref><ref>{{cite web |url=http://uk.reuters.com/article/2012/04/01/uk-traders-bitcoin-idUKBRE8300JL20120401 |title=Bitcoin, the City traders' anarchic new toy |last1=O'Leary |first1=Naomi |date=2 April 2012 |publisher=Reuters |accessdate=14 November 2012}}</ref> A report by the European Central Bank, using the U.S. Securities and Exchange Commission's definition of a Ponzi scheme, found that the use of bitcoins shares some characteristics with Ponzi schemes, but also has characteristics of its own which contradict several common aspects of Ponzi schemes.<ref name="ecbreport">{{cite web | url=http://www.ecb.europa.eu/pub/pdf/other/virtualcurrencyschemes201210en.pdf | title=Virtual Currency Schemes | publisher=European Central Bank | date=October 2012 | accessdate=4 December 2012}}</ref><br />
<br />
===Privacy===<br />
Because transactions are broadcast to the entire network, they are inherently public. Unlike regular banking,<ref>{{cite web<br />
|url= http://spectrum.ieee.org/computing/software/bitcoin-the-cryptoanarchists-answer-to-cash/0<br />
|title= Bitcoin: The Cryptoanarchists' Answer to Cash<br />
|publisher= IEEE.org<br />
|date= June 2012<br />
|accessdate = 2012-06-05<br />
}}</ref> which preserves customer privacy by keeping transaction records private, loose transactional privacy is accomplished in Bitcoin by using many unique addresses for every wallet, while at the same time publishing all transactions. As an example, if Alice sends 123.45 BTC to Bob, the network creates a public record that allows anyone to see that 123.45 has been sent from one address to another. However, unless Alice or Bob make their ownership of these addresses known, it is difficult for anyone else to connect the transaction with them. However, if someone connects an address to a user at any point they could follow back a series of transactions as each participant likely knows who paid them and may disclose that information on request or under duress.<br />
<br />
It can be difficult to associate Bitcoin identities with real-life identities.<ref name="An Analysis of Anonymity in the Bitcoin System">Fergal Reid and Martin Harrigan (24 July 2011). [http://anonymity-in-bitcoin.blogspot.com/2011/07/bitcoin-is-not-anonymous.html An Analysis of Anonymity in the Bitcoin System]. An Analysis of Anonymity in the Bitcoin System.</ref> This property makes Bitcoin transactions attractive to sellers of illegal products.<ref name="Forbes">Andy Greenberg (20 April 2011). [http://www.forbes.com/forbes/2011/0509/technology-psilocybin-bitcoins-gavin-andresen-crypto-currency.html Crypto Currency]. Forbes Magazine.</ref><ref>{{cite web<br />
|last= Madrigal<br />
|first= Alexis<br />
|title= Libertarian Dream? A Site Where You Buy Drugs With Digital Dollars<br />
|publisher= The Atlantic Monthly<br />
|date= 2011-06-01<br />
|url= http://www.theatlantic.com/technology/archive/2011/06/libertarian-dream-a-site-where-you-buy-drugs-with-digital-dollars/239776/<br />
|accessdate = 2011-06-05<br />
}}</ref><br />
<br />
===Illicit use===<br />
<br />
====Cracking====<br />
The cracking organization "LulzSec" accepted donations in Bitcoin, having said that the group "needs Bitcoin donations to continue their hacking efforts".<ref name="CNET">{{cite web<br />
|last= Reisinger<br />
|first= Don<br />
|url= http://news.cnet.com/8301-13506_3-20070268-17/senators-target-bitcoin-currency-citing-drug-sales/<br />
|title= Senators target Bitcoin currency, citing drug sales &#124; The Digital Home – CNET News<br />
|publisher= News.cnet.com<br />
|date= 2011-06-09<br />
|accessdate = 2011-06-22<br />
}}</ref><ref>{{cite news<br />
|last= Olson<br />
|first= Parmy<br />
|url= http://blogs.forbes.com/parmyolson/2011/06/06/lulzsec-hackers-posts-sony-dev-source-code-get-7k-donation/<br />
|title= LulzSec Hackers Post Sony Dev. Source Code, Get $7K Donation – Parmy Olson – Disruptors – Forbes<br />
|publisher= Blogs.forbes.com<br />
|date= 6 June 2011<br />
|accessdate = 2011-06-22<br />
}}</ref><br />
<br />
====Silk Road====<br />
[[Silk Road]] is an anonymous black market that uses only the Bitcoin.<ref name="npr-06-12-11"><br />
{{Cite news<br />
|url= http://www.npr.org/2011/06/12/137138008/silk-road-not-your-fathers-amazon-com<br />
|date= 12 June 2011<br />
|newspaper= NPR<br />
|title= Silk Road: Not Your Father's Amazon.com<br />
|author= Staff<br />
}}</ref> <br />
<br />
In a 2011 letter to Attorney General Eric Holder and the Drug Enforcement Administration, senators Charles Schumer of New York and Joe Manchin of West Virginia called for an investigation into Silk Road and the Bitcoin.<ref name="npr-06-12-11"/><br />
Schumer described the use of Bitcoins at Silk Road as a form of money laundering.<ref name="ars-06-08-11"/><br />
<br />
====Botnet mining====<br />
In June 2011, Symantec warned about the possibility of botnets engaging in covert "mining" of Bitcoins,<ref>{{Cite web|author=Updated: 17 June 2011 | Translations available: 日本語 |url=http://www.symantec.com/connect/blogs/bitcoin-botnet-mining |title=Bitcoin Botnet Mining &#124; Symantec Connect Community |publisher=Symantec.com |date=2011-06-17 |accessdate = 2012-01-24}}</ref><ref>{{Cite web|url=http://www.zdnet.com/blog/security/researchers-find-malware-rigged-with-bitcoin-miner/8934 |title=Researchers find malware rigged with Bitcoin miner |publisher=ZDNet |date=2011-06-29 |accessdate = 2012-01-24}}</ref> consuming computing cycles, using extra electricity and possibly increasing the temperature of the computer. Later that month, the Australian Broadcasting Corporation caught an employee using the company's servers to generate Bitcoins without permission.<ref>{{Cite web|url=http://thenextweb.com/au/2011/06/23/abc-employee-caught-mining-for-bitcoins-on-company-servers/ |title=ABC employee caught mining for Bitcoins on company servers |publisher=The Next Web |date=2011-06-23 |accessdate = 2012-01-24}}</ref> Some malware also uses the parallel processing capabilities of the GPUs built into many modern-day video cards.<ref>{{Cite news |url=http://www.theregister.co.uk/2011/08/16/gpu_bitcoin_brute_forcing/ |title=Malware mints virtual currency using victim's GPU |date=16 August 2011<!-- 20:00 GMT -->|first=Dan |last=Goodin }}</ref> In mid August 2011, Bitcoin miner botnets were found;<ref>{{Cite web|url=http://www.infosecurity-magazine.com/view/20211/researcher-discovers-distributed-bitcoin-cracking-trojan-malware/ |title=Infosecurity – Researcher discovers distributed bitcoin cracking trojan malware |publisher=Infosecurity-magazine.com |date=2011-08-19 |accessdate = 2012-01-24}}</ref> trojans infecting Mac OS X have also been uncovered.<ref>{{Cite web|url=http://www.techworld.com.au/article/405849/mac_os_x_trojan_steals_processing_power_produce_bitcoins |title=Mac OS X Trojan steals processing power to produce Bitcoins – sophos, security, malware, Intego – Vulnerabilities – Security |publisher=Techworld |date=2011-11-01 |accessdate = 2012-01-24}}</ref><br />
<br />
===Theft and fraud===<br />
On 19 June 2011, a security breach of the Mt.Gox (an acronym for ''M''agic: ''T''he ''G''athering ''O''nline E''x''change, its original purpose) Bitcoin Exchange caused the price of a Bitcoin to briefly drop to US$0.01 on the Mt.Gox exchange (though it remained unaffected on other exchanges) after a hacker allegedly used credentials from a Mt.Gox auditor's compromised computer to illegally transfer a large number of Bitcoins to him- or herself and sell them all, creating a massive "ask" order at any price. Within minutes the price rebounded to over $15 before Mt.Gox shut down their exchange and canceled all trades that happened during the hacking period.<ref>[https://mtgox.com/press_release_20110630.html Clarification of Mt Gox Compromised Accounts and Major Bitcoin Sell-Off]</ref><ref>[http://www.youtube.com/watch?v=T1X6qQt9ONg YouTube. Bitcoin Report]</ref> The exchange rate of Bitcoins quickly returned to near pre-crash values.<ref name="mick">Jason Mick, 19 June 2011, [http://www.dailytech.com/Inside+the+MegaHack+of+Bitcoin+the+Full+Story/article21942.htm Inside the Mega-Hack of Bitcoin: the Full Story], DailyTech</ref><ref>Timothy B. Lee, 19 June 2011, [http://arstechnica.com/tech-policy/news/2011/06/bitcoin-price-plummets-on-compromised-exchange.ars Bitcoin prices plummet on hacked exchange], Ars Technica</ref><ref>Mark Karpeles, 20 June 2011, [https://support.mtgox.com/entries/20208066-huge-bitcoin-sell-off-due-to-a-compromised-account-rollback Huge Bitcoin sell off due to a compromised account – rollback], Mt.Gox Support</ref><ref name="register1">{{Cite news<br />
|title= Bitcoin collapses on malicious trade – Mt Gox scrambling to raise the Titanic<br />
|url= http://www.theregister.co.uk/2011/06/19/bitcoin_values_collapse_again/<br />
|date= 2011-06-19<br />
|author= Chirgwin, Richard<br />
|publisher= The Register<br />
}}</ref> Accounts with the equivalent of more than USD 8,750,000 were affected.<ref name="mick" /><br />
<br />
In July 2011, The operator of Bitomat, the third largest Bitcoin exchange, announced that he lost access to his wallet.dat file with about 17,000 BitCoins (roughly equivalent to 220,000 USD at that time). He announced that he would sell the service for the missing amount, aiming to use funds from the sale to refund his customers.<ref>[http://siliconangle.com/blog/2011/08/01/third-largest-bitcoin-exchange-bitomat-lost-their-wallet-over-17000-bitcoins-missing/ Third Largest Bitcoin Exchange Bitomat Lost Their Wallet, Over 17,000 Bitcoins Missing]. SiliconAngle</ref><br />
<br />
In August 2011, MyBitcoin, one of popular Bitcoin transaction processors, declared that it was hacked, which resulted in it being shut down, with paying 49% on customer deposits, leaving more than 78,000 BitCoins (roughly equivalent to 800,000 USD at that time) unaccounted for.<ref>[http://betabeat.com/2011/08/mybitcoin-spokesman-finally-comes-forward-what-did-you-think-we-did-after-the-hack-we-got-shitfaced/ MyBitcoin Spokesman Finally Comes Forward: “What Did You Think We Did After the Hack? We Got Shitfaced”]. BetaBeat</ref><ref>[http://betabeat.com/2011/08/search-for-owners-of-mybitcoin-loses-steam/ Search for Owners of MyBitcoin Loses Steam]. BetaBeat</ref><br />
<br />
In early August 2012, a lawsuit was filed in San Francisco court against Bitcoinica, claiming about 460,000 USD from the company. Bitcoinica was hacked twice in 2012, which led to allegations of neglecting the safety of customers' money and cheating them out of withdrawal requests.<ref>[http://arstechnica.com/tech-policy/2012/08/bitcoinica-users-sue-for-460k-in-lost-bitcoins/ Bitcoinica users sue for $460k in lost Bitcoins]. Arstechnica</ref><ref>[http://spectrum.ieee.org/tech-talk/computing/networks/first-bitcoin-lawsuit-filed-in-san-francisco First Bitcoin Lawsuit Filed In San Francisco]. IEEE Spectrum</ref><br />
<br />
In late August 2012, Bitcoin Savings and Trust was shut down by the owner, allegedly leaving around $5.6 million in debts; this led to allegations of the operation being a Ponzi scheme.<ref>{{Cite web|title=Bitcoin ponzi scheme – investors lose $5 million USD in online hedge fund|url=http://rt.com/usa/news/investors-currency-digital-fund-868/|publisher=RT}}</ref><ref>{{Cite web|last=Jeffries|first=Adrianne|title=Suspected multi-million dollar Bitcoin pyramid scheme shuts down, investors revolt|url=http://www.theverge.com/2012/8/27/3271637/bitcoin-savings-trust-pyramid-scheme-shuts-down|publisher=The Verge}}</ref><ref>{{Cite web|last=Mick|first=Jason|title="Pirateat40" Makes Off $5.6M USD in BitCoins From Pyramid Scheme|url=http://www.dailytech.com/Pirateat40+Makes+Off+56M+USD+in+BitCoins+From+Pyramid+Scheme/article25538.htm|publisher=DailyTech}}</ref><ref>[http://pandodaily.com/2012/08/31/bitcoin-how-a-virtual-currency-became-real-with-a-5-6m-fraud/ Bitcoin: How a Virtual Currency Became Real with a $5.6M Fraud]. PandoDaily</ref> In September 2012, it was reported that U.S. Securities and Exchange Commission has started an investigation on the case.<ref>[http://blogs.telegraph.co.uk/technology/willardfoxton2/100007836/bitcoin-pirate-scandal-sec-steps-in-amid-allegations-that-the-whole-thing-was-a-ponzi-scheme/ Bitcoin 'Pirate' scandal: SEC steps in amid allegations that the whole thing was a Ponzi scheme ]. The Telegraph</ref><br />
<br />
In September 2012, Bitfloor Bitcoin exchange also reported being hacked, with 24,000 BitCoins (roughly equivalent to 250,000 USD) stolen. As a result, Bitfloor suspended operations.<ref>[http://www.bbc.co.uk/news/technology-19486695 Bitcoin theft causes Bitfloor exchange to go offline]. BBC</ref><ref>[http://www.theverge.com/2012/9/5/3293375/bitfloor-bitcoin-exchange-suspended-theft Bitcoin exchange BitFloor suspends operations after $250,000 theft Bitcoin exchange BitFloor suspends operations after $250,000 theft]. The Verge</ref> The same month, Bitfloor resumed operations, with its founder saying that he reported the theft to FBI, and that he is planning to repay the victims, though the time frame for such repayment is unclear.<ref>[http://www.pcworld.com/article/2010586/bitcoin-exchange-back-online-after-hack.html?tk=rel_news Bitcoin exchange back online after hack]. PCWorld</ref><br />
<br />
===Taxation===<br />
In September 2012, the Intra-European Organization of Tax Administrations (IOTA), in Tbilisi, Georgia, held a workshop titled "Auditing Individuals and Legal Entities in the Use of e-Money." The workshop was attended by representatives from 23 countries.<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> Jerry Taylor, IOTA's technical taxation expert, said, "There's an awful lot happening on the Internet environment which is fascinating at the moment and introducing new challenges for auditors when it comes to virtual currency."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> Bitcoin was mentioned during the workshop.<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> <br />
<br />
Matthew Elias, founder of the [[Cryptocurrency Legal Advocacy Group]] (CLAG) published "Staying Between the Lines: A Survey of U.S. Income Taxation and its Ramifications on Cryptocurrencies", which discusses "the taxability of cryptocurrencies such as bitcoin."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> CLAG "stressed the importance for taxpayers to determine on their own whether taxes are due on a bitcoin-related transaction based on whether one has "experienced a realization event."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> Such examples are "when a taxpayer has provided a service in exchange for bitcoins, a realization event has probably occurred, and any gain or loss would likely be calculated using fair market values for the service provided."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref><br />
<br />
[[Peter Vessenes]], [[Bitcoin Foundation|Bitcoin Foundation's]] executive director, said, since the foundation is trying to pay for everything in bitcoin, including salaries, "How do we W-2 someone for their bitcoins? Do we mark-to-market every time a transfer happens? Payroll companies cringe."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> The Bitcoin Foundation hopes "to push for solid guidance about its legal and tax treatment." [[Patrick Murck]], legal counsel for the Bitcoin Foundation, said he would like "to help regulators understand the technology better so they can make better decisions."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> Murck said, "Bitcoin has the potential to become much more than a niche currency, but it needs the guidance and understanding of regulators." and "The full potential of bitcoin could be realized through clearer guidelines and a better understanding by financial and tax regulators." and "Part of making that happen is to talk to regulators, the IRS, and tax professionals and helping them understand that bitcoin is not this nefarious thing, it's just software, it's a community, and there's nothing inherently nefarious about either of those things."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref><br />
<br />
==See Also==<br />
* [[Introduction]]<br />
* [[Getting started]]<br />
* [[Using_Bitcoin|Detailed tutorial]]<br />
* [[How bitcoin works]]<br />
* [[FAQ]]<br />
<br />
==References==<br />
<references /><br />
<br />
[[Category:Digital currencies]]</div>Anymhttps://tests.bitcoin.it/w/index.php?title=Template:MainPage_Intro&diff=33762Template:MainPage Intro2012-12-14T20:43:42Z<p>Anym: </p>
<hr />
<div>[[Image:Bitcoin world map.png|left|200px|Bitcoin usage worldwide.]]<br />
<br />
'''Bitcoin''' is an experimental, decentralized [[digital currency]] that enables instant payments to anyone, anywhere in the world. Bitcoin uses peer-to-peer technology to operate with no central authority: managing transactions and issuing money are carried out collectively by the network. <br />
<br />
The original Bitcoin software by [[Satoshi Nakamoto]] was released under the MIT license.<br />
Most client software, derived or "from scratch", also use open source licensing.<br />
<br />
Bitcoin is one of the first implementations of a concept called ''crypto-currency'' which was first described in 1998 by Wei Dai on the cypherpunks mailing list. Building upon the notion that money is any object, or any sort of record, accepted as payment for goods and services and repayment of debts in a given country or socio-economic context, Bitcoin is designed around the idea of using cryptography to control the creation and transfer of money, rather than relying on central authorities.<br />
<br />
:''Sourced from [http://bitcoin.org Bitcoin.org] and [[wikipedia:Bitcoin|Wikipedia]].''<br />
<br />
'''Bitcoin-Qt:'''<br />
{|style="background-color: inherit;"<br />
|<br />
* [http://sourceforge.net/projects/bitcoin/files/Bitcoin/bitcoin-0.7.2/bitcoin-0.7.2-win32-setup.exe/download '''Windows (exe)'''] 9.3 MB [http://sourceforge.net/projects/bitcoin/files/Bitcoin/bitcoin-0.7.2/bitcoin-0.7.2-win32.zip/download '''(zip)'''] 13 MB<br />
* [http://sourceforge.net/projects/bitcoin/files/Bitcoin/bitcoin-0.7.2/bitcoin-0.7.2-linux.tar.gz/download '''GNU/Linux'''] 12 MB<br />
* [http://sourceforge.net/projects/bitcoin/files/Bitcoin/bitcoin-0.7.2/bitcoin-0.7.2-macosx.dmg/download '''Mac OS X'''] 13 MB<br />
|}<br />
<br />
[http://bitcoin.org/clients.html More Bitcoin Client Software]</div>Anymhttps://tests.bitcoin.it/w/index.php?title=Help:Introduction&diff=33696Help:Introduction2012-12-12T20:12:06Z<p>Anym: /* Capitalization / Nomenclature */</p>
<hr />
<div>The purpose of this page is to provide a general overview of the Bitcoin system and economy.<br />
<br />
==Basic Concepts==<br />
<br />
===Currency===<br />
<br />
Alice wants to buy the [http://www.grasshillalpacas.com/alpacaproductsforbitcoinoffer.html Alpaca socks] which Bob has for sale. In return, she is to provide something of equal value to Bob. The most efficient way to do this is by using a medium of exchange that Bob accepts which would be classified as currency. Currency makes trade easier by eliminating the need for [http://en.wikipedia.org/wiki/Coincidence_of_wants coincidence of wants] required in other systems of trade such as barter. Currency adoption and acceptance can be global, national, or in some cases local or community-based.<br />
<br />
===Banks===<br />
<br />
Alice needs not provide currency to Bob in-person. She may instead transfer this value by first entrusting her currency to a bank who promises to store and protect Alice's currency notes. The bank gives Alice a written promise (called a "bank statement") that entitles her to withdraw the same number of currency bills that she deposited. Since the money is still Alice's, she is entitled to do with it whatever she pleases, and the bank (like most banks), for a small fee, will do Alice the service of passing on the currency bills to Bob on her behalf. This is done by Alice's bank by giving the dollar bills to Bob's bank and informing them that the money is for Bob, who will then see the amount the next time he checks his balance or receives his bank statement.<br />
<br />
Since banks have many customers, and bank employees require money for doing the job of talking to people and signing documents, banks in recent times have been using machines such as ATMs and web servers that do the job of interacting with customers instead of paid bank employees. The task of these machines is to learn what each customer wants to do with their money and, to the extent that it is possible, act on what the customer wants (for example, ATMs can hand out cash). Customers can always know how much money they have in their accounts, and they are confident that the numbers they see in their bank statements and on their computer screens accurately reflect the number of dollars that they can get from the bank on demand. They can be so sure of this that they can accept those numbers in the same way they accept paper banknotes (this is similar to the way people started accepting paper dollars when they had been accepting gold or silver).<br />
<br />
Such a system has several disadvantages:<br />
* It is costly. [https://en.wikipedia.org/wiki/Electronic_funds_transfer EFTs] in Europe can cost 25 euros. Credit transactions can cost several percent of the transaction.<br />
* It is slow. Checking and low cost wire services take days to complete.<br />
* In most cases, it cannot be anonymous.<br />
* Accounts can be frozen. <br />
* Banks and other payment processors like PayPal, Visa, and Mastercard may refuse to process payments for legal entities. <br />
<br />
<br />
Bitcoin is a system of owning and voluntarily transferring amounts of so-called ''bitcoins'', in a manner similar to an on-line banking, but pseudonymously and without reliance on a central authority to maintain account balances. If bitcoins are valuable, it is because they are useful and limited in supply.<br />
<br />
==Bitcoin Basics==<br />
<br />
===Creation of coins===<br />
The creation of coins must be limited for the currency to have any value. <br />
<br />
New coins are slowly [[Mining|mined]] into existence by following a mutually agreed-upon set of rules. A user [[Mining|mining]] bitcoins is running a software program that searches intensively for a solution to a very computationally expensive math problem whose difficulty is precisely known. The cost function (the computationally expensive math problem) that miners spend their time on is the [http://en.wikipedia.org/wiki/Hashcash Hashcash cost-function]. In bitcoin the hashcash difficulty is automatically adjusted regularly so that the number of solutions found globally, by everyone, is constant: an average of 6 per hour. When a solution is found, the user may tell everyone of the existence of this newly found solution, along with other information, packaged together in what is called a "[[Block|block]]". <br />
<br />
Blocks contain 50 bitcoins at present. This amount, known as the block reward, is an incentive for people to perform the computation work required for generating blocks. Roughly every 4 years, the number of bitcoins that can be "mined" in a block reduces by 50%. Any block that is created by a malicious user that does not follow this rule (or any other rules) will be rejected by everyone else. In the end, no more than 21 million bitcoins will ever exist. <br />
<br />
Because the block reward will decrease over the long term, miners will some day instead pay for their hardware and electricity costs by collecting [[Transaction_fee|transaction fees]]. The sender of money may voluntarily pay a small transaction fee which will be kept by whomever finds the next block. Paying this fee will encourage miners to include the transaction in a block more quickly.<br />
<br />
===Sending payments===<br />
To guarantee that a third-party, let's call her Eve, cannot spend other people's bitcoins by creating transactions in their names, Bitcoin uses [[Wikipedia:Public-key_cryptography|public key cryptography]] to make and verify digital signatures. In this system, each person, such as Alice or Bob, has one or more addresses each with an associated pair of public and private keys that they may hold in a [[Wallet|wallet]]. Only the user with the private key can sign a transaction to give some of their bitcoins to somebody else, but anyone can validate the signature using that user’s public key.<br />
<br />
Suppose Alice wants to send a bitcoin to Bob.<br />
* Bob sends his address (from which the public key can be derived) to Alice.<br />
* Alice adds Bob’s public key and the amount of bitcoins to transfer to a message: a 'transaction' message.<br />
* Alice signs the transaction with her private key.<br />
* Alice broadcasts the transaction on the Bitcoin network for all to see.<br />
<br />
(Only the first two steps require human action. The rest is done by the Bitcoin client software.)<br />
<br />
Looking at this transaction from the outside, anyone who knows that these addresses belong to Alice and Bob can see that Alice has agreed to transfer the amount to Bob, because nobody else has Alice's private key. Alice would be foolish to give her private key to other people, as this would allow them to sign transactions in her name, removing funds from her control.<br />
<br />
Later on, when Bob wishes to transfer the same bitcoins to Charley, he will do the same thing:<br />
* Charlie sends Bob his address.<br />
* Bob adds Charlie's public key and the amount of bitcoins to transfer to a message: a 'transaction' message.<br />
* Bob signs the transaction with his private key.<br />
* Bob broadcasts the transaction on the Bitcoin network for all to see. <br />
<br />
Only Bob can do this because only he has the private key that can create a valid signature for the transaction.<br />
<br />
Eve cannot change whose coins these are by replacing Bob’s public key with her public key, because Alice signed the transfer to Bob using her own private key, which is kept secret from Eve, and instructing that the coins which were hers now belong to Bob. So if Charlie accepts that the original coin was in the hands of Alice, he will also accept the fact that this coin was later passed to Bob, and now Bob is passing this same coin to him.<br />
<br />
===Preventing [[double-spending]]===<br />
The process described above does not prevent Alice from using the same bitcoins in more than one transaction. The following process does; this is the primary innovation behind Bitcoin.<br />
<br />
* Details about the [[Transactions|transaction]] are [[Network|sent and forwarded]] to all or as many other computers as possible.<br />
* A constantly growing chain of [[Blocks|blocks]] that contains a record of all transactions is collectively maintained by all computers (each has a full copy).<br />
* To be accepted in the chain, transaction blocks must be valid and must include [[proof of work]] (one block generated by the network every 10 minutes).<br />
* Blocks are chained in a way so that, if any one is modified, all following blocks will have to be recomputed.<br />
* When multiple valid continuations to this chain appear, only the longest such branch is accepted and it is then extended further.<br />
<br />
When Bob sees that his transaction has been included in a block, which has been made part of the single longest and fastest-growing block chain (extended with significant computational effort), he can be confident that the transaction by Alice has been accepted by the computers in the network and is permanently recorded, preventing Alice from creating a second transaction with the same coin. In order for Alice to thwart this system and double-spend her coins, she would need to muster more computing power than all other Bitcoin users combined.<br />
<br />
===Anonymity===<br />
When it comes to the Bitcoin network itself, there are no "accounts" to set up, and no e-mail addresses, user-names or passwords are required to hold or spend bitcoins. Each balance is simply associated with an address and its public-private key pair. The money "belongs" to anyone who has the private key and can sign transactions with it. Moreover, those keys do not have to be registered anywhere in advance, as they are only used when required for a transaction. Transacting parties do not need to know each other's identity in much the same way that a store owner does not know a cash-paying customer's name.<br />
<br />
A [[Address|Bitcoin address]] mathematically corresponds to a public key and looks like this:<br />
<br />
:1PC9aZC4hNX2rmmrt7uHTfYAS3hRbph4UN<br />
<br />
Each person can have many such addresses, each with its own balance, which makes it very difficult to know which person owns what amount. In order to protect his [[Anonymity|privacy]], Bob can generate a new public-private key pair for each individual receiving transaction and the Bitcoin software encourages this behavior by default. Continuing the example from above, when Charlie receives the bitcoins from Bob, Charlie will not be able to identify who owned the bitcoins before Bob without further information.<br />
<br />
===Capitalization / Nomenclature===<br />
Since Bitcoin is both a currency and a protocol, capitalization of Bitcoin can be confusing. Generally accepted practice is to just use Bitcoin (singular, with upper case letter b) to describe the protocol and currency, together.<br />
<br />
==Where to see and explore==<br />
You can directly explore the system in action by visiting [http://blockchain.info/ Blockchain.info] or [http://blockexplorer.com/ Bitcoin Block Explorer].<br />
The site shows you the latest blocks in the block chain. The [[Block_chain|block chain]] contains the agreed history of all transactions that took place in the system.<br />
Note how many blocks were generated in the last hour, which on average will be 6. Also notice the number of transactions and the total amount transferred in the last hour (last time I checked it was about 64 and 15K).<br />
This should give you an indication of how active the system is.<br />
<br />
Next, navigate to one of these blocks.<br />
The block's [[hash]] begins with a run of zeros. This is what made creating the block so difficult; a hash that begins with many zeros is much more difficult to find than a hash with few or no zeros. The computer that generated this block had to try many ''Nonce'' values (also listed on the block's page) until it found one that generated this run of zeros.<br />
Next, see the line titled ''Previous block''. Each block contains the hash of the block that came before it. This is what forms the chain of blocks.<br />
Now take a look at all the transactions the block contains. The first transaction is the income earned by the computer that generated this block. It includes a fixed amount of coins created out of "thin air" and possibly a fee collected from other transactions in the same block.<br />
<br />
Drill down into any of the transactions and you will see how it is made up of one or more amounts coming in and out.<br />
Having more than one incoming and outgoing amount in a transaction enables the system to join and break amounts in any possible way, allowing for any fractional amount needed. Each incoming amount is a past transaction (which you can also view) from someone's address, and each outgoing amount is addressed to someone and will be part of a future transaction (which you can also navigate down into if it has already taken place.)<br />
<br />
Finally you can follow any of the [[Address|addresses]] links and see what public information is available for them.<br />
<br />
To get an impression of the amount of activity on the Bitcoin network, you might like to visit the monitoring websites [[Bitcoin Monitor]] and [[Bitcoin Watch]]. The first shows a real-time visualization of events on the Bitcoin network, and the second lists general statistics on the amount and size of recent transactions.<br />
<br />
===How many people use Bitcoin?===<br />
<br />
This is quite a difficult question to answer accurately. One approach is to count how many bitcoin clients connected to the network in the last 24 hours. We can do this because some clients transmit their addresses to the other members of the network periodically. In September 2011 this method suggested that there were about {{formatnum:60000}} users.<br />
<br />
==See Also==<br />
<br />
* [http://www.youtube.com/watch?v=Um63OQz3bjo What is Bitcoin?] video introduction<br />
* Installing Bitcoin [[getting started]] <br />
* [[How bitcoin works]]<br />
* [[Using Bitcoin]]<br />
* A gentle introduction to Bitcoin - [[BitcoinMe]]<br />
* [http://coinlab.com/2011/12/bitcoin-primer Bitcoin Primer] from CoinLab<br />
* Another introduction, ''The Rebooting Of Money'' podcast is found at [[Bitcoin Money]]<br />
* A beginner's step-by-step guide to using Bitcoin, use of alternative wallets, and generally keeping your money and computer secure - [http://BitcoinIntro.com BitcoinIntro.com]<br />
* [http://howtobitcoin.info howtobitcoin.info] Directory of bitcoin links for beginners<br />
* Amazon Kindle Book [http://www.amazon.com/Bitcoin-Step-by-ebook/dp/B00A1CUQQU Bitcoin Step by Step] $3.99 (USD). The author walks you step by step through getting started.<br />
<br />
[[zh-cn:简介]]<br />
<br />
[[de:Einführung]]</div>Anymhttps://tests.bitcoin.it/w/index.php?title=Help:Introduction&diff=33695Help:Introduction2012-12-12T20:11:41Z<p>Anym: /* Capitalization / Nomenclature */</p>
<hr />
<div>The purpose of this page is to provide a general overview of the Bitcoin system and economy.<br />
<br />
==Basic Concepts==<br />
<br />
===Currency===<br />
<br />
Alice wants to buy the [http://www.grasshillalpacas.com/alpacaproductsforbitcoinoffer.html Alpaca socks] which Bob has for sale. In return, she is to provide something of equal value to Bob. The most efficient way to do this is by using a medium of exchange that Bob accepts which would be classified as currency. Currency makes trade easier by eliminating the need for [http://en.wikipedia.org/wiki/Coincidence_of_wants coincidence of wants] required in other systems of trade such as barter. Currency adoption and acceptance can be global, national, or in some cases local or community-based.<br />
<br />
===Banks===<br />
<br />
Alice needs not provide currency to Bob in-person. She may instead transfer this value by first entrusting her currency to a bank who promises to store and protect Alice's currency notes. The bank gives Alice a written promise (called a "bank statement") that entitles her to withdraw the same number of currency bills that she deposited. Since the money is still Alice's, she is entitled to do with it whatever she pleases, and the bank (like most banks), for a small fee, will do Alice the service of passing on the currency bills to Bob on her behalf. This is done by Alice's bank by giving the dollar bills to Bob's bank and informing them that the money is for Bob, who will then see the amount the next time he checks his balance or receives his bank statement.<br />
<br />
Since banks have many customers, and bank employees require money for doing the job of talking to people and signing documents, banks in recent times have been using machines such as ATMs and web servers that do the job of interacting with customers instead of paid bank employees. The task of these machines is to learn what each customer wants to do with their money and, to the extent that it is possible, act on what the customer wants (for example, ATMs can hand out cash). Customers can always know how much money they have in their accounts, and they are confident that the numbers they see in their bank statements and on their computer screens accurately reflect the number of dollars that they can get from the bank on demand. They can be so sure of this that they can accept those numbers in the same way they accept paper banknotes (this is similar to the way people started accepting paper dollars when they had been accepting gold or silver).<br />
<br />
Such a system has several disadvantages:<br />
* It is costly. [https://en.wikipedia.org/wiki/Electronic_funds_transfer EFTs] in Europe can cost 25 euros. Credit transactions can cost several percent of the transaction.<br />
* It is slow. Checking and low cost wire services take days to complete.<br />
* In most cases, it cannot be anonymous.<br />
* Accounts can be frozen. <br />
* Banks and other payment processors like PayPal, Visa, and Mastercard may refuse to process payments for legal entities. <br />
<br />
<br />
Bitcoin is a system of owning and voluntarily transferring amounts of so-called ''bitcoins'', in a manner similar to an on-line banking, but pseudonymously and without reliance on a central authority to maintain account balances. If bitcoins are valuable, it is because they are useful and limited in supply.<br />
<br />
==Bitcoin Basics==<br />
<br />
===Creation of coins===<br />
The creation of coins must be limited for the currency to have any value. <br />
<br />
New coins are slowly [[Mining|mined]] into existence by following a mutually agreed-upon set of rules. A user [[Mining|mining]] bitcoins is running a software program that searches intensively for a solution to a very computationally expensive math problem whose difficulty is precisely known. The cost function (the computationally expensive math problem) that miners spend their time on is the [http://en.wikipedia.org/wiki/Hashcash Hashcash cost-function]. In bitcoin the hashcash difficulty is automatically adjusted regularly so that the number of solutions found globally, by everyone, is constant: an average of 6 per hour. When a solution is found, the user may tell everyone of the existence of this newly found solution, along with other information, packaged together in what is called a "[[Block|block]]". <br />
<br />
Blocks contain 50 bitcoins at present. This amount, known as the block reward, is an incentive for people to perform the computation work required for generating blocks. Roughly every 4 years, the number of bitcoins that can be "mined" in a block reduces by 50%. Any block that is created by a malicious user that does not follow this rule (or any other rules) will be rejected by everyone else. In the end, no more than 21 million bitcoins will ever exist. <br />
<br />
Because the block reward will decrease over the long term, miners will some day instead pay for their hardware and electricity costs by collecting [[Transaction_fee|transaction fees]]. The sender of money may voluntarily pay a small transaction fee which will be kept by whomever finds the next block. Paying this fee will encourage miners to include the transaction in a block more quickly.<br />
<br />
===Sending payments===<br />
To guarantee that a third-party, let's call her Eve, cannot spend other people's bitcoins by creating transactions in their names, Bitcoin uses [[Wikipedia:Public-key_cryptography|public key cryptography]] to make and verify digital signatures. In this system, each person, such as Alice or Bob, has one or more addresses each with an associated pair of public and private keys that they may hold in a [[Wallet|wallet]]. Only the user with the private key can sign a transaction to give some of their bitcoins to somebody else, but anyone can validate the signature using that user’s public key.<br />
<br />
Suppose Alice wants to send a bitcoin to Bob.<br />
* Bob sends his address (from which the public key can be derived) to Alice.<br />
* Alice adds Bob’s public key and the amount of bitcoins to transfer to a message: a 'transaction' message.<br />
* Alice signs the transaction with her private key.<br />
* Alice broadcasts the transaction on the Bitcoin network for all to see.<br />
<br />
(Only the first two steps require human action. The rest is done by the Bitcoin client software.)<br />
<br />
Looking at this transaction from the outside, anyone who knows that these addresses belong to Alice and Bob can see that Alice has agreed to transfer the amount to Bob, because nobody else has Alice's private key. Alice would be foolish to give her private key to other people, as this would allow them to sign transactions in her name, removing funds from her control.<br />
<br />
Later on, when Bob wishes to transfer the same bitcoins to Charley, he will do the same thing:<br />
* Charlie sends Bob his address.<br />
* Bob adds Charlie's public key and the amount of bitcoins to transfer to a message: a 'transaction' message.<br />
* Bob signs the transaction with his private key.<br />
* Bob broadcasts the transaction on the Bitcoin network for all to see. <br />
<br />
Only Bob can do this because only he has the private key that can create a valid signature for the transaction.<br />
<br />
Eve cannot change whose coins these are by replacing Bob’s public key with her public key, because Alice signed the transfer to Bob using her own private key, which is kept secret from Eve, and instructing that the coins which were hers now belong to Bob. So if Charlie accepts that the original coin was in the hands of Alice, he will also accept the fact that this coin was later passed to Bob, and now Bob is passing this same coin to him.<br />
<br />
===Preventing [[double-spending]]===<br />
The process described above does not prevent Alice from using the same bitcoins in more than one transaction. The following process does; this is the primary innovation behind Bitcoin.<br />
<br />
* Details about the [[Transactions|transaction]] are [[Network|sent and forwarded]] to all or as many other computers as possible.<br />
* A constantly growing chain of [[Blocks|blocks]] that contains a record of all transactions is collectively maintained by all computers (each has a full copy).<br />
* To be accepted in the chain, transaction blocks must be valid and must include [[proof of work]] (one block generated by the network every 10 minutes).<br />
* Blocks are chained in a way so that, if any one is modified, all following blocks will have to be recomputed.<br />
* When multiple valid continuations to this chain appear, only the longest such branch is accepted and it is then extended further.<br />
<br />
When Bob sees that his transaction has been included in a block, which has been made part of the single longest and fastest-growing block chain (extended with significant computational effort), he can be confident that the transaction by Alice has been accepted by the computers in the network and is permanently recorded, preventing Alice from creating a second transaction with the same coin. In order for Alice to thwart this system and double-spend her coins, she would need to muster more computing power than all other Bitcoin users combined.<br />
<br />
===Anonymity===<br />
When it comes to the Bitcoin network itself, there are no "accounts" to set up, and no e-mail addresses, user-names or passwords are required to hold or spend bitcoins. Each balance is simply associated with an address and its public-private key pair. The money "belongs" to anyone who has the private key and can sign transactions with it. Moreover, those keys do not have to be registered anywhere in advance, as they are only used when required for a transaction. Transacting parties do not need to know each other's identity in much the same way that a store owner does not know a cash-paying customer's name.<br />
<br />
A [[Address|Bitcoin address]] mathematically corresponds to a public key and looks like this:<br />
<br />
:1PC9aZC4hNX2rmmrt7uHTfYAS3hRbph4UN<br />
<br />
Each person can have many such addresses, each with its own balance, which makes it very difficult to know which person owns what amount. In order to protect his [[Anonymity|privacy]], Bob can generate a new public-private key pair for each individual receiving transaction and the Bitcoin software encourages this behavior by default. Continuing the example from above, when Charlie receives the bitcoins from Bob, Charlie will not be able to identify who owned the bitcoins before Bob without further information.<br />
<br />
===Capitalization / Nomenclature===<br />
Since Bitcoin is both a currency and a protocol, capitalization of Bitcoin can be confusing. Generally accepted practice is to use Bitcoin (singular, with upper case letter b) to describe the protocol and currency in one<br />
<br />
==Where to see and explore==<br />
You can directly explore the system in action by visiting [http://blockchain.info/ Blockchain.info] or [http://blockexplorer.com/ Bitcoin Block Explorer].<br />
The site shows you the latest blocks in the block chain. The [[Block_chain|block chain]] contains the agreed history of all transactions that took place in the system.<br />
Note how many blocks were generated in the last hour, which on average will be 6. Also notice the number of transactions and the total amount transferred in the last hour (last time I checked it was about 64 and 15K).<br />
This should give you an indication of how active the system is.<br />
<br />
Next, navigate to one of these blocks.<br />
The block's [[hash]] begins with a run of zeros. This is what made creating the block so difficult; a hash that begins with many zeros is much more difficult to find than a hash with few or no zeros. The computer that generated this block had to try many ''Nonce'' values (also listed on the block's page) until it found one that generated this run of zeros.<br />
Next, see the line titled ''Previous block''. Each block contains the hash of the block that came before it. This is what forms the chain of blocks.<br />
Now take a look at all the transactions the block contains. The first transaction is the income earned by the computer that generated this block. It includes a fixed amount of coins created out of "thin air" and possibly a fee collected from other transactions in the same block.<br />
<br />
Drill down into any of the transactions and you will see how it is made up of one or more amounts coming in and out.<br />
Having more than one incoming and outgoing amount in a transaction enables the system to join and break amounts in any possible way, allowing for any fractional amount needed. Each incoming amount is a past transaction (which you can also view) from someone's address, and each outgoing amount is addressed to someone and will be part of a future transaction (which you can also navigate down into if it has already taken place.)<br />
<br />
Finally you can follow any of the [[Address|addresses]] links and see what public information is available for them.<br />
<br />
To get an impression of the amount of activity on the Bitcoin network, you might like to visit the monitoring websites [[Bitcoin Monitor]] and [[Bitcoin Watch]]. The first shows a real-time visualization of events on the Bitcoin network, and the second lists general statistics on the amount and size of recent transactions.<br />
<br />
===How many people use Bitcoin?===<br />
<br />
This is quite a difficult question to answer accurately. One approach is to count how many bitcoin clients connected to the network in the last 24 hours. We can do this because some clients transmit their addresses to the other members of the network periodically. In September 2011 this method suggested that there were about {{formatnum:60000}} users.<br />
<br />
==See Also==<br />
<br />
* [http://www.youtube.com/watch?v=Um63OQz3bjo What is Bitcoin?] video introduction<br />
* Installing Bitcoin [[getting started]] <br />
* [[How bitcoin works]]<br />
* [[Using Bitcoin]]<br />
* A gentle introduction to Bitcoin - [[BitcoinMe]]<br />
* [http://coinlab.com/2011/12/bitcoin-primer Bitcoin Primer] from CoinLab<br />
* Another introduction, ''The Rebooting Of Money'' podcast is found at [[Bitcoin Money]]<br />
* A beginner's step-by-step guide to using Bitcoin, use of alternative wallets, and generally keeping your money and computer secure - [http://BitcoinIntro.com BitcoinIntro.com]<br />
* [http://howtobitcoin.info howtobitcoin.info] Directory of bitcoin links for beginners<br />
* Amazon Kindle Book [http://www.amazon.com/Bitcoin-Step-by-ebook/dp/B00A1CUQQU Bitcoin Step by Step] $3.99 (USD). The author walks you step by step through getting started.<br />
<br />
[[zh-cn:简介]]<br />
<br />
[[de:Einführung]]</div>Anymhttps://tests.bitcoin.it/w/index.php?title=Bitcoin&diff=33694Bitcoin2012-12-12T20:10:56Z<p>Anym: </p>
<hr />
<div><br />
'''Bitcoin''' is a decentralized [[digital currency]] created by developer [[Satoshi Nakamoto]]. It does not rely on a central server to process transactions or store funds. Each Bitcoin is divisible up to 100-million units, allowing the currency to adapt in cases of high valuation.<br />
<br />
It is the most widely used alternative currency,<ref name="Quantitative Analysis of the Full Bitcoin Transaction Graph">{{cite web|title=Quantitative Analysis of the Full Bitcoin Transaction Graph|url=http://eprint.iacr.org/2012/584.pdf|publisher=Cryptology ePrint Archive|accessdate=18 October 2012|author=Ron Dorit|coauthors=Adi Shamir|page=17|quote=The Bitcoin system is the best known and most widely used alternative payment scheme,...}}</ref> with the total market cap at over 100 million US dollars.<ref>{{cite web|last=Koch|first=Rüdiger|title=Bitcoin - a Means for Redistribution of Wealth|url=http://ieet.org/index.php/IEET/more/koch20120927|publisher=Institute for Ethics & Emerging Technologies|accessdate=27 October 2012|quote=We’re currently at 50,000 users and a market cap of $100 Million.}}</ref><ref>{{cite web|title=Market Capitalization|url=http://blockchain.info/charts/market-cap|publisher=Blockchain.info|accessdate=28 October 2012}}</ref><ref name="Mt.Gox data">{{Cite web|title=Mt.Gox data|url=http://bitcoincharts.com/markets/mtgoxUSD.html|publisher=Bitcoincharts}}</ref> <br />
<br />
Bitcoin has no central issuer; instead, the peer-to-peer network regulates Bitcoins, transactions and issuance according to consensus in network software.<br />
Bitcoins are issued to various nodes that verify transactions through computing power;<br />
it is established that there will be a limited and scheduled release of no more than 21 million BTC worth of coins, which will be fully issued by the year 2140.<br />
<br />
Internationally, Bitcoins can be exchanged and managed through various websites and [[software]] along with physical banknotes and coins.<ref>{{Cite web|title=Physical Bitcoins by Casascius|url=https://www.casascius.com/|publisher=Casascius Coins|accessdate=29 September 2012}}</ref><ref>{{Cite web|title=Bitbills|url=http://www.bitbills.com/|publisher=Bitbills|accessdate=29 September 2012}}</ref><br />
<br />
==History==<br />
:Main article: [[History]]<br />
<br />
A cryptographic system for untraceable payments was first described by David Chaum in 1982.<ref>[http://blog.koehntopp.de/uploads/Chaum.BlindSigForPayment.1982.PDF David Chaum, Blind signatures for untraceable payments], Advances in Cryptology - Crypto '82, Springer-Verlag (1983), 199–203.</ref> In 1990 Chaum extended this system to create the first cryptographic anonymous electronic cash system.,<ref>{{cite journal|journal=Lecture Notes in Computer Science|last1=Chaum|first1=David|last2=Fiat|first2=Amos|last3=Naor|first3=Moni|title=Untraceable Electronic Cash|url=http://blog.koehntopp.de/uploads/chaum_fiat_naor_ecash.pdf}}</ref> which became known as ecash.<br />
<ref>{{cite web|url=http://www.wired.com/wired/archive/2.12/emoney.html|publisher=Wired|title=E-Money (That's What I Want)|date=1994–2012|author=Steven Levy}}</ref> In 1998 Wei Dai published a description of an anonymous, distributed electronic cash system which he called "b-money".<ref>{{cite web|title=B-Money|url=http://www.weidai.com/bmoney.txt|author=Wei Dai|year=1998}}</ref> Around the same time, Nick Szabo created ''bit gold''.<ref>{{cite web|url=http://spectrum.ieee.org/computing/software/bitcoin-the-cryptoanarchists-answer-to-cash/0|title=Bitcoin: The Cryptoanarchists’ Answer to Cash|publisher=IEEE Spectrum|quote=Around the same time, Nick Szabo, a computer scientist who now blogs about law and the history of money, was one of the first to imagine a new digital currency from the ground up. Although many consider his scheme, which he calls “bit gold,” to be a precursor to Bitcoin}}</ref><ref name="bitgold">{{cite web|title=Bit gold|url=http://unenumerated.blogspot.co.uk/2005/12/bit-gold.html|author=Nick Szabo|quote=My proposal for bit gold is based on computing a string of bits from a string of challenge bits, using functions called variously "client puzzle function," "proof of work function," or "secure benchmark function.". The resulting string of bits is the proof of work.... The last-created string of bit gold provides the challenge bits for the next-created string.}}</ref> Like Bitcoin, ''Bit gold'' was a currency system where users would compete to solve a [[proof of work]] function, with solutions being cryptographically chained together and published via a distributed property title registry. A variant of ''Bit gold'', called ''Reusable Proofs of Work'', was implemented by Hal Finney.<ref name="bitgold"/><br />
<br />
In 2008, Satoshi Nakamoto published a paper<ref name="whitepaper">{{cite web<br />
|last= Nakamoto<br />
|first= Satoshi<br />
|title= Bitcoin: A Peer-to-Peer Electronic Cash System<br />
|url= http://www.cs.kent.edu/~JAVED/class-P2P12F/papers-2012/PAPER2012-p2p-bitcoin-satoshinakamoto.pdf<br />
|accessdate = 14 December 2010<br />
|date= 24 May 2009<br />
|postscript=<br />
}}</ref><ref>{{cite web<br />
|url= http://article.gmane.org/gmane.comp.encryption.general/12588/<br />
|title= Bitcoin P2P e-cash paper<br />
}}</ref> on The Cryptography Mailing list at metzdowd.com<ref>[http://www.mail-archive.com/search?l=cryptography@metzdowd.com&q=from:%22Satoshi+Nakamoto%22 Satoshi's posts to Cryptography mailing list]</ref> describing the Bitcoin protocol.<br />
<br />
The Bitcoin network came into existence on 3 January 2009 with the release of the first Bitcoin client, [[wxBitcoin]], and the issuance of the first Bitcoins.<ref>{{cite web |title=Block 0 – Bitcoin Block Explorer |url=http://blockexplorer.com/block/000000000019d6689c085ae165831e934ff763ae46a2a6c172b3f1b60a8ce26f }}</ref><ref>{{cite web |url=http://www.mail-archive.com/cryptography@metzdowd.com/msg10142.html |title=Bitcoin v0.1 released}}</ref><ref>{{cite web |url=http://sourceforge.net/news/?group_id=244765 |title=SourceForge.net: Bitcoin}}</ref><br />
A year after, the initial exchange rates for Bitcoin were set by individuals on the bitcointalk forums.{{Citation needed|date=October 2012}} The most significant transaction involved a 10,000 BTC pizza.<ref>{{cite web|title=The Rise and Fall of Bitcoin|url=http://www.wired.com/magazine/2011/11/mf_bitcoin/|publisher=Wired|accessdate=13 October 2012}}</ref><br />
Today, the majority of Bitcoin exchanges occur on the [[MtGox]] Bitcoin exchange.<br />
<br />
In 2011, Wikileaks,<ref>{{cite news<br />
|last= Greenberg<br />
|first= Andy<br />
|url= http://blogs.forbes.com/andygreenberg/2011/06/14/wikileaks-asks-for-anonymous-bitcoin-donations/<br />
|title= WikiLeaks Asks For Anonymous Bitcoin Donations – Andy Greenberg – The Firewall – Forbes<br />
|publisher= Blogs.forbes.com<br />
|date= 2011-06-14<br />
|accessdate = 2011-06-22<br />
}}</ref> [[Freenet]],<ref>{{cite web<br />
|url= https://freenetproject.org/donate.html<br />
|title= /donate<br />
|publisher= The Freenet Project<br />
|date=<br />
|accessdate = 2011-06-22<br />
}}</ref> Singularity Institute,<ref>[http://singinst.org/donate/ SIAI donation page]</ref> Internet Archive,<ref>[http://www.archive.org/donate/index.php Internet Archive donation page]</ref> Free Software Foundation<ref>[https://my.fsf.org/donate/other/ Other ways to donate]</ref> and others, began to accept donations in Bitcoin. The Electronic Frontier Foundation did so for a while but has since stopped, citing concerns about a lack of legal precedent about new currency systems, and because they "generally don't endorse any type of product or service."<ref>{{cite web<br />
|url= https://www.eff.org/deeplinks/2011/06/eff-and-bitcoin<br />
|title= EFF and Bitcoin &#124; Electronic Frontier Foundation<br />
|publisher= Eff.org<br />
|date= 2011-06-14<br />
|accessdate = 2011-06-22<br />
}}</ref> Some small businesses had started to adopt Bitcoin. LaCie, a public company, accepts Bitcoin for its Wuala service.<ref>{{Cite web|url=http://www.wuala.com/en/bitcoin |title=Secure Online Storage – Backup. Sync. Share. Access Everywhere |publisher=Wuala |date= |accessdate = 2012-01-24}}</ref><br />
<br />
In 2012, BitPay reports of having over 1000 merchants accepting Bitcoin under its payment processing service.<ref>{{cite web|title=BitPay Signs 1,000 Merchants to Accept Bitcoin Payments|url=http://www.americanbanker.com/issues/177_176/bitpay-signs-1000-merchants-to-accept-bitcoin-payments-1052538-1.html|publisher=American Banker|accessdate=12 October 2012}}</ref><br />
<br />
==Administration==<br />
Bitcoin is administered through a decentralized peer-to-peer network.<ref name="whitepaper"/> Cryptographic technologies and the peer-to-peer network of computing power enables users to make and verify irreversible, instant online Bitcoin payments, without an obligation to trust and use centralized banking institutions and authorities. Dispute resolution services are not made directly available. Instead it is left to the users to verify and trust the parties they are sending money to through their choice of methods. <br />
<br />
Bitcoins are issued according to rules agreed to by the majority of the computing power within the Bitcoin network. The core rules describing the predictable issuance of Bitcoins to its verifying servers, a voluntary and competitive transaction fee system and the hard limit of no more than 21 million BTC issued in total.<ref name="whitepaper"/><br />
<br />
Bitcoin does not require a central bank, State,<ref>{{cite web<br />
|url= http://spectrum.ieee.org/computing/software/bitcoin-the-cryptoanarchists-answer-to-cash/3<br />
|title= Bitcoin: The Cryptoanarchists' Answer to Cash<br />
|publisher= IEEE.org<br />
|date= June 2012<br />
|accessdate = 2012-06-05<br />
}}</ref> or incorporated backers.<br />
<br />
==Services==<br />
:Main article: [[Wallet]]<br />
<br />
Bitcoins are sent and received through software and websites called wallets. They send and confirm transactions to the network through Bitcoin addresses, the identifiers for users' Bitcoin wallets within the network.<ref name="whitepaper"/><br />
<br />
===Bitcoin addresses===<br />
:Main article: [[Address]]<br />
<br />
Payments are made to Bitcoin "addresses": human-readable strings of numbers and letters around 33 characters in length, always beginning with the digit 1 or 3, as in the example of ''31uEbMgunupShBVTewXjtqbBv5MndwfXhb''.<br />
<br />
Users obtain new Bitcoin addresses from their Bitcoin software. Creating a new address can be a completely offline process and require no communication with the Bitcoin network.<br />
<br />
===Transaction fees===<br />
:Main article: [[Transaction fees]]<br />
Transaction fees may be included with any transfer of Bitcoins. {{As of|2012}} many transactions are processed in a way which makes no charge for the transaction. For transactions which consume or produce many coins (and therefore have a large data size), a small transaction fee is usually expected.<br />
<br />
===Confirmations===<br />
:Main article: [[Confirmation]]<br />
<br />
The network's software confirms a transaction when it records it in a block. Further blocks of transactions confirm it even further. After six confirmations/blocks, a transaction is confirmed beyond reasonable doubt.<br />
<br />
The network must store the whole transaction history inside the blockchain, which grows constantly as new records are added and never removed. Nakamoto conceived that as the database became larger, users would desire applications for Bitcoin that didn't store the entire database on their computer. To enable this, the blockchain uses a [[merkle tree]] to organize the transaction records in such a way that client software can locally delete portions of its own database it knows it will never need, such as earlier transaction records of Bitcoins that have changed ownership multiple times.<br />
<br />
==Economics==<br />
<br />
===Initial distribution===<br />
<br />
Bitcoin has no centralized issuing authority.<ref name="ars-06-08-11"><br />
{{Cite news<br />
|first= Thomas<br />
|last= Lowenthal<br />
|title= Bitcoin: inside the encrypted, peer-to-peer digital currency<br />
|newspaper= Ars Technica<br />
|date= 8 June 2011<br />
|url= http://arstechnica.com/tech-policy/news/2011/06/bitcoin-inside-the-encrypted-peer-to-peer-currency.ars<br />
}}</ref><ref>{{cite news<br />
|author= Sponsored by<br />
|url= http://www.economist.com/blogs/babbage/2011/06/virtual-currency<br />
|title= Virtual currency: Bits and bob<br />
|publisher= The Economist<br />
|date=<br />
|accessdate = 2011-06-22<br />
}}</ref><ref>{{cite web<br />
|last= Geere<br />
|first= Duncan<br />
|url= http://www.wired.co.uk/news/archive/2011-05/16/bitcoin-p2p-currency<br />
|title= Peer-to-peer currency Bitcoin sidesteps financial institutions (Wired UK)<br />
|publisher= Wired.co.uk<br />
|date=<br />
|accessdate = 2011-06-22<br />
}}</ref> The network is programmed to increase the money supply as a geometric series until the total number of Bitcoins reaches 21 million BTC.<ref name="Quantitative Analysis of the Full Bitcoin Transaction Graph"/> {{As of|2012|10}} slightly over 10 million of the total 21 million BTC had been created; the current total number created is available online.<ref>{{cite web<br />
|title= Total Number of Bitcoins in Existence<br />
|url= http://blockexplorer.com/q/totalbc<br />
|work= Bitcoin Block Explorer<br />
|accessdate = 2012-10-03<br />
}}</ref> By 2013 half of the total supply will have been generated, and by 2017, three-quarters will have been generated. To ensure sufficient granularity of the [[money supply]], clients can divide each BTC unit down to eight decimal places (a total of 2.1&nbsp;×&nbsp;10<sup>15</sup> or 2.1 quadrillion units).<ref name="lwn">{{Cite news<br />
|author= Nathan Willis<br />
|date= 2010-11-10<br />
|title= Bitcoin: Virtual money created by CPU cycles<br />
|publisher= LWN.net<br />
|url= http://lwn.net/Articles/414452/<br />
}}</ref><br />
<br />
The network {{As of|2012|lc=on}} required over one million times more work for confirming a block and receiving an award (25 BTC {{As of|2012|2|lc=on}}) than when the first blocks were confirmed.<br />
The difficulty is automatically adjusted every 2016 blocks based on the time taken to find the previous 2016 blocks such that one block is created roughly every 10 minutes.<br />
<br />
Those who chose to put computational and electrical resources toward mining early on had a greater chance at receiving awards for block generations. This served to make available enough processing power to process blocks. Indeed, without miners there are no transactions and the Bitcoin economy comes to a halt.<br />
<br />
===Exchange rate===<br />
Prices fluctuate relative to goods and services more than more widely accepted currencies;<br />
the price of a Bitcoin is not static.<br />
<br />
In August 2012, 1 BTC traded at around $10.00 USD. Taking into account the total number of Bitcoins mined, the monetary base of the Bitcoin network stands at over 110 million USD.<ref>[http://www.bitcoinwatch.com/ http://www.bitcoinwatch.com/] Bitcoin statistics</ref><br />
<br />
== Security ==<!--Please keep as starting template--><br />
:Main article: [[Weaknesses]]<br />
<br />
In the history of bitcoin, there have been a few [[incidents]], caused by problematic as well as malicious transactions. In the worst such incident, and the only one of its type, a person was able to pretend that he had a practically infinite supply of bitcoins, for almost 9 hours.<br />
<br />
Bitcoin relies, among other things, on [http://en.wikipedia.org/wiki/Public-key_cryptography public key cryptography] and thus may be vulnerable to [http://en.wikipedia.org/wiki/Elliptic_curve_cryptography#Quantum_computing_attacks quantum computing attacks] if and when practical quantum computers can be constructed.<br />
<br />
If multiple different software packages, whose usage becomes widespread on the Bitcoin network, disagree on the protocol and the rules for transactions, this could potentially cause a fork in the block chain, with each faction of users being able to accept only their own version of the history of transactions. This could influence the price of bitcoins.<br />
<br />
A global, organized campaign against the currency or the software could also influence the demand for bitcoins, and thus the exchange price.<br />
<br />
==Bitcoin mining==<br />
:Main article: [[Mining]]<br />
<br />
Bitcoin mining nodes are responsible for managing the Bitcoin network.<br />
<br />
Bitcoins are awarded to Bitcoin nodes known as "miners" for the solution to a difficult [[proof-of-work]] problem which confirms transactions and prevents double-spending. This incentive, as the Nakamoto white paper describes it, encourages "nodes to support the network, and provides a way to initially distribute coins into circulation, since no central authority issues them."<ref name="whitepaper" /><br />
<br />
Nakamoto compared the generation of new coins by expending CPU time and electricity to gold miners expending resources to add gold to circulation.<ref name="whitepaper"/><br />
<br />
===Node operation===<br />
<br />
The node software for the Bitcoin network is based on peer-to-peer networking, digital signatures and cryptographic proof to make and verify transactions. Nodes broadcast transactions to the network, which records them in a public record of all transactions, called the ''blockchain'', after validating them with a [[proof-of-work|proof-of-work system]].<br />
<br />
Satoshi Nakamoto designed the first Bitcoin node and mining software<ref name="processors">{{Cite news<br />
|last= Davis<br />
|first= Joshua<br />
|title= The Crypto-Currency<br />
|url= http://www.wired.com/magazine/2011/11/mf_bitcoin/all<br />
|accessdate = 11 November 2011<br />
|newspaper= Wired Magazine<br />
|date= 10 November 2011<br />
}}</ref> and developed the majority of the first implementation, Bitcoind, from 2007 to mid-2010.<ref name="code_start">{{cite web<br />
|url= https://bitcointalk.org/index.php?topic=13.msg46#msg46<br />
|title= Questions about Bitcoin<br />
|publisher= Bitcoin forum<br />
|date= 2009-12-10<br />
}}</ref><br />
<br />
Node implementations include core software such as Bitcoind/Bitcoin-Qt, [[libbitcoin]], [[cbitcoin]]<ref>{{Cite web|title=cbitcoin|url=https://github.com/MatthewLM/cbitcoin|accessdate=3 October 2012}}</ref> and BitCoinJ.<ref>{{cite web<br />
|url= http://news.slashdot.org/story/11/03/23/0210207/Google-Engineer-Releases-Open-Source-Bitcoin-Client<br />
|title= Google Engineer Releases Open Source Bitcoin Client<br />
|author= angry tapir, timothy<br />
|date= 23 March 2011<br />
|publisher= Slashdot<br />
|accessdate = 2011-05-18<br />
}}</ref><ref>{{cite web<br />
|url= http://www.javaworld.com/javaworld/jw-01-2012/120110-bitcoin-for-beginners-3.html?page=1<br />
|title= Bitcoin for beginners: The BitcoinJ API<br />
|author= Dirk Merkel<br />
|date= 10 January 2012<br />
|publisher= JavaWorld<br />
|accessdate = 2012-08-03<br />
}}</ref><br />
<br />
Every node in the Bitcoin network collects all the unacknowledged transactions it knows of in a file called a ''block'', which also contains a reference to the previous valid block known to that node. It then appends a [[nonce]] value to this previous block and computes the SHA-256 cryptographic hash of the block and the appended nonce value. The node repeats this process until it adds a nonce that allows for the generation of a hash with a value lower than a specified ''target''. Because computers cannot practically reverse the hash function, finding such a nonce is hard and requires on average a predictable amount of repetitious trial and error. This is where the ''[[proof-of-work]]'' concept comes in to play. When a node finds such a solution, it announces it to the rest of the network. Peers receiving the new solved block validate it by computing the hash and checking that it really starts with the given number of zero bits (i.e., that the hash is within the target). Then they accept it and add it to the chain.<br />
<br />
===Mining rewards===<br />
In addition to receiving the pending transactions confirmed in the block, a generating node adds a ''generate'' transaction, which awards new Bitcoins to the operator of the node that generated the block. The system sets the payout of this generated transaction according to its defined inflation schedule. The miner that generates a block also receives the fees that users have paid as an incentive to give particular transactions priority for faster confirmation.<br />
<br />
The network never creates more than a 50&nbsp;BTC reward per block and this amount will decrease over time towards zero, such that no more than 21 million BTC will ever exist.<ref name="lwn" /> As this payout decreases, the incentive for users to run block-generating nodes is intended to change to earning [[#Transaction fees|transaction fees]].<br />
<br />
===Mining pools===<br />
:Main article: [[Pooled mining]]<br />
<br />
Bitcoin users often pool computational effort to increase the stability of the collected fees and subsidy they receive.<ref name="We Use Coins Mining">{{cite web|title=About Bitcoin Mining|url=http://www.weusecoins.com/mining-guide.php|publisher=We Use Coins|accessdate=18 October 2012}}</ref><br />
<br />
===Mining difficulty===<br />
:Main article: [[Difficulty]]<br />
<br />
In order to throttle the creation of blocks, the difficulty of generating new blocks is adjusted over time. If mining output increases or decreases, the difficulty increases or decreases accordingly.<br />
<br />
The adjustment is done by changing the threshold that a hash is required to be less than. A lower threshold means fewer possible hashes can be accepted, and thus a higher degree of difficulty. The target rate of block generation is one block every 10 minutes, or 2016 blocks every two weeks. Bitcoin changes the difficulty of finding a valid block every 2016 blocks, using the difficulty that would have been most likely to cause the prior 2016 blocks to have taken two weeks to generate, according to the timestamps on the blocks. Technically, this is done by modeling the generation of Bitcoins as Poisson process. All nodes perform and enforce the same difficulty calculation.<br />
<br />
Difficulty is intended as an automatic stabilizer allowing mining for Bitcoins to remain profitable in the long run for the most efficient miners, independently of the fluctuations in demand of Bitcoin in relation to other currencies.<br />
<br />
===Mining hardware===<br />
:Main article: [[Mining Hardware Comparison]]<br />
<br />
Bitcoins used to be mined through Intel/AMD CPUs. {{As of | 2012}}, mining has gradually moved to [[GPU]] and [[FPGA]] hardware.<ref name="bitcoinmag-butterfly" /> [[Application-specific integrated circuit|ASIC]]-based hardware for Bitcoin mining has been announced by several manufacturers who intend to ship products from late 2012 to early 2013.<ref name="bitcoinmag-butterfly">{{Cite web|title=Bitpay Breaks Daily Volume Record with Butterfly ASIC mining release|url=http://bitcoinmagazine.net/bitpay-breaks-daily-volume-record-with-butterfly-asic-mining-release/|publisher=Bitcoin Magazine}}</ref><br />
<br />
==Concerns==<br />
<br />
===As an investment===<br />
Bitcoin describes itself as an experimental digital currency. Reuben Grinberg has noted that Bitcoin's supporters have argued that Bitcoin is neither a security or an investment because it fails to meet the criteria for either category.<ref name="grinberg">{{cite web | url=http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1817857 | title=Bitcoin: An Innovative Alternative Digital Currency | publisher=SSRN | date=9 December 2011 | accessdate=4 December 2012 | author=Grinberg, Reuben}}</ref> Although it is a virtual currency, some people see it as an investment<ref name="cnbc">{{cite web | url=http://www.cnbc.com/id/45030812/The_Pros_And_Cons_Of_Biting_on_Bitcoins | title=The Pros And Cons Of Biting on Bitcoins | publisher=CNBC | date=23 November 2011 | accessdate=4 December 2012 | author=Gustke, Constance}}</ref> or accuse it of being a form of investment fraud known as a Ponzi scheme.<ref>{{cite web |url=http://www.theregister.co.uk/2011/06/08/bitcoin_under_attack/ |title=US senators draw a bead on Bitcoin |last1=Chirgwin |first1=Richard |date=8 June 2011 |publisher=The Register |accessdate=14 November 2012}}</ref><ref>{{cite web |url=http://uk.reuters.com/article/2012/04/01/uk-traders-bitcoin-idUKBRE8300JL20120401 |title=Bitcoin, the City traders' anarchic new toy |last1=O'Leary |first1=Naomi |date=2 April 2012 |publisher=Reuters |accessdate=14 November 2012}}</ref> A report by the European Central Bank, using the U.S. Securities and Exchange Commission's definition of a Ponzi scheme, found that the use of bitcoins shares some characteristics with Ponzi schemes, but also has characteristics of its own which contradict several common aspects of Ponzi schemes.<ref name="ecbreport">{{cite web | url=http://www.ecb.europa.eu/pub/pdf/other/virtualcurrencyschemes201210en.pdf | title=Virtual Currency Schemes | publisher=European Central Bank | date=October 2012 | accessdate=4 December 2012}}</ref><br />
<br />
===Privacy===<br />
Because transactions are broadcast to the entire network, they are inherently public. Unlike regular banking,<ref>{{cite web<br />
|url= http://spectrum.ieee.org/computing/software/bitcoin-the-cryptoanarchists-answer-to-cash/0<br />
|title= Bitcoin: The Cryptoanarchists' Answer to Cash<br />
|publisher= IEEE.org<br />
|date= June 2012<br />
|accessdate = 2012-06-05<br />
}}</ref> which preserves customer privacy by keeping transaction records private, loose transactional privacy is accomplished in Bitcoin by using many unique addresses for every wallet, while at the same time publishing all transactions. As an example, if Alice sends 123.45 BTC to Bob, the network creates a public record that allows anyone to see that 123.45 has been sent from one address to another. However, unless Alice or Bob make their ownership of these addresses known, it is difficult for anyone else to connect the transaction with them. However, if someone connects an address to a user at any point they could follow back a series of transactions as each participant likely knows who paid them and may disclose that information on request or under duress.<br />
<br />
It can be difficult to associate Bitcoin identities with real-life identities.<ref name="An Analysis of Anonymity in the Bitcoin System">Fergal Reid and Martin Harrigan (24 July 2011). [http://anonymity-in-bitcoin.blogspot.com/2011/07/bitcoin-is-not-anonymous.html An Analysis of Anonymity in the Bitcoin System]. An Analysis of Anonymity in the Bitcoin System.</ref> This property makes Bitcoin transactions attractive to sellers of illegal products.<ref name="Forbes">Andy Greenberg (20 April 2011). [http://www.forbes.com/forbes/2011/0509/technology-psilocybin-bitcoins-gavin-andresen-crypto-currency.html Crypto Currency]. Forbes Magazine.</ref><ref>{{cite web<br />
|last= Madrigal<br />
|first= Alexis<br />
|title= Libertarian Dream? A Site Where You Buy Drugs With Digital Dollars<br />
|publisher= The Atlantic Monthly<br />
|date= 2011-06-01<br />
|url= http://www.theatlantic.com/technology/archive/2011/06/libertarian-dream-a-site-where-you-buy-drugs-with-digital-dollars/239776/<br />
|accessdate = 2011-06-05<br />
}}</ref><br />
<br />
===Illicit use===<br />
<br />
====Cracking====<br />
The cracking organization "LulzSec" accepted donations in Bitcoin, having said that the group "needs Bitcoin donations to continue their hacking efforts".<ref name="CNET">{{cite web<br />
|last= Reisinger<br />
|first= Don<br />
|url= http://news.cnet.com/8301-13506_3-20070268-17/senators-target-bitcoin-currency-citing-drug-sales/<br />
|title= Senators target Bitcoin currency, citing drug sales &#124; The Digital Home – CNET News<br />
|publisher= News.cnet.com<br />
|date= 2011-06-09<br />
|accessdate = 2011-06-22<br />
}}</ref><ref>{{cite news<br />
|last= Olson<br />
|first= Parmy<br />
|url= http://blogs.forbes.com/parmyolson/2011/06/06/lulzsec-hackers-posts-sony-dev-source-code-get-7k-donation/<br />
|title= LulzSec Hackers Post Sony Dev. Source Code, Get $7K Donation – Parmy Olson – Disruptors – Forbes<br />
|publisher= Blogs.forbes.com<br />
|date= 6 June 2011<br />
|accessdate = 2011-06-22<br />
}}</ref><br />
<br />
====Silk Road====<br />
[[Silk Road]] is an anonymous black market that uses only the Bitcoin.<ref name="npr-06-12-11"><br />
{{Cite news<br />
|url= http://www.npr.org/2011/06/12/137138008/silk-road-not-your-fathers-amazon-com<br />
|date= 12 June 2011<br />
|newspaper= NPR<br />
|title= Silk Road: Not Your Father's Amazon.com<br />
|author= Staff<br />
}}</ref> <br />
<br />
In a 2011 letter to Attorney General Eric Holder and the Drug Enforcement Administration, senators Charles Schumer of New York and Joe Manchin of West Virginia called for an investigation into Silk Road and the Bitcoin.<ref name="npr-06-12-11"/><br />
Schumer described the use of Bitcoins at Silk Road as a form of money laundering.<ref name="ars-06-08-11"/><br />
<br />
====Botnet mining====<br />
In June 2011, Symantec warned about the possibility of botnets engaging in covert "mining" of Bitcoins,<ref>{{Cite web|author=Updated: 17 June 2011 | Translations available: 日本語 |url=http://www.symantec.com/connect/blogs/bitcoin-botnet-mining |title=Bitcoin Botnet Mining &#124; Symantec Connect Community |publisher=Symantec.com |date=2011-06-17 |accessdate = 2012-01-24}}</ref><ref>{{Cite web|url=http://www.zdnet.com/blog/security/researchers-find-malware-rigged-with-bitcoin-miner/8934 |title=Researchers find malware rigged with Bitcoin miner |publisher=ZDNet |date=2011-06-29 |accessdate = 2012-01-24}}</ref> consuming computing cycles, using extra electricity and possibly increasing the temperature of the computer. Later that month, the Australian Broadcasting Corporation caught an employee using the company's servers to generate Bitcoins without permission.<ref>{{Cite web|url=http://thenextweb.com/au/2011/06/23/abc-employee-caught-mining-for-bitcoins-on-company-servers/ |title=ABC employee caught mining for Bitcoins on company servers |publisher=The Next Web |date=2011-06-23 |accessdate = 2012-01-24}}</ref> Some malware also uses the parallel processing capabilities of the GPUs built into many modern-day video cards.<ref>{{Cite news |url=http://www.theregister.co.uk/2011/08/16/gpu_bitcoin_brute_forcing/ |title=Malware mints virtual currency using victim's GPU |date=16 August 2011<!-- 20:00 GMT -->|first=Dan |last=Goodin }}</ref> In mid August 2011, Bitcoin miner botnets were found;<ref>{{Cite web|url=http://www.infosecurity-magazine.com/view/20211/researcher-discovers-distributed-bitcoin-cracking-trojan-malware/ |title=Infosecurity – Researcher discovers distributed bitcoin cracking trojan malware |publisher=Infosecurity-magazine.com |date=2011-08-19 |accessdate = 2012-01-24}}</ref> trojans infecting Mac OS X have also been uncovered.<ref>{{Cite web|url=http://www.techworld.com.au/article/405849/mac_os_x_trojan_steals_processing_power_produce_bitcoins |title=Mac OS X Trojan steals processing power to produce Bitcoins – sophos, security, malware, Intego – Vulnerabilities – Security |publisher=Techworld |date=2011-11-01 |accessdate = 2012-01-24}}</ref><br />
<br />
===Theft and fraud===<br />
On 19 June 2011, a security breach of the Mt.Gox (an acronym for ''M''agic: ''T''he ''G''athering ''O''nline E''x''change, its original purpose) Bitcoin Exchange caused the price of a Bitcoin to briefly drop to US$0.01 on the Mt.Gox exchange (though it remained unaffected on other exchanges) after a hacker allegedly used credentials from a Mt.Gox auditor's compromised computer to illegally transfer a large number of Bitcoins to him- or herself and sell them all, creating a massive "ask" order at any price. Within minutes the price rebounded to over $15 before Mt.Gox shut down their exchange and canceled all trades that happened during the hacking period.<ref>[https://mtgox.com/press_release_20110630.html Clarification of Mt Gox Compromised Accounts and Major Bitcoin Sell-Off]</ref><ref>[http://www.youtube.com/watch?v=T1X6qQt9ONg YouTube. Bitcoin Report]</ref> The exchange rate of Bitcoins quickly returned to near pre-crash values.<ref name="mick">Jason Mick, 19 June 2011, [http://www.dailytech.com/Inside+the+MegaHack+of+Bitcoin+the+Full+Story/article21942.htm Inside the Mega-Hack of Bitcoin: the Full Story], DailyTech</ref><ref>Timothy B. Lee, 19 June 2011, [http://arstechnica.com/tech-policy/news/2011/06/bitcoin-price-plummets-on-compromised-exchange.ars Bitcoin prices plummet on hacked exchange], Ars Technica</ref><ref>Mark Karpeles, 20 June 2011, [https://support.mtgox.com/entries/20208066-huge-bitcoin-sell-off-due-to-a-compromised-account-rollback Huge Bitcoin sell off due to a compromised account – rollback], Mt.Gox Support</ref><ref name="register1">{{Cite news<br />
|title= Bitcoin collapses on malicious trade – Mt Gox scrambling to raise the Titanic<br />
|url= http://www.theregister.co.uk/2011/06/19/bitcoin_values_collapse_again/<br />
|date= 2011-06-19<br />
|author= Chirgwin, Richard<br />
|publisher= The Register<br />
}}</ref> Accounts with the equivalent of more than USD 8,750,000 were affected.<ref name="mick" /><br />
<br />
In July 2011, The operator of Bitomat, the third largest Bitcoin exchange, announced that he lost access to his wallet.dat file with about 17,000 BitCoins (roughly equivalent to 220,000 USD at that time). He announced that he would sell the service for the missing amount, aiming to use funds from the sale to refund his customers.<ref>[http://siliconangle.com/blog/2011/08/01/third-largest-bitcoin-exchange-bitomat-lost-their-wallet-over-17000-bitcoins-missing/ Third Largest Bitcoin Exchange Bitomat Lost Their Wallet, Over 17,000 Bitcoins Missing]. SiliconAngle</ref><br />
<br />
In August 2011, MyBitcoin, one of popular Bitcoin transaction processors, declared that it was hacked, which resulted in it being shut down, with paying 49% on customer deposits, leaving more than 78,000 BitCoins (roughly equivalent to 800,000 USD at that time) unaccounted for.<ref>[http://betabeat.com/2011/08/mybitcoin-spokesman-finally-comes-forward-what-did-you-think-we-did-after-the-hack-we-got-shitfaced/ MyBitcoin Spokesman Finally Comes Forward: “What Did You Think We Did After the Hack? We Got Shitfaced”]. BetaBeat</ref><ref>[http://betabeat.com/2011/08/search-for-owners-of-mybitcoin-loses-steam/ Search for Owners of MyBitcoin Loses Steam]. BetaBeat</ref><br />
<br />
In early August 2012, a lawsuit was filed in San Francisco court against Bitcoinica, claiming about 460,000 USD from the company. Bitcoinica was hacked twice in 2012, which led to allegations of neglecting the safety of customers' money and cheating them out of withdrawal requests.<ref>[http://arstechnica.com/tech-policy/2012/08/bitcoinica-users-sue-for-460k-in-lost-bitcoins/ Bitcoinica users sue for $460k in lost Bitcoins]. Arstechnica</ref><ref>[http://spectrum.ieee.org/tech-talk/computing/networks/first-bitcoin-lawsuit-filed-in-san-francisco First Bitcoin Lawsuit Filed In San Francisco]. IEEE Spectrum</ref><br />
<br />
In late August 2012, Bitcoin Savings and Trust was shut down by the owner, allegedly leaving around $5.6 million in debts; this led to allegations of the operation being a Ponzi scheme.<ref>{{Cite web|title=Bitcoin ponzi scheme – investors lose $5 million USD in online hedge fund|url=http://rt.com/usa/news/investors-currency-digital-fund-868/|publisher=RT}}</ref><ref>{{Cite web|last=Jeffries|first=Adrianne|title=Suspected multi-million dollar Bitcoin pyramid scheme shuts down, investors revolt|url=http://www.theverge.com/2012/8/27/3271637/bitcoin-savings-trust-pyramid-scheme-shuts-down|publisher=The Verge}}</ref><ref>{{Cite web|last=Mick|first=Jason|title="Pirateat40" Makes Off $5.6M USD in BitCoins From Pyramid Scheme|url=http://www.dailytech.com/Pirateat40+Makes+Off+56M+USD+in+BitCoins+From+Pyramid+Scheme/article25538.htm|publisher=DailyTech}}</ref><ref>[http://pandodaily.com/2012/08/31/bitcoin-how-a-virtual-currency-became-real-with-a-5-6m-fraud/ Bitcoin: How a Virtual Currency Became Real with a $5.6M Fraud]. PandoDaily</ref> In September 2012, it was reported that U.S. Securities and Exchange Commission has started an investigation on the case.<ref>[http://blogs.telegraph.co.uk/technology/willardfoxton2/100007836/bitcoin-pirate-scandal-sec-steps-in-amid-allegations-that-the-whole-thing-was-a-ponzi-scheme/ Bitcoin 'Pirate' scandal: SEC steps in amid allegations that the whole thing was a Ponzi scheme ]. The Telegraph</ref><br />
<br />
In September 2012, Bitfloor Bitcoin exchange also reported being hacked, with 24,000 BitCoins (roughly equivalent to 250,000 USD) stolen. As a result, Bitfloor suspended operations.<ref>[http://www.bbc.co.uk/news/technology-19486695 Bitcoin theft causes Bitfloor exchange to go offline]. BBC</ref><ref>[http://www.theverge.com/2012/9/5/3293375/bitfloor-bitcoin-exchange-suspended-theft Bitcoin exchange BitFloor suspends operations after $250,000 theft Bitcoin exchange BitFloor suspends operations after $250,000 theft]. The Verge</ref> The same month, Bitfloor resumed operations, with its founder saying that he reported the theft to FBI, and that he is planning to repay the victims, though the time frame for such repayment is unclear.<ref>[http://www.pcworld.com/article/2010586/bitcoin-exchange-back-online-after-hack.html?tk=rel_news Bitcoin exchange back online after hack]. PCWorld</ref><br />
<br />
===Taxation===<br />
In September 2012, the Intra-European Organization of Tax Administrations (IOTA), in Tbilisi, Georgia, held a workshop titled "Auditing Individuals and Legal Entities in the Use of e-Money." The workshop was attended by representatives from 23 countries.<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> Jerry Taylor, IOTA's technical taxation expert, said, "There's an awful lot happening on the Internet environment which is fascinating at the moment and introducing new challenges for auditors when it comes to virtual currency."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> Bitcoin was mentioned during the workshop.<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> <br />
<br />
Matthew Elias, founder of the [[Cryptocurrency Legal Advocacy Group]] (CLAG) published "Staying Between the Lines: A Survey of U.S. Income Taxation and its Ramifications on Cryptocurrencies", which discusses "the taxability of cryptocurrencies such as bitcoin."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> CLAG "stressed the importance for taxpayers to determine on their own whether taxes are due on a bitcoin-related transaction based on whether one has "experienced a realization event."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> Such examples are "when a taxpayer has provided a service in exchange for bitcoins, a realization event has probably occurred, and any gain or loss would likely be calculated using fair market values for the service provided."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref><br />
<br />
[[Peter Vessenes]], [[Bitcoin Foundation|Bitcoin Foundation's]] executive director, said, since the foundation is trying to pay for everything in bitcoin, including salaries, "How do we W-2 someone for their bitcoins? Do we mark-to-market every time a transfer happens? Payroll companies cringe."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> The Bitcoin Foundation hopes "to push for solid guidance about its legal and tax treatment." [[Patrick Murck]], legal counsel for the Bitcoin Foundation, said he would like "to help regulators understand the technology better so they can make better decisions."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> Murck said, "Bitcoin has the potential to become much more than a niche currency, but it needs the guidance and understanding of regulators." and "The full potential of bitcoin could be realized through clearer guidelines and a better understanding by financial and tax regulators." and "Part of making that happen is to talk to regulators, the IRS, and tax professionals and helping them understand that bitcoin is not this nefarious thing, it's just software, it's a community, and there's nothing inherently nefarious about either of those things."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref><br />
<br />
==See Also==<br />
* [[Introduction]]<br />
* [[Getting started]]<br />
* [[Using_Bitcoin|Detailed tutorial]]<br />
* [[How bitcoin works]]<br />
* [[FAQ]]<br />
<br />
==References==<br />
<references /><br />
<br />
[[Category:Digital currencies]]</div>Anymhttps://tests.bitcoin.it/w/index.php?title=Satoshi_Dice&diff=33693Satoshi Dice2012-12-12T19:42:50Z<p>Anym: neutrality</p>
<hr />
<div>SatoshiDice is a "blockchain-based betting game."<br />
<br />
It is often thought to be DDoS attack against the Bitcoin network since it is bypassing the built-in anti-DDoS features of Bitcoin (transaction fees).<br />
<br />
Unlike traditional online gaming software, wagers with SatoshiDice can be sent without access to the website nor running any client software. To play, a Bitcoin transaction is made to one of the static addresses operated by the service, each having differing payouts. The service determines if the wager wins or loses and sends a transaction in response with the payout to a winning bet or it returns a tiny fraction of the house's gain to a losing bet.<br />
As a result, the game spams the p2p network and blockchain with useless data.<br />
SatoshiDice forces players to pay a transaction fee on each result so the spam will successfully flood both the p2p relay network and the blockchain.<br />
<br />
There has been the suggestion that the service might be also be used as a [[mixing service]], as the composition of a wallet can be materially changed after running wagers through SatoshiDice<ref>[http://bitcointalk.org/index.php?topic=79079.0 Blockchain-based betting services function as mixing services?]</ref>.<br />
Though this approach could change the makeup of the wallet, it does not sufficiently serve the mixing purpose as the coins returned in winning bets are tied to the coins from the wager transaction.<br />
<br />
There is no reason to believe that [[Satoshi Nakamoto]] has anything to do with this attack, other than the service choosing to include the noun Satoshi in the brand.<br />
It is known to be currently operated by [[Erik Voorhees]].<br />
<br />
==Random Number Generation==<br />
<br />
To determine if a wager is a winner or loser, the site uses a method to produce a number between 0 and 65,535, similar to how a random number generator (RNG) would be used. The service uses a combination of the transaction hash from the wager transaction from the blockchain and performs a 512-bit SHA2 hash for that transaction hash using a secret unknown to the player. The first four bytes of that hash become the lucky number in determining winner or loser.<br />
<br />
==Odds==<br />
<br />
Each wager address has different odds, and each gives the house an edge of 1.50% (i.e., payouts are 98.5% when including the payout to the losing bets)<ref>[http://bitcointalk.org/index.php?topic=77870.msg906438#msg906438 Some changes to the site]</ref>. The website shows the full list of wager addresses and odds.<br />
<br />
==Automated Betting==<br />
<br />
Some gamblers have built automated betting bot scripts employing the Martingale betting system and variants thereof<ref>[http://bitcointalk.org/index.php?topic=80245.0 PHP martingale bot for satoshiDICE]</ref>.<br />
<br />
==History==<br />
<br />
SatoshiDice was the brand given the service initially created by [[BitcoinTalk]] forum user FireDuck before selling the system to another operator<ref>[http://www.reddit.com/r/Bitcoin/comments/segz0/anyone_want_to_run_my_bitcoin_casino Anyone want to run my bitcoin casino]</ref>. The service was announced on April 24, 2012<ref>[http://bitcointalk.org/index.php?topic=77870.0 SatoshiDICE.com - Verified rolls, up to 65,000x winning]</ref>].<br />
Withing weeks, the site became responsible for flooding more Bitcoin spam transactions than all legitimate uses of Bitcoin combined<ref>[http://bitcointalk.org/index.php?topic=79285.0 All-time transaction record was just hit]</ref>.<br />
<br />
Since August 20, 2012 SatoshiDice shares are publicly traded<ref>https://bitcointalk.org/index.php?topic=101902.0 IPO shares announcement</ref> at [[MPEx]] under S.DICE symbol and paying monthly dividends.<br />
<br />
==See Also==<br />
<br />
* [[Mixing service]]<br />
<br />
==External Links==<br />
<br />
* [http://www.SatoshiDice.com SatoshiDice.com] website<br />
<br />
==References==<br />
<references /></div>Anymhttps://tests.bitcoin.it/w/index.php?title=Template:MainPage_Intro&diff=33691Template:MainPage Intro2012-12-12T19:33:01Z<p>Anym: </p>
<hr />
<div>[[Image:Bitcoin world map.png|left|200px|Bitcoin usage worldwide.]]<br />
<br />
'''Bitcoin''' is a decentralized, experimental [[digital currency]] that enables instant payments to anyone, anywhere in the world. Bitcoin uses peer-to-peer technology to operate with no central authority: managing transactions and issuing money are carried out collectively by the network. <br />
<br />
The original Bitcoin software by [[Satoshi Nakamoto]] was released under the MIT license.<br />
Most client software, derived or "from scratch", also use open source licensing.<br />
<br />
Bitcoin is one of the first implementations of a concept called ''crypto-currency'' which was first described in 1998 by Wei Dai on the cypherpunks mailing list. Building upon the notion that money is any object, or any sort of record, accepted as payment for goods and services and repayment of debts in a given country or socio-economic context, Bitcoin is designed around the idea of using cryptography to control the creation and transfer of money, rather than relying on central authorities. ([https://en.bitcoin.it/wiki/Bitcoin More...])<br />
<br />
:''Sourced from [http://bitcoin.org Bitcoin.org] and [[wikipedia:Bitcoin|Wikipedia]].''<br />
<br />
'''Bitcoin-Qt:'''<br />
{|style="background-color: inherit;"<br />
|<br />
* [http://sourceforge.net/projects/bitcoin/files/Bitcoin/bitcoin-0.7.1/bitcoin-0.7.1-win32-setup.exe/download '''Windows (exe)'''] 9.3 MB [http://sourceforge.net/projects/bitcoin/files/Bitcoin/bitcoin-0.7.1/bitcoin-0.7.1-win32.zip/download '''(zip)'''] 13 MB<br />
* [http://sourceforge.net/projects/bitcoin/files/Bitcoin/bitcoin-0.7.1/bitcoin-0.7.1-linux.tar.gz/download '''GNU/Linux'''] 12 MB<br />
* [http://sourceforge.net/projects/bitcoin/files/Bitcoin/bitcoin-0.7.1/bitcoin-0.7.1-macosx.dmg/download '''Mac OS X'''] 13 MB<br />
|}<br />
<br />
[http://bitcoin.org/clients.html More Bitcoin Client Software]</div>Anymhttps://tests.bitcoin.it/w/index.php?title=Bitcoin&diff=33690Bitcoin2012-12-12T19:30:09Z<p>Anym: </p>
<hr />
<div><br />
'''Bitcoin''' is a decentralized [[digital currency]] created by developer [[Satoshi Nakamoto]]. It allows for pseudonymous and secure ownership of Bitcoins, without relying on a central server to process transactions or store funds. Each Bitcoin is divisible up to 100-million units, allowing the currency to adapt in cases of high valuation.<br />
<br />
It is the most widely used alternative currency,<ref name="Quantitative Analysis of the Full Bitcoin Transaction Graph">{{cite web|title=Quantitative Analysis of the Full Bitcoin Transaction Graph|url=http://eprint.iacr.org/2012/584.pdf|publisher=Cryptology ePrint Archive|accessdate=18 October 2012|author=Ron Dorit|coauthors=Adi Shamir|page=17|quote=The Bitcoin system is the best known and most widely used alternative payment scheme,...}}</ref> with the total market cap at over 100 million US dollars.<ref>{{cite web|last=Koch|first=Rüdiger|title=Bitcoin - a Means for Redistribution of Wealth|url=http://ieet.org/index.php/IEET/more/koch20120927|publisher=Institute for Ethics & Emerging Technologies|accessdate=27 October 2012|quote=We’re currently at 50,000 users and a market cap of $100 Million.}}</ref><ref>{{cite web|title=Market Capitalization|url=http://blockchain.info/charts/market-cap|publisher=Blockchain.info|accessdate=28 October 2012}}</ref><ref name="Mt.Gox data">{{Cite web|title=Mt.Gox data|url=http://bitcoincharts.com/markets/mtgoxUSD.html|publisher=Bitcoincharts}}</ref> <br />
<br />
Bitcoin has no central issuer; instead, the peer-to-peer network regulates Bitcoins, transactions and issuance according to consensus in network software.<br />
Bitcoins are issued to various nodes that verify transactions through computing power;<br />
it is established that there will be a limited and scheduled release of no more than 21 million BTC worth of coins, which will be fully issued by the year 2140.<br />
<br />
Internationally, Bitcoins can be exchanged and managed through various websites and [[software]] along with physical banknotes and coins.<ref>{{Cite web|title=Physical Bitcoins by Casascius|url=https://www.casascius.com/|publisher=Casascius Coins|accessdate=29 September 2012}}</ref><ref>{{Cite web|title=Bitbills|url=http://www.bitbills.com/|publisher=Bitbills|accessdate=29 September 2012}}</ref><br />
<br />
==History==<br />
:Main article: [[History]]<br />
<br />
A cryptographic system for untraceable payments was first described by David Chaum in 1982.<ref>[http://blog.koehntopp.de/uploads/Chaum.BlindSigForPayment.1982.PDF David Chaum, Blind signatures for untraceable payments], Advances in Cryptology - Crypto '82, Springer-Verlag (1983), 199–203.</ref> In 1990 Chaum extended this system to create the first cryptographic anonymous electronic cash system.,<ref>{{cite journal|journal=Lecture Notes in Computer Science|last1=Chaum|first1=David|last2=Fiat|first2=Amos|last3=Naor|first3=Moni|title=Untraceable Electronic Cash|url=http://blog.koehntopp.de/uploads/chaum_fiat_naor_ecash.pdf}}</ref> which became known as ecash.<br />
<ref>{{cite web|url=http://www.wired.com/wired/archive/2.12/emoney.html|publisher=Wired|title=E-Money (That's What I Want)|date=1994–2012|author=Steven Levy}}</ref> In 1998 Wei Dai published a description of an anonymous, distributed electronic cash system which he called "b-money".<ref>{{cite web|title=B-Money|url=http://www.weidai.com/bmoney.txt|author=Wei Dai|year=1998}}</ref> Around the same time, Nick Szabo created ''bit gold''.<ref>{{cite web|url=http://spectrum.ieee.org/computing/software/bitcoin-the-cryptoanarchists-answer-to-cash/0|title=Bitcoin: The Cryptoanarchists’ Answer to Cash|publisher=IEEE Spectrum|quote=Around the same time, Nick Szabo, a computer scientist who now blogs about law and the history of money, was one of the first to imagine a new digital currency from the ground up. Although many consider his scheme, which he calls “bit gold,” to be a precursor to Bitcoin}}</ref><ref name="bitgold">{{cite web|title=Bit gold|url=http://unenumerated.blogspot.co.uk/2005/12/bit-gold.html|author=Nick Szabo|quote=My proposal for bit gold is based on computing a string of bits from a string of challenge bits, using functions called variously "client puzzle function," "proof of work function," or "secure benchmark function.". The resulting string of bits is the proof of work.... The last-created string of bit gold provides the challenge bits for the next-created string.}}</ref> Like Bitcoin, ''Bit gold'' was a currency system where users would compete to solve a [[proof of work]] function, with solutions being cryptographically chained together and published via a distributed property title registry. A variant of ''Bit gold'', called ''Reusable Proofs of Work'', was implemented by Hal Finney.<ref name="bitgold"/><br />
<br />
In 2008, Satoshi Nakamoto published a paper<ref name="whitepaper">{{cite web<br />
|last= Nakamoto<br />
|first= Satoshi<br />
|title= Bitcoin: A Peer-to-Peer Electronic Cash System<br />
|url= http://www.cs.kent.edu/~JAVED/class-P2P12F/papers-2012/PAPER2012-p2p-bitcoin-satoshinakamoto.pdf<br />
|accessdate = 14 December 2010<br />
|date= 24 May 2009<br />
|postscript=<br />
}}</ref><ref>{{cite web<br />
|url= http://article.gmane.org/gmane.comp.encryption.general/12588/<br />
|title= Bitcoin P2P e-cash paper<br />
}}</ref> on The Cryptography Mailing list at metzdowd.com<ref>[http://www.mail-archive.com/search?l=cryptography@metzdowd.com&q=from:%22Satoshi+Nakamoto%22 Satoshi's posts to Cryptography mailing list]</ref> describing the Bitcoin protocol.<br />
<br />
The Bitcoin network came into existence on 3 January 2009 with the release of the first Bitcoin client, [[wxBitcoin]], and the issuance of the first Bitcoins.<ref>{{cite web |title=Block 0 – Bitcoin Block Explorer |url=http://blockexplorer.com/block/000000000019d6689c085ae165831e934ff763ae46a2a6c172b3f1b60a8ce26f }}</ref><ref>{{cite web |url=http://www.mail-archive.com/cryptography@metzdowd.com/msg10142.html |title=Bitcoin v0.1 released}}</ref><ref>{{cite web |url=http://sourceforge.net/news/?group_id=244765 |title=SourceForge.net: Bitcoin}}</ref><br />
A year after, the initial exchange rates for Bitcoin were set by individuals on the bitcointalk forums.{{Citation needed|date=October 2012}} The most significant transaction involved a 10,000 BTC pizza.<ref>{{cite web|title=The Rise and Fall of Bitcoin|url=http://www.wired.com/magazine/2011/11/mf_bitcoin/|publisher=Wired|accessdate=13 October 2012}}</ref><br />
Today, the majority of Bitcoin exchanges occur on the [[MtGox]] Bitcoin exchange.<br />
<br />
In 2011, Wikileaks,<ref>{{cite news<br />
|last= Greenberg<br />
|first= Andy<br />
|url= http://blogs.forbes.com/andygreenberg/2011/06/14/wikileaks-asks-for-anonymous-bitcoin-donations/<br />
|title= WikiLeaks Asks For Anonymous Bitcoin Donations – Andy Greenberg – The Firewall – Forbes<br />
|publisher= Blogs.forbes.com<br />
|date= 2011-06-14<br />
|accessdate = 2011-06-22<br />
}}</ref> [[Freenet]],<ref>{{cite web<br />
|url= https://freenetproject.org/donate.html<br />
|title= /donate<br />
|publisher= The Freenet Project<br />
|date=<br />
|accessdate = 2011-06-22<br />
}}</ref> Singularity Institute,<ref>[http://singinst.org/donate/ SIAI donation page]</ref> Internet Archive,<ref>[http://www.archive.org/donate/index.php Internet Archive donation page]</ref> Free Software Foundation<ref>[https://my.fsf.org/donate/other/ Other ways to donate]</ref> and others, began to accept donations in Bitcoin. The Electronic Frontier Foundation did so for a while but has since stopped, citing concerns about a lack of legal precedent about new currency systems, and because they "generally don't endorse any type of product or service."<ref>{{cite web<br />
|url= https://www.eff.org/deeplinks/2011/06/eff-and-bitcoin<br />
|title= EFF and Bitcoin &#124; Electronic Frontier Foundation<br />
|publisher= Eff.org<br />
|date= 2011-06-14<br />
|accessdate = 2011-06-22<br />
}}</ref> Some small businesses had started to adopt Bitcoin. LaCie, a public company, accepts Bitcoin for its Wuala service.<ref>{{Cite web|url=http://www.wuala.com/en/bitcoin |title=Secure Online Storage – Backup. Sync. Share. Access Everywhere |publisher=Wuala |date= |accessdate = 2012-01-24}}</ref><br />
<br />
In 2012, BitPay reports of having over 1000 merchants accepting Bitcoin under its payment processing service.<ref>{{cite web|title=BitPay Signs 1,000 Merchants to Accept Bitcoin Payments|url=http://www.americanbanker.com/issues/177_176/bitpay-signs-1000-merchants-to-accept-bitcoin-payments-1052538-1.html|publisher=American Banker|accessdate=12 October 2012}}</ref><br />
<br />
==Administration==<br />
Bitcoin is administered through a decentralized peer-to-peer network.<ref name="whitepaper"/> Cryptographic technologies and the peer-to-peer network of computing power enables users to make and verify irreversible, instant online Bitcoin payments, without an obligation to trust and use centralized banking institutions and authorities. Dispute resolution services are not made directly available. Instead it is left to the users to verify and trust the parties they are sending money to through their choice of methods. <br />
<br />
Bitcoins are issued according to rules agreed to by the majority of the computing power within the Bitcoin network. The core rules describing the predictable issuance of Bitcoins to its verifying servers, a voluntary and competitive transaction fee system and the hard limit of no more than 21 million BTC issued in total.<ref name="whitepaper"/><br />
<br />
Bitcoin does not require a central bank, State,<ref>{{cite web<br />
|url= http://spectrum.ieee.org/computing/software/bitcoin-the-cryptoanarchists-answer-to-cash/3<br />
|title= Bitcoin: The Cryptoanarchists' Answer to Cash<br />
|publisher= IEEE.org<br />
|date= June 2012<br />
|accessdate = 2012-06-05<br />
}}</ref> or incorporated backers.<br />
<br />
==Services==<br />
:Main article: [[Wallet]]<br />
<br />
Bitcoins are sent and received through software and websites called wallets. They send and confirm transactions to the network through Bitcoin addresses, the identifiers for users' Bitcoin wallets within the network.<ref name="whitepaper"/><br />
<br />
===Bitcoin addresses===<br />
:Main article: [[Address]]<br />
<br />
Payments are made to Bitcoin "addresses": human-readable strings of numbers and letters around 33 characters in length, always beginning with the digit 1 or 3, as in the example of ''31uEbMgunupShBVTewXjtqbBv5MndwfXhb''.<br />
<br />
Users obtain new Bitcoin addresses from their Bitcoin software. Creating a new address can be a completely offline process and require no communication with the Bitcoin network.<br />
<br />
===Transaction fees===<br />
:Main article: [[Transaction fees]]<br />
Transaction fees may be included with any transfer of Bitcoins. {{As of|2012}} many transactions are processed in a way which makes no charge for the transaction. For transactions which consume or produce many coins (and therefore have a large data size), a small transaction fee is usually expected.<br />
<br />
===Confirmations===<br />
:Main article: [[Confirmation]]<br />
<br />
The network's software confirms a transaction when it records it in a block. Further blocks of transactions confirm it even further. After six confirmations/blocks, a transaction is confirmed beyond reasonable doubt.<br />
<br />
The network must store the whole transaction history inside the blockchain, which grows constantly as new records are added and never removed. Nakamoto conceived that as the database became larger, users would desire applications for Bitcoin that didn't store the entire database on their computer. To enable this, the blockchain uses a [[merkle tree]] to organize the transaction records in such a way that client software can locally delete portions of its own database it knows it will never need, such as earlier transaction records of Bitcoins that have changed ownership multiple times.<br />
<br />
==Economics==<br />
<br />
===Initial distribution===<br />
<br />
Bitcoin has no centralized issuing authority.<ref name="ars-06-08-11"><br />
{{Cite news<br />
|first= Thomas<br />
|last= Lowenthal<br />
|title= Bitcoin: inside the encrypted, peer-to-peer digital currency<br />
|newspaper= Ars Technica<br />
|date= 8 June 2011<br />
|url= http://arstechnica.com/tech-policy/news/2011/06/bitcoin-inside-the-encrypted-peer-to-peer-currency.ars<br />
}}</ref><ref>{{cite news<br />
|author= Sponsored by<br />
|url= http://www.economist.com/blogs/babbage/2011/06/virtual-currency<br />
|title= Virtual currency: Bits and bob<br />
|publisher= The Economist<br />
|date=<br />
|accessdate = 2011-06-22<br />
}}</ref><ref>{{cite web<br />
|last= Geere<br />
|first= Duncan<br />
|url= http://www.wired.co.uk/news/archive/2011-05/16/bitcoin-p2p-currency<br />
|title= Peer-to-peer currency Bitcoin sidesteps financial institutions (Wired UK)<br />
|publisher= Wired.co.uk<br />
|date=<br />
|accessdate = 2011-06-22<br />
}}</ref> The network is programmed to increase the money supply as a geometric series until the total number of Bitcoins reaches 21 million BTC.<ref name="Quantitative Analysis of the Full Bitcoin Transaction Graph"/> {{As of|2012|10}} slightly over 10 million of the total 21 million BTC had been created; the current total number created is available online.<ref>{{cite web<br />
|title= Total Number of Bitcoins in Existence<br />
|url= http://blockexplorer.com/q/totalbc<br />
|work= Bitcoin Block Explorer<br />
|accessdate = 2012-10-03<br />
}}</ref> By 2013 half of the total supply will have been generated, and by 2017, three-quarters will have been generated. To ensure sufficient granularity of the [[money supply]], clients can divide each BTC unit down to eight decimal places (a total of 2.1&nbsp;×&nbsp;10<sup>15</sup> or 2.1 quadrillion units).<ref name="lwn">{{Cite news<br />
|author= Nathan Willis<br />
|date= 2010-11-10<br />
|title= Bitcoin: Virtual money created by CPU cycles<br />
|publisher= LWN.net<br />
|url= http://lwn.net/Articles/414452/<br />
}}</ref><br />
<br />
The network {{As of|2012|lc=on}} required over one million times more work for confirming a block and receiving an award (25 BTC {{As of|2012|2|lc=on}}) than when the first blocks were confirmed.<br />
The difficulty is automatically adjusted every 2016 blocks based on the time taken to find the previous 2016 blocks such that one block is created roughly every 10 minutes.<br />
<br />
Those who chose to put computational and electrical resources toward mining early on had a greater chance at receiving awards for block generations. This served to make available enough processing power to process blocks. Indeed, without miners there are no transactions and the Bitcoin economy comes to a halt.<br />
<br />
===Exchange rate===<br />
Prices fluctuate relative to goods and services more than more widely accepted currencies;<br />
the price of a Bitcoin is not static.<br />
<br />
In August 2012, 1 BTC traded at around $10.00 USD. Taking into account the total number of Bitcoins mined, the monetary base of the Bitcoin network stands at over 110 million USD.<ref>[http://www.bitcoinwatch.com/ http://www.bitcoinwatch.com/] Bitcoin statistics</ref><br />
<br />
== Security ==<!--Please keep as starting template--><br />
:Main article: [[Weaknesses]]<br />
<br />
In the history of bitcoin, there have been a few [[incidents]], caused by problematic as well as malicious transactions. In the worst such incident, and the only one of its type, a person was able to pretend that he had a practically infinite supply of bitcoins, for almost 9 hours.<br />
<br />
Bitcoin relies, among other things, on [http://en.wikipedia.org/wiki/Public-key_cryptography public key cryptography] and thus may be vulnerable to [http://en.wikipedia.org/wiki/Elliptic_curve_cryptography#Quantum_computing_attacks quantum computing attacks] if and when practical quantum computers can be constructed.<br />
<br />
If multiple different software packages, whose usage becomes widespread on the Bitcoin network, disagree on the protocol and the rules for transactions, this could potentially cause a fork in the block chain, with each faction of users being able to accept only their own version of the history of transactions. This could influence the price of bitcoins.<br />
<br />
A global, organized campaign against the currency or the software could also influence the demand for bitcoins, and thus the exchange price.<br />
<br />
==Bitcoin mining==<br />
:Main article: [[Mining]]<br />
<br />
Bitcoin mining nodes are responsible for managing the Bitcoin network.<br />
<br />
Bitcoins are awarded to Bitcoin nodes known as "miners" for the solution to a difficult [[proof-of-work]] problem which confirms transactions and prevents double-spending. This incentive, as the Nakamoto white paper describes it, encourages "nodes to support the network, and provides a way to initially distribute coins into circulation, since no central authority issues them."<ref name="whitepaper" /><br />
<br />
Nakamoto compared the generation of new coins by expending CPU time and electricity to gold miners expending resources to add gold to circulation.<ref name="whitepaper"/><br />
<br />
===Node operation===<br />
<br />
The node software for the Bitcoin network is based on peer-to-peer networking, digital signatures and cryptographic proof to make and verify transactions. Nodes broadcast transactions to the network, which records them in a public record of all transactions, called the ''blockchain'', after validating them with a [[proof-of-work|proof-of-work system]].<br />
<br />
Satoshi Nakamoto designed the first Bitcoin node and mining software<ref name="processors">{{Cite news<br />
|last= Davis<br />
|first= Joshua<br />
|title= The Crypto-Currency<br />
|url= http://www.wired.com/magazine/2011/11/mf_bitcoin/all<br />
|accessdate = 11 November 2011<br />
|newspaper= Wired Magazine<br />
|date= 10 November 2011<br />
}}</ref> and developed the majority of the first implementation, Bitcoind, from 2007 to mid-2010.<ref name="code_start">{{cite web<br />
|url= https://bitcointalk.org/index.php?topic=13.msg46#msg46<br />
|title= Questions about Bitcoin<br />
|publisher= Bitcoin forum<br />
|date= 2009-12-10<br />
}}</ref><br />
<br />
Node implementations include core software such as Bitcoind/Bitcoin-Qt, [[libbitcoin]], [[cbitcoin]]<ref>{{Cite web|title=cbitcoin|url=https://github.com/MatthewLM/cbitcoin|accessdate=3 October 2012}}</ref> and BitCoinJ.<ref>{{cite web<br />
|url= http://news.slashdot.org/story/11/03/23/0210207/Google-Engineer-Releases-Open-Source-Bitcoin-Client<br />
|title= Google Engineer Releases Open Source Bitcoin Client<br />
|author= angry tapir, timothy<br />
|date= 23 March 2011<br />
|publisher= Slashdot<br />
|accessdate = 2011-05-18<br />
}}</ref><ref>{{cite web<br />
|url= http://www.javaworld.com/javaworld/jw-01-2012/120110-bitcoin-for-beginners-3.html?page=1<br />
|title= Bitcoin for beginners: The BitcoinJ API<br />
|author= Dirk Merkel<br />
|date= 10 January 2012<br />
|publisher= JavaWorld<br />
|accessdate = 2012-08-03<br />
}}</ref><br />
<br />
Every node in the Bitcoin network collects all the unacknowledged transactions it knows of in a file called a ''block'', which also contains a reference to the previous valid block known to that node. It then appends a [[nonce]] value to this previous block and computes the SHA-256 cryptographic hash of the block and the appended nonce value. The node repeats this process until it adds a nonce that allows for the generation of a hash with a value lower than a specified ''target''. Because computers cannot practically reverse the hash function, finding such a nonce is hard and requires on average a predictable amount of repetitious trial and error. This is where the ''[[proof-of-work]]'' concept comes in to play. When a node finds such a solution, it announces it to the rest of the network. Peers receiving the new solved block validate it by computing the hash and checking that it really starts with the given number of zero bits (i.e., that the hash is within the target). Then they accept it and add it to the chain.<br />
<br />
===Mining rewards===<br />
In addition to receiving the pending transactions confirmed in the block, a generating node adds a ''generate'' transaction, which awards new Bitcoins to the operator of the node that generated the block. The system sets the payout of this generated transaction according to its defined inflation schedule. The miner that generates a block also receives the fees that users have paid as an incentive to give particular transactions priority for faster confirmation.<br />
<br />
The network never creates more than a 50&nbsp;BTC reward per block and this amount will decrease over time towards zero, such that no more than 21 million BTC will ever exist.<ref name="lwn" /> As this payout decreases, the incentive for users to run block-generating nodes is intended to change to earning [[#Transaction fees|transaction fees]].<br />
<br />
===Mining pools===<br />
:Main article: [[Pooled mining]]<br />
<br />
Bitcoin users often pool computational effort to increase the stability of the collected fees and subsidy they receive.<ref name="We Use Coins Mining">{{cite web|title=About Bitcoin Mining|url=http://www.weusecoins.com/mining-guide.php|publisher=We Use Coins|accessdate=18 October 2012}}</ref><br />
<br />
===Mining difficulty===<br />
:Main article: [[Difficulty]]<br />
<br />
In order to throttle the creation of blocks, the difficulty of generating new blocks is adjusted over time. If mining output increases or decreases, the difficulty increases or decreases accordingly.<br />
<br />
The adjustment is done by changing the threshold that a hash is required to be less than. A lower threshold means fewer possible hashes can be accepted, and thus a higher degree of difficulty. The target rate of block generation is one block every 10 minutes, or 2016 blocks every two weeks. Bitcoin changes the difficulty of finding a valid block every 2016 blocks, using the difficulty that would have been most likely to cause the prior 2016 blocks to have taken two weeks to generate, according to the timestamps on the blocks. Technically, this is done by modeling the generation of Bitcoins as Poisson process. All nodes perform and enforce the same difficulty calculation.<br />
<br />
Difficulty is intended as an automatic stabilizer allowing mining for Bitcoins to remain profitable in the long run for the most efficient miners, independently of the fluctuations in demand of Bitcoin in relation to other currencies.<br />
<br />
===Mining hardware===<br />
:Main article: [[Mining Hardware Comparison]]<br />
<br />
Bitcoins used to be mined through Intel/AMD CPUs. {{As of | 2012}}, mining has gradually moved to [[GPU]] and [[FPGA]] hardware.<ref name="bitcoinmag-butterfly" /> [[Application-specific integrated circuit|ASIC]]-based hardware for Bitcoin mining has been announced by several manufacturers who intend to ship products from late 2012 to early 2013.<ref name="bitcoinmag-butterfly">{{Cite web|title=Bitpay Breaks Daily Volume Record with Butterfly ASIC mining release|url=http://bitcoinmagazine.net/bitpay-breaks-daily-volume-record-with-butterfly-asic-mining-release/|publisher=Bitcoin Magazine}}</ref><br />
<br />
==Concerns==<br />
<br />
===As an investment===<br />
Bitcoin describes itself as an experimental digital currency. Reuben Grinberg has noted that Bitcoin's supporters have argued that Bitcoin is neither a security or an investment because it fails to meet the criteria for either category.<ref name="grinberg">{{cite web | url=http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1817857 | title=Bitcoin: An Innovative Alternative Digital Currency | publisher=SSRN | date=9 December 2011 | accessdate=4 December 2012 | author=Grinberg, Reuben}}</ref> Although it is a virtual currency, some people see it as an investment<ref name="cnbc">{{cite web | url=http://www.cnbc.com/id/45030812/The_Pros_And_Cons_Of_Biting_on_Bitcoins | title=The Pros And Cons Of Biting on Bitcoins | publisher=CNBC | date=23 November 2011 | accessdate=4 December 2012 | author=Gustke, Constance}}</ref> or accuse it of being a form of investment fraud known as a Ponzi scheme.<ref>{{cite web |url=http://www.theregister.co.uk/2011/06/08/bitcoin_under_attack/ |title=US senators draw a bead on Bitcoin |last1=Chirgwin |first1=Richard |date=8 June 2011 |publisher=The Register |accessdate=14 November 2012}}</ref><ref>{{cite web |url=http://uk.reuters.com/article/2012/04/01/uk-traders-bitcoin-idUKBRE8300JL20120401 |title=Bitcoin, the City traders' anarchic new toy |last1=O'Leary |first1=Naomi |date=2 April 2012 |publisher=Reuters |accessdate=14 November 2012}}</ref> A report by the European Central Bank, using the U.S. Securities and Exchange Commission's definition of a Ponzi scheme, found that the use of bitcoins shares some characteristics with Ponzi schemes, but also has characteristics of its own which contradict several common aspects of Ponzi schemes.<ref name="ecbreport">{{cite web | url=http://www.ecb.europa.eu/pub/pdf/other/virtualcurrencyschemes201210en.pdf | title=Virtual Currency Schemes | publisher=European Central Bank | date=October 2012 | accessdate=4 December 2012}}</ref><br />
<br />
===Privacy===<br />
Because transactions are broadcast to the entire network, they are inherently public. Unlike regular banking,<ref>{{cite web<br />
|url= http://spectrum.ieee.org/computing/software/bitcoin-the-cryptoanarchists-answer-to-cash/0<br />
|title= Bitcoin: The Cryptoanarchists' Answer to Cash<br />
|publisher= IEEE.org<br />
|date= June 2012<br />
|accessdate = 2012-06-05<br />
}}</ref> which preserves customer privacy by keeping transaction records private, loose transactional privacy is accomplished in Bitcoin by using many unique addresses for every wallet, while at the same time publishing all transactions. As an example, if Alice sends 123.45 BTC to Bob, the network creates a public record that allows anyone to see that 123.45 has been sent from one address to another. However, unless Alice or Bob make their ownership of these addresses known, it is difficult for anyone else to connect the transaction with them. However, if someone connects an address to a user at any point they could follow back a series of transactions as each participant likely knows who paid them and may disclose that information on request or under duress.<br />
<br />
It can be difficult to associate Bitcoin identities with real-life identities.<ref name="An Analysis of Anonymity in the Bitcoin System">Fergal Reid and Martin Harrigan (24 July 2011). [http://anonymity-in-bitcoin.blogspot.com/2011/07/bitcoin-is-not-anonymous.html An Analysis of Anonymity in the Bitcoin System]. An Analysis of Anonymity in the Bitcoin System.</ref> This property makes Bitcoin transactions attractive to sellers of illegal products.<ref name="Forbes">Andy Greenberg (20 April 2011). [http://www.forbes.com/forbes/2011/0509/technology-psilocybin-bitcoins-gavin-andresen-crypto-currency.html Crypto Currency]. Forbes Magazine.</ref><ref>{{cite web<br />
|last= Madrigal<br />
|first= Alexis<br />
|title= Libertarian Dream? A Site Where You Buy Drugs With Digital Dollars<br />
|publisher= The Atlantic Monthly<br />
|date= 2011-06-01<br />
|url= http://www.theatlantic.com/technology/archive/2011/06/libertarian-dream-a-site-where-you-buy-drugs-with-digital-dollars/239776/<br />
|accessdate = 2011-06-05<br />
}}</ref><br />
<br />
===Illicit use===<br />
<br />
====Cracking====<br />
The cracking organization "LulzSec" accepted donations in Bitcoin, having said that the group "needs Bitcoin donations to continue their hacking efforts".<ref name="CNET">{{cite web<br />
|last= Reisinger<br />
|first= Don<br />
|url= http://news.cnet.com/8301-13506_3-20070268-17/senators-target-bitcoin-currency-citing-drug-sales/<br />
|title= Senators target Bitcoin currency, citing drug sales &#124; The Digital Home – CNET News<br />
|publisher= News.cnet.com<br />
|date= 2011-06-09<br />
|accessdate = 2011-06-22<br />
}}</ref><ref>{{cite news<br />
|last= Olson<br />
|first= Parmy<br />
|url= http://blogs.forbes.com/parmyolson/2011/06/06/lulzsec-hackers-posts-sony-dev-source-code-get-7k-donation/<br />
|title= LulzSec Hackers Post Sony Dev. Source Code, Get $7K Donation – Parmy Olson – Disruptors – Forbes<br />
|publisher= Blogs.forbes.com<br />
|date= 6 June 2011<br />
|accessdate = 2011-06-22<br />
}}</ref><br />
<br />
====Silk Road====<br />
[[Silk Road]] is an anonymous black market that uses only the Bitcoin.<ref name="npr-06-12-11"><br />
{{Cite news<br />
|url= http://www.npr.org/2011/06/12/137138008/silk-road-not-your-fathers-amazon-com<br />
|date= 12 June 2011<br />
|newspaper= NPR<br />
|title= Silk Road: Not Your Father's Amazon.com<br />
|author= Staff<br />
}}</ref> <br />
<br />
In a 2011 letter to Attorney General Eric Holder and the Drug Enforcement Administration, senators Charles Schumer of New York and Joe Manchin of West Virginia called for an investigation into Silk Road and the Bitcoin.<ref name="npr-06-12-11"/><br />
Schumer described the use of Bitcoins at Silk Road as a form of money laundering.<ref name="ars-06-08-11"/><br />
<br />
====Botnet mining====<br />
In June 2011, Symantec warned about the possibility of botnets engaging in covert "mining" of Bitcoins,<ref>{{Cite web|author=Updated: 17 June 2011 | Translations available: 日本語 |url=http://www.symantec.com/connect/blogs/bitcoin-botnet-mining |title=Bitcoin Botnet Mining &#124; Symantec Connect Community |publisher=Symantec.com |date=2011-06-17 |accessdate = 2012-01-24}}</ref><ref>{{Cite web|url=http://www.zdnet.com/blog/security/researchers-find-malware-rigged-with-bitcoin-miner/8934 |title=Researchers find malware rigged with Bitcoin miner |publisher=ZDNet |date=2011-06-29 |accessdate = 2012-01-24}}</ref> consuming computing cycles, using extra electricity and possibly increasing the temperature of the computer. Later that month, the Australian Broadcasting Corporation caught an employee using the company's servers to generate Bitcoins without permission.<ref>{{Cite web|url=http://thenextweb.com/au/2011/06/23/abc-employee-caught-mining-for-bitcoins-on-company-servers/ |title=ABC employee caught mining for Bitcoins on company servers |publisher=The Next Web |date=2011-06-23 |accessdate = 2012-01-24}}</ref> Some malware also uses the parallel processing capabilities of the GPUs built into many modern-day video cards.<ref>{{Cite news |url=http://www.theregister.co.uk/2011/08/16/gpu_bitcoin_brute_forcing/ |title=Malware mints virtual currency using victim's GPU |date=16 August 2011<!-- 20:00 GMT -->|first=Dan |last=Goodin }}</ref> In mid August 2011, Bitcoin miner botnets were found;<ref>{{Cite web|url=http://www.infosecurity-magazine.com/view/20211/researcher-discovers-distributed-bitcoin-cracking-trojan-malware/ |title=Infosecurity – Researcher discovers distributed bitcoin cracking trojan malware |publisher=Infosecurity-magazine.com |date=2011-08-19 |accessdate = 2012-01-24}}</ref> trojans infecting Mac OS X have also been uncovered.<ref>{{Cite web|url=http://www.techworld.com.au/article/405849/mac_os_x_trojan_steals_processing_power_produce_bitcoins |title=Mac OS X Trojan steals processing power to produce Bitcoins – sophos, security, malware, Intego – Vulnerabilities – Security |publisher=Techworld |date=2011-11-01 |accessdate = 2012-01-24}}</ref><br />
<br />
===Theft and fraud===<br />
On 19 June 2011, a security breach of the Mt.Gox (an acronym for ''M''agic: ''T''he ''G''athering ''O''nline E''x''change, its original purpose) Bitcoin Exchange caused the price of a Bitcoin to briefly drop to US$0.01 on the Mt.Gox exchange (though it remained unaffected on other exchanges) after a hacker allegedly used credentials from a Mt.Gox auditor's compromised computer to illegally transfer a large number of Bitcoins to him- or herself and sell them all, creating a massive "ask" order at any price. Within minutes the price rebounded to over $15 before Mt.Gox shut down their exchange and canceled all trades that happened during the hacking period.<ref>[https://mtgox.com/press_release_20110630.html Clarification of Mt Gox Compromised Accounts and Major Bitcoin Sell-Off]</ref><ref>[http://www.youtube.com/watch?v=T1X6qQt9ONg YouTube. Bitcoin Report]</ref> The exchange rate of Bitcoins quickly returned to near pre-crash values.<ref name="mick">Jason Mick, 19 June 2011, [http://www.dailytech.com/Inside+the+MegaHack+of+Bitcoin+the+Full+Story/article21942.htm Inside the Mega-Hack of Bitcoin: the Full Story], DailyTech</ref><ref>Timothy B. Lee, 19 June 2011, [http://arstechnica.com/tech-policy/news/2011/06/bitcoin-price-plummets-on-compromised-exchange.ars Bitcoin prices plummet on hacked exchange], Ars Technica</ref><ref>Mark Karpeles, 20 June 2011, [https://support.mtgox.com/entries/20208066-huge-bitcoin-sell-off-due-to-a-compromised-account-rollback Huge Bitcoin sell off due to a compromised account – rollback], Mt.Gox Support</ref><ref name="register1">{{Cite news<br />
|title= Bitcoin collapses on malicious trade – Mt Gox scrambling to raise the Titanic<br />
|url= http://www.theregister.co.uk/2011/06/19/bitcoin_values_collapse_again/<br />
|date= 2011-06-19<br />
|author= Chirgwin, Richard<br />
|publisher= The Register<br />
}}</ref> Accounts with the equivalent of more than USD 8,750,000 were affected.<ref name="mick" /><br />
<br />
In July 2011, The operator of Bitomat, the third largest Bitcoin exchange, announced that he lost access to his wallet.dat file with about 17,000 BitCoins (roughly equivalent to 220,000 USD at that time). He announced that he would sell the service for the missing amount, aiming to use funds from the sale to refund his customers.<ref>[http://siliconangle.com/blog/2011/08/01/third-largest-bitcoin-exchange-bitomat-lost-their-wallet-over-17000-bitcoins-missing/ Third Largest Bitcoin Exchange Bitomat Lost Their Wallet, Over 17,000 Bitcoins Missing]. SiliconAngle</ref><br />
<br />
In August 2011, MyBitcoin, one of popular Bitcoin transaction processors, declared that it was hacked, which resulted in it being shut down, with paying 49% on customer deposits, leaving more than 78,000 BitCoins (roughly equivalent to 800,000 USD at that time) unaccounted for.<ref>[http://betabeat.com/2011/08/mybitcoin-spokesman-finally-comes-forward-what-did-you-think-we-did-after-the-hack-we-got-shitfaced/ MyBitcoin Spokesman Finally Comes Forward: “What Did You Think We Did After the Hack? We Got Shitfaced”]. BetaBeat</ref><ref>[http://betabeat.com/2011/08/search-for-owners-of-mybitcoin-loses-steam/ Search for Owners of MyBitcoin Loses Steam]. BetaBeat</ref><br />
<br />
In early August 2012, a lawsuit was filed in San Francisco court against Bitcoinica, claiming about 460,000 USD from the company. Bitcoinica was hacked twice in 2012, which led to allegations of neglecting the safety of customers' money and cheating them out of withdrawal requests.<ref>[http://arstechnica.com/tech-policy/2012/08/bitcoinica-users-sue-for-460k-in-lost-bitcoins/ Bitcoinica users sue for $460k in lost Bitcoins]. Arstechnica</ref><ref>[http://spectrum.ieee.org/tech-talk/computing/networks/first-bitcoin-lawsuit-filed-in-san-francisco First Bitcoin Lawsuit Filed In San Francisco]. IEEE Spectrum</ref><br />
<br />
In late August 2012, Bitcoin Savings and Trust was shut down by the owner, allegedly leaving around $5.6 million in debts; this led to allegations of the operation being a Ponzi scheme.<ref>{{Cite web|title=Bitcoin ponzi scheme – investors lose $5 million USD in online hedge fund|url=http://rt.com/usa/news/investors-currency-digital-fund-868/|publisher=RT}}</ref><ref>{{Cite web|last=Jeffries|first=Adrianne|title=Suspected multi-million dollar Bitcoin pyramid scheme shuts down, investors revolt|url=http://www.theverge.com/2012/8/27/3271637/bitcoin-savings-trust-pyramid-scheme-shuts-down|publisher=The Verge}}</ref><ref>{{Cite web|last=Mick|first=Jason|title="Pirateat40" Makes Off $5.6M USD in BitCoins From Pyramid Scheme|url=http://www.dailytech.com/Pirateat40+Makes+Off+56M+USD+in+BitCoins+From+Pyramid+Scheme/article25538.htm|publisher=DailyTech}}</ref><ref>[http://pandodaily.com/2012/08/31/bitcoin-how-a-virtual-currency-became-real-with-a-5-6m-fraud/ Bitcoin: How a Virtual Currency Became Real with a $5.6M Fraud]. PandoDaily</ref> In September 2012, it was reported that U.S. Securities and Exchange Commission has started an investigation on the case.<ref>[http://blogs.telegraph.co.uk/technology/willardfoxton2/100007836/bitcoin-pirate-scandal-sec-steps-in-amid-allegations-that-the-whole-thing-was-a-ponzi-scheme/ Bitcoin 'Pirate' scandal: SEC steps in amid allegations that the whole thing was a Ponzi scheme ]. The Telegraph</ref><br />
<br />
In September 2012, Bitfloor Bitcoin exchange also reported being hacked, with 24,000 BitCoins (roughly equivalent to 250,000 USD) stolen. As a result, Bitfloor suspended operations.<ref>[http://www.bbc.co.uk/news/technology-19486695 Bitcoin theft causes Bitfloor exchange to go offline]. BBC</ref><ref>[http://www.theverge.com/2012/9/5/3293375/bitfloor-bitcoin-exchange-suspended-theft Bitcoin exchange BitFloor suspends operations after $250,000 theft Bitcoin exchange BitFloor suspends operations after $250,000 theft]. The Verge</ref> The same month, Bitfloor resumed operations, with its founder saying that he reported the theft to FBI, and that he is planning to repay the victims, though the time frame for such repayment is unclear.<ref>[http://www.pcworld.com/article/2010586/bitcoin-exchange-back-online-after-hack.html?tk=rel_news Bitcoin exchange back online after hack]. PCWorld</ref><br />
<br />
===Taxation===<br />
In September 2012, the Intra-European Organization of Tax Administrations (IOTA), in Tbilisi, Georgia, held a workshop titled "Auditing Individuals and Legal Entities in the Use of e-Money." The workshop was attended by representatives from 23 countries.<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> Jerry Taylor, IOTA's technical taxation expert, said, "There's an awful lot happening on the Internet environment which is fascinating at the moment and introducing new challenges for auditors when it comes to virtual currency."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> Bitcoin was mentioned during the workshop.<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> <br />
<br />
Matthew Elias, founder of the [[Cryptocurrency Legal Advocacy Group]] (CLAG) published "Staying Between the Lines: A Survey of U.S. Income Taxation and its Ramifications on Cryptocurrencies", which discusses "the taxability of cryptocurrencies such as bitcoin."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> CLAG "stressed the importance for taxpayers to determine on their own whether taxes are due on a bitcoin-related transaction based on whether one has "experienced a realization event."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> Such examples are "when a taxpayer has provided a service in exchange for bitcoins, a realization event has probably occurred, and any gain or loss would likely be calculated using fair market values for the service provided."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref><br />
<br />
[[Peter Vessenes]], [[Bitcoin Foundation|Bitcoin Foundation's]] executive director, said, since the foundation is trying to pay for everything in bitcoin, including salaries, "How do we W-2 someone for their bitcoins? Do we mark-to-market every time a transfer happens? Payroll companies cringe."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> The Bitcoin Foundation hopes "to push for solid guidance about its legal and tax treatment." [[Patrick Murck]], legal counsel for the Bitcoin Foundation, said he would like "to help regulators understand the technology better so they can make better decisions."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> Murck said, "Bitcoin has the potential to become much more than a niche currency, but it needs the guidance and understanding of regulators." and "The full potential of bitcoin could be realized through clearer guidelines and a better understanding by financial and tax regulators." and "Part of making that happen is to talk to regulators, the IRS, and tax professionals and helping them understand that bitcoin is not this nefarious thing, it's just software, it's a community, and there's nothing inherently nefarious about either of those things."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref><br />
<br />
==See Also==<br />
* [[Introduction]]<br />
* [[Getting started]]<br />
* [[Using_Bitcoin|Detailed tutorial]]<br />
* [[How bitcoin works]]<br />
* [[FAQ]]<br />
<br />
==References==<br />
<references /><br />
<br />
[[Category:Digital currencies]]</div>Anymhttps://tests.bitcoin.it/w/index.php?title=Bitcoin&diff=33689Bitcoin2012-12-12T19:29:35Z<p>Anym: </p>
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<div><br />
'''Bitcoin''' is a decentralized [[digital currency]] created by programmer [[Satoshi Nakamoto]]. It allows for pseudonymous and secure ownership of Bitcoins, without relying on a central server to process transactions or store funds. Each Bitcoin is divisible up to 100-million units, allowing the currency to adapt in cases of high valuation.<br />
<br />
It is the most widely used alternative currency,<ref name="Quantitative Analysis of the Full Bitcoin Transaction Graph">{{cite web|title=Quantitative Analysis of the Full Bitcoin Transaction Graph|url=http://eprint.iacr.org/2012/584.pdf|publisher=Cryptology ePrint Archive|accessdate=18 October 2012|author=Ron Dorit|coauthors=Adi Shamir|page=17|quote=The Bitcoin system is the best known and most widely used alternative payment scheme,...}}</ref> with the total market cap at over 100 million US dollars.<ref>{{cite web|last=Koch|first=Rüdiger|title=Bitcoin - a Means for Redistribution of Wealth|url=http://ieet.org/index.php/IEET/more/koch20120927|publisher=Institute for Ethics & Emerging Technologies|accessdate=27 October 2012|quote=We’re currently at 50,000 users and a market cap of $100 Million.}}</ref><ref>{{cite web|title=Market Capitalization|url=http://blockchain.info/charts/market-cap|publisher=Blockchain.info|accessdate=28 October 2012}}</ref><ref name="Mt.Gox data">{{Cite web|title=Mt.Gox data|url=http://bitcoincharts.com/markets/mtgoxUSD.html|publisher=Bitcoincharts}}</ref> <br />
<br />
Bitcoin has no central issuer; instead, the peer-to-peer network regulates Bitcoins, transactions and issuance according to consensus in network software.<br />
Bitcoins are issued to various nodes that verify transactions through computing power;<br />
it is established that there will be a limited and scheduled release of no more than 21 million BTC worth of coins, which will be fully issued by the year 2140.<br />
<br />
Internationally, Bitcoins can be exchanged and managed through various websites and [[software]] along with physical banknotes and coins.<ref>{{Cite web|title=Physical Bitcoins by Casascius|url=https://www.casascius.com/|publisher=Casascius Coins|accessdate=29 September 2012}}</ref><ref>{{Cite web|title=Bitbills|url=http://www.bitbills.com/|publisher=Bitbills|accessdate=29 September 2012}}</ref><br />
<br />
==History==<br />
:Main article: [[History]]<br />
<br />
A cryptographic system for untraceable payments was first described by David Chaum in 1982.<ref>[http://blog.koehntopp.de/uploads/Chaum.BlindSigForPayment.1982.PDF David Chaum, Blind signatures for untraceable payments], Advances in Cryptology - Crypto '82, Springer-Verlag (1983), 199–203.</ref> In 1990 Chaum extended this system to create the first cryptographic anonymous electronic cash system.,<ref>{{cite journal|journal=Lecture Notes in Computer Science|last1=Chaum|first1=David|last2=Fiat|first2=Amos|last3=Naor|first3=Moni|title=Untraceable Electronic Cash|url=http://blog.koehntopp.de/uploads/chaum_fiat_naor_ecash.pdf}}</ref> which became known as ecash.<br />
<ref>{{cite web|url=http://www.wired.com/wired/archive/2.12/emoney.html|publisher=Wired|title=E-Money (That's What I Want)|date=1994–2012|author=Steven Levy}}</ref> In 1998 Wei Dai published a description of an anonymous, distributed electronic cash system which he called "b-money".<ref>{{cite web|title=B-Money|url=http://www.weidai.com/bmoney.txt|author=Wei Dai|year=1998}}</ref> Around the same time, Nick Szabo created ''bit gold''.<ref>{{cite web|url=http://spectrum.ieee.org/computing/software/bitcoin-the-cryptoanarchists-answer-to-cash/0|title=Bitcoin: The Cryptoanarchists’ Answer to Cash|publisher=IEEE Spectrum|quote=Around the same time, Nick Szabo, a computer scientist who now blogs about law and the history of money, was one of the first to imagine a new digital currency from the ground up. Although many consider his scheme, which he calls “bit gold,” to be a precursor to Bitcoin}}</ref><ref name="bitgold">{{cite web|title=Bit gold|url=http://unenumerated.blogspot.co.uk/2005/12/bit-gold.html|author=Nick Szabo|quote=My proposal for bit gold is based on computing a string of bits from a string of challenge bits, using functions called variously "client puzzle function," "proof of work function," or "secure benchmark function.". The resulting string of bits is the proof of work.... The last-created string of bit gold provides the challenge bits for the next-created string.}}</ref> Like Bitcoin, ''Bit gold'' was a currency system where users would compete to solve a [[proof of work]] function, with solutions being cryptographically chained together and published via a distributed property title registry. A variant of ''Bit gold'', called ''Reusable Proofs of Work'', was implemented by Hal Finney.<ref name="bitgold"/><br />
<br />
In 2008, Satoshi Nakamoto published a paper<ref name="whitepaper">{{cite web<br />
|last= Nakamoto<br />
|first= Satoshi<br />
|title= Bitcoin: A Peer-to-Peer Electronic Cash System<br />
|url= http://www.cs.kent.edu/~JAVED/class-P2P12F/papers-2012/PAPER2012-p2p-bitcoin-satoshinakamoto.pdf<br />
|accessdate = 14 December 2010<br />
|date= 24 May 2009<br />
|postscript=<br />
}}</ref><ref>{{cite web<br />
|url= http://article.gmane.org/gmane.comp.encryption.general/12588/<br />
|title= Bitcoin P2P e-cash paper<br />
}}</ref> on The Cryptography Mailing list at metzdowd.com<ref>[http://www.mail-archive.com/search?l=cryptography@metzdowd.com&q=from:%22Satoshi+Nakamoto%22 Satoshi's posts to Cryptography mailing list]</ref> describing the Bitcoin protocol.<br />
<br />
The Bitcoin network came into existence on 3 January 2009 with the release of the first Bitcoin client, [[wxBitcoin]], and the issuance of the first Bitcoins.<ref>{{cite web |title=Block 0 – Bitcoin Block Explorer |url=http://blockexplorer.com/block/000000000019d6689c085ae165831e934ff763ae46a2a6c172b3f1b60a8ce26f }}</ref><ref>{{cite web |url=http://www.mail-archive.com/cryptography@metzdowd.com/msg10142.html |title=Bitcoin v0.1 released}}</ref><ref>{{cite web |url=http://sourceforge.net/news/?group_id=244765 |title=SourceForge.net: Bitcoin}}</ref><br />
A year after, the initial exchange rates for Bitcoin were set by individuals on the bitcointalk forums.{{Citation needed|date=October 2012}} The most significant transaction involved a 10,000 BTC pizza.<ref>{{cite web|title=The Rise and Fall of Bitcoin|url=http://www.wired.com/magazine/2011/11/mf_bitcoin/|publisher=Wired|accessdate=13 October 2012}}</ref><br />
Today, the majority of Bitcoin exchanges occur on the [[MtGox]] Bitcoin exchange.<br />
<br />
In 2011, Wikileaks,<ref>{{cite news<br />
|last= Greenberg<br />
|first= Andy<br />
|url= http://blogs.forbes.com/andygreenberg/2011/06/14/wikileaks-asks-for-anonymous-bitcoin-donations/<br />
|title= WikiLeaks Asks For Anonymous Bitcoin Donations – Andy Greenberg – The Firewall – Forbes<br />
|publisher= Blogs.forbes.com<br />
|date= 2011-06-14<br />
|accessdate = 2011-06-22<br />
}}</ref> [[Freenet]],<ref>{{cite web<br />
|url= https://freenetproject.org/donate.html<br />
|title= /donate<br />
|publisher= The Freenet Project<br />
|date=<br />
|accessdate = 2011-06-22<br />
}}</ref> Singularity Institute,<ref>[http://singinst.org/donate/ SIAI donation page]</ref> Internet Archive,<ref>[http://www.archive.org/donate/index.php Internet Archive donation page]</ref> Free Software Foundation<ref>[https://my.fsf.org/donate/other/ Other ways to donate]</ref> and others, began to accept donations in Bitcoin. The Electronic Frontier Foundation did so for a while but has since stopped, citing concerns about a lack of legal precedent about new currency systems, and because they "generally don't endorse any type of product or service."<ref>{{cite web<br />
|url= https://www.eff.org/deeplinks/2011/06/eff-and-bitcoin<br />
|title= EFF and Bitcoin &#124; Electronic Frontier Foundation<br />
|publisher= Eff.org<br />
|date= 2011-06-14<br />
|accessdate = 2011-06-22<br />
}}</ref> Some small businesses had started to adopt Bitcoin. LaCie, a public company, accepts Bitcoin for its Wuala service.<ref>{{Cite web|url=http://www.wuala.com/en/bitcoin |title=Secure Online Storage – Backup. Sync. Share. Access Everywhere |publisher=Wuala |date= |accessdate = 2012-01-24}}</ref><br />
<br />
In 2012, BitPay reports of having over 1000 merchants accepting Bitcoin under its payment processing service.<ref>{{cite web|title=BitPay Signs 1,000 Merchants to Accept Bitcoin Payments|url=http://www.americanbanker.com/issues/177_176/bitpay-signs-1000-merchants-to-accept-bitcoin-payments-1052538-1.html|publisher=American Banker|accessdate=12 October 2012}}</ref><br />
<br />
==Administration==<br />
Bitcoin is administered through a decentralized peer-to-peer network.<ref name="whitepaper"/> Cryptographic technologies and the peer-to-peer network of computing power enables users to make and verify irreversible, instant online Bitcoin payments, without an obligation to trust and use centralized banking institutions and authorities. Dispute resolution services are not made directly available. Instead it is left to the users to verify and trust the parties they are sending money to through their choice of methods. <br />
<br />
Bitcoins are issued according to rules agreed to by the majority of the computing power within the Bitcoin network. The core rules describing the predictable issuance of Bitcoins to its verifying servers, a voluntary and competitive transaction fee system and the hard limit of no more than 21 million BTC issued in total.<ref name="whitepaper"/><br />
<br />
Bitcoin does not require a central bank, State,<ref>{{cite web<br />
|url= http://spectrum.ieee.org/computing/software/bitcoin-the-cryptoanarchists-answer-to-cash/3<br />
|title= Bitcoin: The Cryptoanarchists' Answer to Cash<br />
|publisher= IEEE.org<br />
|date= June 2012<br />
|accessdate = 2012-06-05<br />
}}</ref> or incorporated backers.<br />
<br />
==Services==<br />
:Main article: [[Wallet]]<br />
<br />
Bitcoins are sent and received through software and websites called wallets. They send and confirm transactions to the network through Bitcoin addresses, the identifiers for users' Bitcoin wallets within the network.<ref name="whitepaper"/><br />
<br />
===Bitcoin addresses===<br />
:Main article: [[Address]]<br />
<br />
Payments are made to Bitcoin "addresses": human-readable strings of numbers and letters around 33 characters in length, always beginning with the digit 1 or 3, as in the example of ''31uEbMgunupShBVTewXjtqbBv5MndwfXhb''.<br />
<br />
Users obtain new Bitcoin addresses from their Bitcoin software. Creating a new address can be a completely offline process and require no communication with the Bitcoin network.<br />
<br />
===Transaction fees===<br />
:Main article: [[Transaction fees]]<br />
Transaction fees may be included with any transfer of Bitcoins. {{As of|2012}} many transactions are processed in a way which makes no charge for the transaction. For transactions which consume or produce many coins (and therefore have a large data size), a small transaction fee is usually expected.<br />
<br />
===Confirmations===<br />
:Main article: [[Confirmation]]<br />
<br />
The network's software confirms a transaction when it records it in a block. Further blocks of transactions confirm it even further. After six confirmations/blocks, a transaction is confirmed beyond reasonable doubt.<br />
<br />
The network must store the whole transaction history inside the blockchain, which grows constantly as new records are added and never removed. Nakamoto conceived that as the database became larger, users would desire applications for Bitcoin that didn't store the entire database on their computer. To enable this, the blockchain uses a [[merkle tree]] to organize the transaction records in such a way that client software can locally delete portions of its own database it knows it will never need, such as earlier transaction records of Bitcoins that have changed ownership multiple times.<br />
<br />
==Economics==<br />
<br />
===Initial distribution===<br />
<br />
Bitcoin has no centralized issuing authority.<ref name="ars-06-08-11"><br />
{{Cite news<br />
|first= Thomas<br />
|last= Lowenthal<br />
|title= Bitcoin: inside the encrypted, peer-to-peer digital currency<br />
|newspaper= Ars Technica<br />
|date= 8 June 2011<br />
|url= http://arstechnica.com/tech-policy/news/2011/06/bitcoin-inside-the-encrypted-peer-to-peer-currency.ars<br />
}}</ref><ref>{{cite news<br />
|author= Sponsored by<br />
|url= http://www.economist.com/blogs/babbage/2011/06/virtual-currency<br />
|title= Virtual currency: Bits and bob<br />
|publisher= The Economist<br />
|date=<br />
|accessdate = 2011-06-22<br />
}}</ref><ref>{{cite web<br />
|last= Geere<br />
|first= Duncan<br />
|url= http://www.wired.co.uk/news/archive/2011-05/16/bitcoin-p2p-currency<br />
|title= Peer-to-peer currency Bitcoin sidesteps financial institutions (Wired UK)<br />
|publisher= Wired.co.uk<br />
|date=<br />
|accessdate = 2011-06-22<br />
}}</ref> The network is programmed to increase the money supply as a geometric series until the total number of Bitcoins reaches 21 million BTC.<ref name="Quantitative Analysis of the Full Bitcoin Transaction Graph"/> {{As of|2012|10}} slightly over 10 million of the total 21 million BTC had been created; the current total number created is available online.<ref>{{cite web<br />
|title= Total Number of Bitcoins in Existence<br />
|url= http://blockexplorer.com/q/totalbc<br />
|work= Bitcoin Block Explorer<br />
|accessdate = 2012-10-03<br />
}}</ref> By 2013 half of the total supply will have been generated, and by 2017, three-quarters will have been generated. To ensure sufficient granularity of the [[money supply]], clients can divide each BTC unit down to eight decimal places (a total of 2.1&nbsp;×&nbsp;10<sup>15</sup> or 2.1 quadrillion units).<ref name="lwn">{{Cite news<br />
|author= Nathan Willis<br />
|date= 2010-11-10<br />
|title= Bitcoin: Virtual money created by CPU cycles<br />
|publisher= LWN.net<br />
|url= http://lwn.net/Articles/414452/<br />
}}</ref><br />
<br />
The network {{As of|2012|lc=on}} required over one million times more work for confirming a block and receiving an award (25 BTC {{As of|2012|2|lc=on}}) than when the first blocks were confirmed.<br />
The difficulty is automatically adjusted every 2016 blocks based on the time taken to find the previous 2016 blocks such that one block is created roughly every 10 minutes.<br />
<br />
Those who chose to put computational and electrical resources toward mining early on had a greater chance at receiving awards for block generations. This served to make available enough processing power to process blocks. Indeed, without miners there are no transactions and the Bitcoin economy comes to a halt.<br />
<br />
===Exchange rate===<br />
Prices fluctuate relative to goods and services more than more widely accepted currencies;<br />
the price of a Bitcoin is not static.<br />
<br />
In August 2012, 1 BTC traded at around $10.00 USD. Taking into account the total number of Bitcoins mined, the monetary base of the Bitcoin network stands at over 110 million USD.<ref>[http://www.bitcoinwatch.com/ http://www.bitcoinwatch.com/] Bitcoin statistics</ref><br />
<br />
== Security ==<!--Please keep as starting template--><br />
:Main article: [[Weaknesses]]<br />
<br />
In the history of bitcoin, there have been a few [[incidents]], caused by problematic as well as malicious transactions. In the worst such incident, and the only one of its type, a person was able to pretend that he had a practically infinite supply of bitcoins, for almost 9 hours.<br />
<br />
Bitcoin relies, among other things, on [http://en.wikipedia.org/wiki/Public-key_cryptography public key cryptography] and thus may be vulnerable to [http://en.wikipedia.org/wiki/Elliptic_curve_cryptography#Quantum_computing_attacks quantum computing attacks] if and when practical quantum computers can be constructed.<br />
<br />
If multiple different software packages, whose usage becomes widespread on the Bitcoin network, disagree on the protocol and the rules for transactions, this could potentially cause a fork in the block chain, with each faction of users being able to accept only their own version of the history of transactions. This could influence the price of bitcoins.<br />
<br />
A global, organized campaign against the currency or the software could also influence the demand for bitcoins, and thus the exchange price.<br />
<br />
==Bitcoin mining==<br />
:Main article: [[Mining]]<br />
<br />
Bitcoin mining nodes are responsible for managing the Bitcoin network.<br />
<br />
Bitcoins are awarded to Bitcoin nodes known as "miners" for the solution to a difficult [[proof-of-work]] problem which confirms transactions and prevents double-spending. This incentive, as the Nakamoto white paper describes it, encourages "nodes to support the network, and provides a way to initially distribute coins into circulation, since no central authority issues them."<ref name="whitepaper" /><br />
<br />
Nakamoto compared the generation of new coins by expending CPU time and electricity to gold miners expending resources to add gold to circulation.<ref name="whitepaper"/><br />
<br />
===Node operation===<br />
<br />
The node software for the Bitcoin network is based on peer-to-peer networking, digital signatures and cryptographic proof to make and verify transactions. Nodes broadcast transactions to the network, which records them in a public record of all transactions, called the ''blockchain'', after validating them with a [[proof-of-work|proof-of-work system]].<br />
<br />
Satoshi Nakamoto designed the first Bitcoin node and mining software<ref name="processors">{{Cite news<br />
|last= Davis<br />
|first= Joshua<br />
|title= The Crypto-Currency<br />
|url= http://www.wired.com/magazine/2011/11/mf_bitcoin/all<br />
|accessdate = 11 November 2011<br />
|newspaper= Wired Magazine<br />
|date= 10 November 2011<br />
}}</ref> and developed the majority of the first implementation, Bitcoind, from 2007 to mid-2010.<ref name="code_start">{{cite web<br />
|url= https://bitcointalk.org/index.php?topic=13.msg46#msg46<br />
|title= Questions about Bitcoin<br />
|publisher= Bitcoin forum<br />
|date= 2009-12-10<br />
}}</ref><br />
<br />
Node implementations include core software such as Bitcoind/Bitcoin-Qt, [[libbitcoin]], [[cbitcoin]]<ref>{{Cite web|title=cbitcoin|url=https://github.com/MatthewLM/cbitcoin|accessdate=3 October 2012}}</ref> and BitCoinJ.<ref>{{cite web<br />
|url= http://news.slashdot.org/story/11/03/23/0210207/Google-Engineer-Releases-Open-Source-Bitcoin-Client<br />
|title= Google Engineer Releases Open Source Bitcoin Client<br />
|author= angry tapir, timothy<br />
|date= 23 March 2011<br />
|publisher= Slashdot<br />
|accessdate = 2011-05-18<br />
}}</ref><ref>{{cite web<br />
|url= http://www.javaworld.com/javaworld/jw-01-2012/120110-bitcoin-for-beginners-3.html?page=1<br />
|title= Bitcoin for beginners: The BitcoinJ API<br />
|author= Dirk Merkel<br />
|date= 10 January 2012<br />
|publisher= JavaWorld<br />
|accessdate = 2012-08-03<br />
}}</ref><br />
<br />
Every node in the Bitcoin network collects all the unacknowledged transactions it knows of in a file called a ''block'', which also contains a reference to the previous valid block known to that node. It then appends a [[nonce]] value to this previous block and computes the SHA-256 cryptographic hash of the block and the appended nonce value. The node repeats this process until it adds a nonce that allows for the generation of a hash with a value lower than a specified ''target''. Because computers cannot practically reverse the hash function, finding such a nonce is hard and requires on average a predictable amount of repetitious trial and error. This is where the ''[[proof-of-work]]'' concept comes in to play. When a node finds such a solution, it announces it to the rest of the network. Peers receiving the new solved block validate it by computing the hash and checking that it really starts with the given number of zero bits (i.e., that the hash is within the target). Then they accept it and add it to the chain.<br />
<br />
===Mining rewards===<br />
In addition to receiving the pending transactions confirmed in the block, a generating node adds a ''generate'' transaction, which awards new Bitcoins to the operator of the node that generated the block. The system sets the payout of this generated transaction according to its defined inflation schedule. The miner that generates a block also receives the fees that users have paid as an incentive to give particular transactions priority for faster confirmation.<br />
<br />
The network never creates more than a 50&nbsp;BTC reward per block and this amount will decrease over time towards zero, such that no more than 21 million BTC will ever exist.<ref name="lwn" /> As this payout decreases, the incentive for users to run block-generating nodes is intended to change to earning [[#Transaction fees|transaction fees]].<br />
<br />
===Mining pools===<br />
:Main article: [[Pooled mining]]<br />
<br />
Bitcoin users often pool computational effort to increase the stability of the collected fees and subsidy they receive.<ref name="We Use Coins Mining">{{cite web|title=About Bitcoin Mining|url=http://www.weusecoins.com/mining-guide.php|publisher=We Use Coins|accessdate=18 October 2012}}</ref><br />
<br />
===Mining difficulty===<br />
:Main article: [[Difficulty]]<br />
<br />
In order to throttle the creation of blocks, the difficulty of generating new blocks is adjusted over time. If mining output increases or decreases, the difficulty increases or decreases accordingly.<br />
<br />
The adjustment is done by changing the threshold that a hash is required to be less than. A lower threshold means fewer possible hashes can be accepted, and thus a higher degree of difficulty. The target rate of block generation is one block every 10 minutes, or 2016 blocks every two weeks. Bitcoin changes the difficulty of finding a valid block every 2016 blocks, using the difficulty that would have been most likely to cause the prior 2016 blocks to have taken two weeks to generate, according to the timestamps on the blocks. Technically, this is done by modeling the generation of Bitcoins as Poisson process. All nodes perform and enforce the same difficulty calculation.<br />
<br />
Difficulty is intended as an automatic stabilizer allowing mining for Bitcoins to remain profitable in the long run for the most efficient miners, independently of the fluctuations in demand of Bitcoin in relation to other currencies.<br />
<br />
===Mining hardware===<br />
:Main article: [[Mining Hardware Comparison]]<br />
<br />
Bitcoins used to be mined through Intel/AMD CPUs. {{As of | 2012}}, mining has gradually moved to [[GPU]] and [[FPGA]] hardware.<ref name="bitcoinmag-butterfly" /> [[Application-specific integrated circuit|ASIC]]-based hardware for Bitcoin mining has been announced by several manufacturers who intend to ship products from late 2012 to early 2013.<ref name="bitcoinmag-butterfly">{{Cite web|title=Bitpay Breaks Daily Volume Record with Butterfly ASIC mining release|url=http://bitcoinmagazine.net/bitpay-breaks-daily-volume-record-with-butterfly-asic-mining-release/|publisher=Bitcoin Magazine}}</ref><br />
<br />
==Concerns==<br />
<br />
===As an investment===<br />
Bitcoin describes itself as an experimental digital currency. Reuben Grinberg has noted that Bitcoin's supporters have argued that Bitcoin is neither a security or an investment because it fails to meet the criteria for either category.<ref name="grinberg">{{cite web | url=http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1817857 | title=Bitcoin: An Innovative Alternative Digital Currency | publisher=SSRN | date=9 December 2011 | accessdate=4 December 2012 | author=Grinberg, Reuben}}</ref> Although it is a virtual currency, some people see it as an investment<ref name="cnbc">{{cite web | url=http://www.cnbc.com/id/45030812/The_Pros_And_Cons_Of_Biting_on_Bitcoins | title=The Pros And Cons Of Biting on Bitcoins | publisher=CNBC | date=23 November 2011 | accessdate=4 December 2012 | author=Gustke, Constance}}</ref> or accuse it of being a form of investment fraud known as a Ponzi scheme.<ref>{{cite web |url=http://www.theregister.co.uk/2011/06/08/bitcoin_under_attack/ |title=US senators draw a bead on Bitcoin |last1=Chirgwin |first1=Richard |date=8 June 2011 |publisher=The Register |accessdate=14 November 2012}}</ref><ref>{{cite web |url=http://uk.reuters.com/article/2012/04/01/uk-traders-bitcoin-idUKBRE8300JL20120401 |title=Bitcoin, the City traders' anarchic new toy |last1=O'Leary |first1=Naomi |date=2 April 2012 |publisher=Reuters |accessdate=14 November 2012}}</ref> A report by the European Central Bank, using the U.S. Securities and Exchange Commission's definition of a Ponzi scheme, found that the use of bitcoins shares some characteristics with Ponzi schemes, but also has characteristics of its own which contradict several common aspects of Ponzi schemes.<ref name="ecbreport">{{cite web | url=http://www.ecb.europa.eu/pub/pdf/other/virtualcurrencyschemes201210en.pdf | title=Virtual Currency Schemes | publisher=European Central Bank | date=October 2012 | accessdate=4 December 2012}}</ref><br />
<br />
===Privacy===<br />
Because transactions are broadcast to the entire network, they are inherently public. Unlike regular banking,<ref>{{cite web<br />
|url= http://spectrum.ieee.org/computing/software/bitcoin-the-cryptoanarchists-answer-to-cash/0<br />
|title= Bitcoin: The Cryptoanarchists' Answer to Cash<br />
|publisher= IEEE.org<br />
|date= June 2012<br />
|accessdate = 2012-06-05<br />
}}</ref> which preserves customer privacy by keeping transaction records private, loose transactional privacy is accomplished in Bitcoin by using many unique addresses for every wallet, while at the same time publishing all transactions. As an example, if Alice sends 123.45 BTC to Bob, the network creates a public record that allows anyone to see that 123.45 has been sent from one address to another. However, unless Alice or Bob make their ownership of these addresses known, it is difficult for anyone else to connect the transaction with them. However, if someone connects an address to a user at any point they could follow back a series of transactions as each participant likely knows who paid them and may disclose that information on request or under duress.<br />
<br />
It can be difficult to associate Bitcoin identities with real-life identities.<ref name="An Analysis of Anonymity in the Bitcoin System">Fergal Reid and Martin Harrigan (24 July 2011). [http://anonymity-in-bitcoin.blogspot.com/2011/07/bitcoin-is-not-anonymous.html An Analysis of Anonymity in the Bitcoin System]. An Analysis of Anonymity in the Bitcoin System.</ref> This property makes Bitcoin transactions attractive to sellers of illegal products.<ref name="Forbes">Andy Greenberg (20 April 2011). [http://www.forbes.com/forbes/2011/0509/technology-psilocybin-bitcoins-gavin-andresen-crypto-currency.html Crypto Currency]. Forbes Magazine.</ref><ref>{{cite web<br />
|last= Madrigal<br />
|first= Alexis<br />
|title= Libertarian Dream? A Site Where You Buy Drugs With Digital Dollars<br />
|publisher= The Atlantic Monthly<br />
|date= 2011-06-01<br />
|url= http://www.theatlantic.com/technology/archive/2011/06/libertarian-dream-a-site-where-you-buy-drugs-with-digital-dollars/239776/<br />
|accessdate = 2011-06-05<br />
}}</ref><br />
<br />
===Illicit use===<br />
<br />
====Cracking====<br />
The cracking organization "LulzSec" accepted donations in Bitcoin, having said that the group "needs Bitcoin donations to continue their hacking efforts".<ref name="CNET">{{cite web<br />
|last= Reisinger<br />
|first= Don<br />
|url= http://news.cnet.com/8301-13506_3-20070268-17/senators-target-bitcoin-currency-citing-drug-sales/<br />
|title= Senators target Bitcoin currency, citing drug sales &#124; The Digital Home – CNET News<br />
|publisher= News.cnet.com<br />
|date= 2011-06-09<br />
|accessdate = 2011-06-22<br />
}}</ref><ref>{{cite news<br />
|last= Olson<br />
|first= Parmy<br />
|url= http://blogs.forbes.com/parmyolson/2011/06/06/lulzsec-hackers-posts-sony-dev-source-code-get-7k-donation/<br />
|title= LulzSec Hackers Post Sony Dev. Source Code, Get $7K Donation – Parmy Olson – Disruptors – Forbes<br />
|publisher= Blogs.forbes.com<br />
|date= 6 June 2011<br />
|accessdate = 2011-06-22<br />
}}</ref><br />
<br />
====Silk Road====<br />
[[Silk Road]] is an anonymous black market that uses only the Bitcoin.<ref name="npr-06-12-11"><br />
{{Cite news<br />
|url= http://www.npr.org/2011/06/12/137138008/silk-road-not-your-fathers-amazon-com<br />
|date= 12 June 2011<br />
|newspaper= NPR<br />
|title= Silk Road: Not Your Father's Amazon.com<br />
|author= Staff<br />
}}</ref> <br />
<br />
In a 2011 letter to Attorney General Eric Holder and the Drug Enforcement Administration, senators Charles Schumer of New York and Joe Manchin of West Virginia called for an investigation into Silk Road and the Bitcoin.<ref name="npr-06-12-11"/><br />
Schumer described the use of Bitcoins at Silk Road as a form of money laundering.<ref name="ars-06-08-11"/><br />
<br />
====Botnet mining====<br />
In June 2011, Symantec warned about the possibility of botnets engaging in covert "mining" of Bitcoins,<ref>{{Cite web|author=Updated: 17 June 2011 | Translations available: 日本語 |url=http://www.symantec.com/connect/blogs/bitcoin-botnet-mining |title=Bitcoin Botnet Mining &#124; Symantec Connect Community |publisher=Symantec.com |date=2011-06-17 |accessdate = 2012-01-24}}</ref><ref>{{Cite web|url=http://www.zdnet.com/blog/security/researchers-find-malware-rigged-with-bitcoin-miner/8934 |title=Researchers find malware rigged with Bitcoin miner |publisher=ZDNet |date=2011-06-29 |accessdate = 2012-01-24}}</ref> consuming computing cycles, using extra electricity and possibly increasing the temperature of the computer. Later that month, the Australian Broadcasting Corporation caught an employee using the company's servers to generate Bitcoins without permission.<ref>{{Cite web|url=http://thenextweb.com/au/2011/06/23/abc-employee-caught-mining-for-bitcoins-on-company-servers/ |title=ABC employee caught mining for Bitcoins on company servers |publisher=The Next Web |date=2011-06-23 |accessdate = 2012-01-24}}</ref> Some malware also uses the parallel processing capabilities of the GPUs built into many modern-day video cards.<ref>{{Cite news |url=http://www.theregister.co.uk/2011/08/16/gpu_bitcoin_brute_forcing/ |title=Malware mints virtual currency using victim's GPU |date=16 August 2011<!-- 20:00 GMT -->|first=Dan |last=Goodin }}</ref> In mid August 2011, Bitcoin miner botnets were found;<ref>{{Cite web|url=http://www.infosecurity-magazine.com/view/20211/researcher-discovers-distributed-bitcoin-cracking-trojan-malware/ |title=Infosecurity – Researcher discovers distributed bitcoin cracking trojan malware |publisher=Infosecurity-magazine.com |date=2011-08-19 |accessdate = 2012-01-24}}</ref> trojans infecting Mac OS X have also been uncovered.<ref>{{Cite web|url=http://www.techworld.com.au/article/405849/mac_os_x_trojan_steals_processing_power_produce_bitcoins |title=Mac OS X Trojan steals processing power to produce Bitcoins – sophos, security, malware, Intego – Vulnerabilities – Security |publisher=Techworld |date=2011-11-01 |accessdate = 2012-01-24}}</ref><br />
<br />
===Theft and fraud===<br />
On 19 June 2011, a security breach of the Mt.Gox (an acronym for ''M''agic: ''T''he ''G''athering ''O''nline E''x''change, its original purpose) Bitcoin Exchange caused the price of a Bitcoin to briefly drop to US$0.01 on the Mt.Gox exchange (though it remained unaffected on other exchanges) after a hacker allegedly used credentials from a Mt.Gox auditor's compromised computer to illegally transfer a large number of Bitcoins to him- or herself and sell them all, creating a massive "ask" order at any price. Within minutes the price rebounded to over $15 before Mt.Gox shut down their exchange and canceled all trades that happened during the hacking period.<ref>[https://mtgox.com/press_release_20110630.html Clarification of Mt Gox Compromised Accounts and Major Bitcoin Sell-Off]</ref><ref>[http://www.youtube.com/watch?v=T1X6qQt9ONg YouTube. Bitcoin Report]</ref> The exchange rate of Bitcoins quickly returned to near pre-crash values.<ref name="mick">Jason Mick, 19 June 2011, [http://www.dailytech.com/Inside+the+MegaHack+of+Bitcoin+the+Full+Story/article21942.htm Inside the Mega-Hack of Bitcoin: the Full Story], DailyTech</ref><ref>Timothy B. Lee, 19 June 2011, [http://arstechnica.com/tech-policy/news/2011/06/bitcoin-price-plummets-on-compromised-exchange.ars Bitcoin prices plummet on hacked exchange], Ars Technica</ref><ref>Mark Karpeles, 20 June 2011, [https://support.mtgox.com/entries/20208066-huge-bitcoin-sell-off-due-to-a-compromised-account-rollback Huge Bitcoin sell off due to a compromised account – rollback], Mt.Gox Support</ref><ref name="register1">{{Cite news<br />
|title= Bitcoin collapses on malicious trade – Mt Gox scrambling to raise the Titanic<br />
|url= http://www.theregister.co.uk/2011/06/19/bitcoin_values_collapse_again/<br />
|date= 2011-06-19<br />
|author= Chirgwin, Richard<br />
|publisher= The Register<br />
}}</ref> Accounts with the equivalent of more than USD 8,750,000 were affected.<ref name="mick" /><br />
<br />
In July 2011, The operator of Bitomat, the third largest Bitcoin exchange, announced that he lost access to his wallet.dat file with about 17,000 BitCoins (roughly equivalent to 220,000 USD at that time). He announced that he would sell the service for the missing amount, aiming to use funds from the sale to refund his customers.<ref>[http://siliconangle.com/blog/2011/08/01/third-largest-bitcoin-exchange-bitomat-lost-their-wallet-over-17000-bitcoins-missing/ Third Largest Bitcoin Exchange Bitomat Lost Their Wallet, Over 17,000 Bitcoins Missing]. SiliconAngle</ref><br />
<br />
In August 2011, MyBitcoin, one of popular Bitcoin transaction processors, declared that it was hacked, which resulted in it being shut down, with paying 49% on customer deposits, leaving more than 78,000 BitCoins (roughly equivalent to 800,000 USD at that time) unaccounted for.<ref>[http://betabeat.com/2011/08/mybitcoin-spokesman-finally-comes-forward-what-did-you-think-we-did-after-the-hack-we-got-shitfaced/ MyBitcoin Spokesman Finally Comes Forward: “What Did You Think We Did After the Hack? We Got Shitfaced”]. BetaBeat</ref><ref>[http://betabeat.com/2011/08/search-for-owners-of-mybitcoin-loses-steam/ Search for Owners of MyBitcoin Loses Steam]. BetaBeat</ref><br />
<br />
In early August 2012, a lawsuit was filed in San Francisco court against Bitcoinica, claiming about 460,000 USD from the company. Bitcoinica was hacked twice in 2012, which led to allegations of neglecting the safety of customers' money and cheating them out of withdrawal requests.<ref>[http://arstechnica.com/tech-policy/2012/08/bitcoinica-users-sue-for-460k-in-lost-bitcoins/ Bitcoinica users sue for $460k in lost Bitcoins]. Arstechnica</ref><ref>[http://spectrum.ieee.org/tech-talk/computing/networks/first-bitcoin-lawsuit-filed-in-san-francisco First Bitcoin Lawsuit Filed In San Francisco]. IEEE Spectrum</ref><br />
<br />
In late August 2012, Bitcoin Savings and Trust was shut down by the owner, allegedly leaving around $5.6 million in debts; this led to allegations of the operation being a Ponzi scheme.<ref>{{Cite web|title=Bitcoin ponzi scheme – investors lose $5 million USD in online hedge fund|url=http://rt.com/usa/news/investors-currency-digital-fund-868/|publisher=RT}}</ref><ref>{{Cite web|last=Jeffries|first=Adrianne|title=Suspected multi-million dollar Bitcoin pyramid scheme shuts down, investors revolt|url=http://www.theverge.com/2012/8/27/3271637/bitcoin-savings-trust-pyramid-scheme-shuts-down|publisher=The Verge}}</ref><ref>{{Cite web|last=Mick|first=Jason|title="Pirateat40" Makes Off $5.6M USD in BitCoins From Pyramid Scheme|url=http://www.dailytech.com/Pirateat40+Makes+Off+56M+USD+in+BitCoins+From+Pyramid+Scheme/article25538.htm|publisher=DailyTech}}</ref><ref>[http://pandodaily.com/2012/08/31/bitcoin-how-a-virtual-currency-became-real-with-a-5-6m-fraud/ Bitcoin: How a Virtual Currency Became Real with a $5.6M Fraud]. PandoDaily</ref> In September 2012, it was reported that U.S. Securities and Exchange Commission has started an investigation on the case.<ref>[http://blogs.telegraph.co.uk/technology/willardfoxton2/100007836/bitcoin-pirate-scandal-sec-steps-in-amid-allegations-that-the-whole-thing-was-a-ponzi-scheme/ Bitcoin 'Pirate' scandal: SEC steps in amid allegations that the whole thing was a Ponzi scheme ]. The Telegraph</ref><br />
<br />
In September 2012, Bitfloor Bitcoin exchange also reported being hacked, with 24,000 BitCoins (roughly equivalent to 250,000 USD) stolen. As a result, Bitfloor suspended operations.<ref>[http://www.bbc.co.uk/news/technology-19486695 Bitcoin theft causes Bitfloor exchange to go offline]. BBC</ref><ref>[http://www.theverge.com/2012/9/5/3293375/bitfloor-bitcoin-exchange-suspended-theft Bitcoin exchange BitFloor suspends operations after $250,000 theft Bitcoin exchange BitFloor suspends operations after $250,000 theft]. The Verge</ref> The same month, Bitfloor resumed operations, with its founder saying that he reported the theft to FBI, and that he is planning to repay the victims, though the time frame for such repayment is unclear.<ref>[http://www.pcworld.com/article/2010586/bitcoin-exchange-back-online-after-hack.html?tk=rel_news Bitcoin exchange back online after hack]. PCWorld</ref><br />
<br />
===Taxation===<br />
In September 2012, the Intra-European Organization of Tax Administrations (IOTA), in Tbilisi, Georgia, held a workshop titled "Auditing Individuals and Legal Entities in the Use of e-Money." The workshop was attended by representatives from 23 countries.<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> Jerry Taylor, IOTA's technical taxation expert, said, "There's an awful lot happening on the Internet environment which is fascinating at the moment and introducing new challenges for auditors when it comes to virtual currency."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> Bitcoin was mentioned during the workshop.<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> <br />
<br />
Matthew Elias, founder of the [[Cryptocurrency Legal Advocacy Group]] (CLAG) published "Staying Between the Lines: A Survey of U.S. Income Taxation and its Ramifications on Cryptocurrencies", which discusses "the taxability of cryptocurrencies such as bitcoin."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> CLAG "stressed the importance for taxpayers to determine on their own whether taxes are due on a bitcoin-related transaction based on whether one has "experienced a realization event."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> Such examples are "when a taxpayer has provided a service in exchange for bitcoins, a realization event has probably occurred, and any gain or loss would likely be calculated using fair market values for the service provided."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref><br />
<br />
[[Peter Vessenes]], [[Bitcoin Foundation|Bitcoin Foundation's]] executive director, said, since the foundation is trying to pay for everything in bitcoin, including salaries, "How do we W-2 someone for their bitcoins? Do we mark-to-market every time a transfer happens? Payroll companies cringe."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> The Bitcoin Foundation hopes "to push for solid guidance about its legal and tax treatment." [[Patrick Murck]], legal counsel for the Bitcoin Foundation, said he would like "to help regulators understand the technology better so they can make better decisions."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> Murck said, "Bitcoin has the potential to become much more than a niche currency, but it needs the guidance and understanding of regulators." and "The full potential of bitcoin could be realized through clearer guidelines and a better understanding by financial and tax regulators." and "Part of making that happen is to talk to regulators, the IRS, and tax professionals and helping them understand that bitcoin is not this nefarious thing, it's just software, it's a community, and there's nothing inherently nefarious about either of those things."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref><br />
<br />
==See Also==<br />
* [[Introduction]]<br />
* [[Getting started]]<br />
* [[Using_Bitcoin|Detailed tutorial]]<br />
* [[How bitcoin works]]<br />
* [[FAQ]]<br />
<br />
==References==<br />
<references /><br />
<br />
[[Category:Digital currencies]]</div>Anymhttps://tests.bitcoin.it/w/index.php?title=Bitcoin&diff=33688Bitcoin2012-12-12T19:28:19Z<p>Anym: redundant</p>
<hr />
<div><br />
'''Bitcoin''' is a decentralized [[digital currency]] created by programmer [[Satoshi Nakamoto]].<br />
It allows for pseudonymous and secure ownership and transfers of amounts of bitcoins, without relying on any central server to process the transactions or store the accounts.<br />
<br />
Each Bitcoin is divisible up to 100-million units, allowing the currency to adapt in cases of high valuation.<br />
<br />
It is the most widely used alternative currency,<ref name="Quantitative Analysis of the Full Bitcoin Transaction Graph">{{cite web|title=Quantitative Analysis of the Full Bitcoin Transaction Graph|url=http://eprint.iacr.org/2012/584.pdf|publisher=Cryptology ePrint Archive|accessdate=18 October 2012|author=Ron Dorit|coauthors=Adi Shamir|page=17|quote=The Bitcoin system is the best known and most widely used alternative payment scheme,...}}</ref> with the total market cap at over 100 million US dollars.<ref>{{cite web|last=Koch|first=Rüdiger|title=Bitcoin - a Means for Redistribution of Wealth|url=http://ieet.org/index.php/IEET/more/koch20120927|publisher=Institute for Ethics & Emerging Technologies|accessdate=27 October 2012|quote=We’re currently at 50,000 users and a market cap of $100 Million.}}</ref><ref>{{cite web|title=Market Capitalization|url=http://blockchain.info/charts/market-cap|publisher=Blockchain.info|accessdate=28 October 2012}}</ref><ref name="Mt.Gox data">{{Cite web|title=Mt.Gox data|url=http://bitcoincharts.com/markets/mtgoxUSD.html|publisher=Bitcoincharts}}</ref> <br />
<br />
Bitcoin has no central issuer; instead, the peer-to-peer network regulates Bitcoins, transactions and issuance according to consensus in network software.<br />
Bitcoins are issued to various nodes that verify transactions through computing power;<br />
it is established that there will be a limited and scheduled release of no more than 21 million BTC worth of coins, which will be fully issued by the year 2140.<br />
<br />
Internationally, Bitcoins can be exchanged and managed through various websites and [[software]] along with physical banknotes and coins.<ref>{{Cite web|title=Physical Bitcoins by Casascius|url=https://www.casascius.com/|publisher=Casascius Coins|accessdate=29 September 2012}}</ref><ref>{{Cite web|title=Bitbills|url=http://www.bitbills.com/|publisher=Bitbills|accessdate=29 September 2012}}</ref><br />
<br />
==History==<br />
:Main article: [[History]]<br />
<br />
A cryptographic system for untraceable payments was first described by David Chaum in 1982.<ref>[http://blog.koehntopp.de/uploads/Chaum.BlindSigForPayment.1982.PDF David Chaum, Blind signatures for untraceable payments], Advances in Cryptology - Crypto '82, Springer-Verlag (1983), 199–203.</ref> In 1990 Chaum extended this system to create the first cryptographic anonymous electronic cash system.,<ref>{{cite journal|journal=Lecture Notes in Computer Science|last1=Chaum|first1=David|last2=Fiat|first2=Amos|last3=Naor|first3=Moni|title=Untraceable Electronic Cash|url=http://blog.koehntopp.de/uploads/chaum_fiat_naor_ecash.pdf}}</ref> which became known as ecash.<br />
<ref>{{cite web|url=http://www.wired.com/wired/archive/2.12/emoney.html|publisher=Wired|title=E-Money (That's What I Want)|date=1994–2012|author=Steven Levy}}</ref> In 1998 Wei Dai published a description of an anonymous, distributed electronic cash system which he called "b-money".<ref>{{cite web|title=B-Money|url=http://www.weidai.com/bmoney.txt|author=Wei Dai|year=1998}}</ref> Around the same time, Nick Szabo created ''bit gold''.<ref>{{cite web|url=http://spectrum.ieee.org/computing/software/bitcoin-the-cryptoanarchists-answer-to-cash/0|title=Bitcoin: The Cryptoanarchists’ Answer to Cash|publisher=IEEE Spectrum|quote=Around the same time, Nick Szabo, a computer scientist who now blogs about law and the history of money, was one of the first to imagine a new digital currency from the ground up. Although many consider his scheme, which he calls “bit gold,” to be a precursor to Bitcoin}}</ref><ref name="bitgold">{{cite web|title=Bit gold|url=http://unenumerated.blogspot.co.uk/2005/12/bit-gold.html|author=Nick Szabo|quote=My proposal for bit gold is based on computing a string of bits from a string of challenge bits, using functions called variously "client puzzle function," "proof of work function," or "secure benchmark function.". The resulting string of bits is the proof of work.... The last-created string of bit gold provides the challenge bits for the next-created string.}}</ref> Like Bitcoin, ''Bit gold'' was a currency system where users would compete to solve a [[proof of work]] function, with solutions being cryptographically chained together and published via a distributed property title registry. A variant of ''Bit gold'', called ''Reusable Proofs of Work'', was implemented by Hal Finney.<ref name="bitgold"/><br />
<br />
In 2008, Satoshi Nakamoto published a paper<ref name="whitepaper">{{cite web<br />
|last= Nakamoto<br />
|first= Satoshi<br />
|title= Bitcoin: A Peer-to-Peer Electronic Cash System<br />
|url= http://www.cs.kent.edu/~JAVED/class-P2P12F/papers-2012/PAPER2012-p2p-bitcoin-satoshinakamoto.pdf<br />
|accessdate = 14 December 2010<br />
|date= 24 May 2009<br />
|postscript=<br />
}}</ref><ref>{{cite web<br />
|url= http://article.gmane.org/gmane.comp.encryption.general/12588/<br />
|title= Bitcoin P2P e-cash paper<br />
}}</ref> on The Cryptography Mailing list at metzdowd.com<ref>[http://www.mail-archive.com/search?l=cryptography@metzdowd.com&q=from:%22Satoshi+Nakamoto%22 Satoshi's posts to Cryptography mailing list]</ref> describing the Bitcoin protocol.<br />
<br />
The Bitcoin network came into existence on 3 January 2009 with the release of the first Bitcoin client, [[wxBitcoin]], and the issuance of the first Bitcoins.<ref>{{cite web |title=Block 0 – Bitcoin Block Explorer |url=http://blockexplorer.com/block/000000000019d6689c085ae165831e934ff763ae46a2a6c172b3f1b60a8ce26f }}</ref><ref>{{cite web |url=http://www.mail-archive.com/cryptography@metzdowd.com/msg10142.html |title=Bitcoin v0.1 released}}</ref><ref>{{cite web |url=http://sourceforge.net/news/?group_id=244765 |title=SourceForge.net: Bitcoin}}</ref><br />
A year after, the initial exchange rates for Bitcoin were set by individuals on the bitcointalk forums.{{Citation needed|date=October 2012}} The most significant transaction involved a 10,000 BTC pizza.<ref>{{cite web|title=The Rise and Fall of Bitcoin|url=http://www.wired.com/magazine/2011/11/mf_bitcoin/|publisher=Wired|accessdate=13 October 2012}}</ref><br />
Today, the majority of Bitcoin exchanges occur on the [[MtGox]] Bitcoin exchange.<br />
<br />
In 2011, Wikileaks,<ref>{{cite news<br />
|last= Greenberg<br />
|first= Andy<br />
|url= http://blogs.forbes.com/andygreenberg/2011/06/14/wikileaks-asks-for-anonymous-bitcoin-donations/<br />
|title= WikiLeaks Asks For Anonymous Bitcoin Donations – Andy Greenberg – The Firewall – Forbes<br />
|publisher= Blogs.forbes.com<br />
|date= 2011-06-14<br />
|accessdate = 2011-06-22<br />
}}</ref> [[Freenet]],<ref>{{cite web<br />
|url= https://freenetproject.org/donate.html<br />
|title= /donate<br />
|publisher= The Freenet Project<br />
|date=<br />
|accessdate = 2011-06-22<br />
}}</ref> Singularity Institute,<ref>[http://singinst.org/donate/ SIAI donation page]</ref> Internet Archive,<ref>[http://www.archive.org/donate/index.php Internet Archive donation page]</ref> Free Software Foundation<ref>[https://my.fsf.org/donate/other/ Other ways to donate]</ref> and others, began to accept donations in Bitcoin. The Electronic Frontier Foundation did so for a while but has since stopped, citing concerns about a lack of legal precedent about new currency systems, and because they "generally don't endorse any type of product or service."<ref>{{cite web<br />
|url= https://www.eff.org/deeplinks/2011/06/eff-and-bitcoin<br />
|title= EFF and Bitcoin &#124; Electronic Frontier Foundation<br />
|publisher= Eff.org<br />
|date= 2011-06-14<br />
|accessdate = 2011-06-22<br />
}}</ref> Some small businesses had started to adopt Bitcoin. LaCie, a public company, accepts Bitcoin for its Wuala service.<ref>{{Cite web|url=http://www.wuala.com/en/bitcoin |title=Secure Online Storage – Backup. Sync. Share. Access Everywhere |publisher=Wuala |date= |accessdate = 2012-01-24}}</ref><br />
<br />
In 2012, BitPay reports of having over 1000 merchants accepting Bitcoin under its payment processing service.<ref>{{cite web|title=BitPay Signs 1,000 Merchants to Accept Bitcoin Payments|url=http://www.americanbanker.com/issues/177_176/bitpay-signs-1000-merchants-to-accept-bitcoin-payments-1052538-1.html|publisher=American Banker|accessdate=12 October 2012}}</ref><br />
<br />
==Administration==<br />
Bitcoin is administered through a decentralized peer-to-peer network.<ref name="whitepaper"/> Cryptographic technologies and the peer-to-peer network of computing power enables users to make and verify irreversible, instant online Bitcoin payments, without an obligation to trust and use centralized banking institutions and authorities. Dispute resolution services are not made directly available. Instead it is left to the users to verify and trust the parties they are sending money to through their choice of methods. <br />
<br />
Bitcoins are issued according to rules agreed to by the majority of the computing power within the Bitcoin network. The core rules describing the predictable issuance of Bitcoins to its verifying servers, a voluntary and competitive transaction fee system and the hard limit of no more than 21 million BTC issued in total.<ref name="whitepaper"/><br />
<br />
Bitcoin does not require a central bank, State,<ref>{{cite web<br />
|url= http://spectrum.ieee.org/computing/software/bitcoin-the-cryptoanarchists-answer-to-cash/3<br />
|title= Bitcoin: The Cryptoanarchists' Answer to Cash<br />
|publisher= IEEE.org<br />
|date= June 2012<br />
|accessdate = 2012-06-05<br />
}}</ref> or incorporated backers.<br />
<br />
==Services==<br />
:Main article: [[Wallet]]<br />
<br />
Bitcoins are sent and received through software and websites called wallets. They send and confirm transactions to the network through Bitcoin addresses, the identifiers for users' Bitcoin wallets within the network.<ref name="whitepaper"/><br />
<br />
===Bitcoin addresses===<br />
:Main article: [[Address]]<br />
<br />
Payments are made to Bitcoin "addresses": human-readable strings of numbers and letters around 33 characters in length, always beginning with the digit 1 or 3, as in the example of ''31uEbMgunupShBVTewXjtqbBv5MndwfXhb''.<br />
<br />
Users obtain new Bitcoin addresses from their Bitcoin software. Creating a new address can be a completely offline process and require no communication with the Bitcoin network.<br />
<br />
===Transaction fees===<br />
:Main article: [[Transaction fees]]<br />
Transaction fees may be included with any transfer of Bitcoins. {{As of|2012}} many transactions are processed in a way which makes no charge for the transaction. For transactions which consume or produce many coins (and therefore have a large data size), a small transaction fee is usually expected.<br />
<br />
===Confirmations===<br />
:Main article: [[Confirmation]]<br />
<br />
The network's software confirms a transaction when it records it in a block. Further blocks of transactions confirm it even further. After six confirmations/blocks, a transaction is confirmed beyond reasonable doubt.<br />
<br />
The network must store the whole transaction history inside the blockchain, which grows constantly as new records are added and never removed. Nakamoto conceived that as the database became larger, users would desire applications for Bitcoin that didn't store the entire database on their computer. To enable this, the blockchain uses a [[merkle tree]] to organize the transaction records in such a way that client software can locally delete portions of its own database it knows it will never need, such as earlier transaction records of Bitcoins that have changed ownership multiple times.<br />
<br />
==Economics==<br />
<br />
===Initial distribution===<br />
<br />
Bitcoin has no centralized issuing authority.<ref name="ars-06-08-11"><br />
{{Cite news<br />
|first= Thomas<br />
|last= Lowenthal<br />
|title= Bitcoin: inside the encrypted, peer-to-peer digital currency<br />
|newspaper= Ars Technica<br />
|date= 8 June 2011<br />
|url= http://arstechnica.com/tech-policy/news/2011/06/bitcoin-inside-the-encrypted-peer-to-peer-currency.ars<br />
}}</ref><ref>{{cite news<br />
|author= Sponsored by<br />
|url= http://www.economist.com/blogs/babbage/2011/06/virtual-currency<br />
|title= Virtual currency: Bits and bob<br />
|publisher= The Economist<br />
|date=<br />
|accessdate = 2011-06-22<br />
}}</ref><ref>{{cite web<br />
|last= Geere<br />
|first= Duncan<br />
|url= http://www.wired.co.uk/news/archive/2011-05/16/bitcoin-p2p-currency<br />
|title= Peer-to-peer currency Bitcoin sidesteps financial institutions (Wired UK)<br />
|publisher= Wired.co.uk<br />
|date=<br />
|accessdate = 2011-06-22<br />
}}</ref> The network is programmed to increase the money supply as a geometric series until the total number of Bitcoins reaches 21 million BTC.<ref name="Quantitative Analysis of the Full Bitcoin Transaction Graph"/> {{As of|2012|10}} slightly over 10 million of the total 21 million BTC had been created; the current total number created is available online.<ref>{{cite web<br />
|title= Total Number of Bitcoins in Existence<br />
|url= http://blockexplorer.com/q/totalbc<br />
|work= Bitcoin Block Explorer<br />
|accessdate = 2012-10-03<br />
}}</ref> By 2013 half of the total supply will have been generated, and by 2017, three-quarters will have been generated. To ensure sufficient granularity of the [[money supply]], clients can divide each BTC unit down to eight decimal places (a total of 2.1&nbsp;×&nbsp;10<sup>15</sup> or 2.1 quadrillion units).<ref name="lwn">{{Cite news<br />
|author= Nathan Willis<br />
|date= 2010-11-10<br />
|title= Bitcoin: Virtual money created by CPU cycles<br />
|publisher= LWN.net<br />
|url= http://lwn.net/Articles/414452/<br />
}}</ref><br />
<br />
The network {{As of|2012|lc=on}} required over one million times more work for confirming a block and receiving an award (25 BTC {{As of|2012|2|lc=on}}) than when the first blocks were confirmed.<br />
The difficulty is automatically adjusted every 2016 blocks based on the time taken to find the previous 2016 blocks such that one block is created roughly every 10 minutes.<br />
<br />
Those who chose to put computational and electrical resources toward mining early on had a greater chance at receiving awards for block generations. This served to make available enough processing power to process blocks. Indeed, without miners there are no transactions and the Bitcoin economy comes to a halt.<br />
<br />
===Exchange rate===<br />
Prices fluctuate relative to goods and services more than more widely accepted currencies;<br />
the price of a Bitcoin is not static.<br />
<br />
In August 2012, 1 BTC traded at around $10.00 USD. Taking into account the total number of Bitcoins mined, the monetary base of the Bitcoin network stands at over 110 million USD.<ref>[http://www.bitcoinwatch.com/ http://www.bitcoinwatch.com/] Bitcoin statistics</ref><br />
<br />
== Security ==<!--Please keep as starting template--><br />
:Main article: [[Weaknesses]]<br />
<br />
In the history of bitcoin, there have been a few [[incidents]], caused by problematic as well as malicious transactions. In the worst such incident, and the only one of its type, a person was able to pretend that he had a practically infinite supply of bitcoins, for almost 9 hours.<br />
<br />
Bitcoin relies, among other things, on [http://en.wikipedia.org/wiki/Public-key_cryptography public key cryptography] and thus may be vulnerable to [http://en.wikipedia.org/wiki/Elliptic_curve_cryptography#Quantum_computing_attacks quantum computing attacks] if and when practical quantum computers can be constructed.<br />
<br />
If multiple different software packages, whose usage becomes widespread on the Bitcoin network, disagree on the protocol and the rules for transactions, this could potentially cause a fork in the block chain, with each faction of users being able to accept only their own version of the history of transactions. This could influence the price of bitcoins.<br />
<br />
A global, organized campaign against the currency or the software could also influence the demand for bitcoins, and thus the exchange price.<br />
<br />
==Bitcoin mining==<br />
:Main article: [[Mining]]<br />
<br />
Bitcoin mining nodes are responsible for managing the Bitcoin network.<br />
<br />
Bitcoins are awarded to Bitcoin nodes known as "miners" for the solution to a difficult [[proof-of-work]] problem which confirms transactions and prevents double-spending. This incentive, as the Nakamoto white paper describes it, encourages "nodes to support the network, and provides a way to initially distribute coins into circulation, since no central authority issues them."<ref name="whitepaper" /><br />
<br />
Nakamoto compared the generation of new coins by expending CPU time and electricity to gold miners expending resources to add gold to circulation.<ref name="whitepaper"/><br />
<br />
===Node operation===<br />
<br />
The node software for the Bitcoin network is based on peer-to-peer networking, digital signatures and cryptographic proof to make and verify transactions. Nodes broadcast transactions to the network, which records them in a public record of all transactions, called the ''blockchain'', after validating them with a [[proof-of-work|proof-of-work system]].<br />
<br />
Satoshi Nakamoto designed the first Bitcoin node and mining software<ref name="processors">{{Cite news<br />
|last= Davis<br />
|first= Joshua<br />
|title= The Crypto-Currency<br />
|url= http://www.wired.com/magazine/2011/11/mf_bitcoin/all<br />
|accessdate = 11 November 2011<br />
|newspaper= Wired Magazine<br />
|date= 10 November 2011<br />
}}</ref> and developed the majority of the first implementation, Bitcoind, from 2007 to mid-2010.<ref name="code_start">{{cite web<br />
|url= https://bitcointalk.org/index.php?topic=13.msg46#msg46<br />
|title= Questions about Bitcoin<br />
|publisher= Bitcoin forum<br />
|date= 2009-12-10<br />
}}</ref><br />
<br />
Node implementations include core software such as Bitcoind/Bitcoin-Qt, [[libbitcoin]], [[cbitcoin]]<ref>{{Cite web|title=cbitcoin|url=https://github.com/MatthewLM/cbitcoin|accessdate=3 October 2012}}</ref> and BitCoinJ.<ref>{{cite web<br />
|url= http://news.slashdot.org/story/11/03/23/0210207/Google-Engineer-Releases-Open-Source-Bitcoin-Client<br />
|title= Google Engineer Releases Open Source Bitcoin Client<br />
|author= angry tapir, timothy<br />
|date= 23 March 2011<br />
|publisher= Slashdot<br />
|accessdate = 2011-05-18<br />
}}</ref><ref>{{cite web<br />
|url= http://www.javaworld.com/javaworld/jw-01-2012/120110-bitcoin-for-beginners-3.html?page=1<br />
|title= Bitcoin for beginners: The BitcoinJ API<br />
|author= Dirk Merkel<br />
|date= 10 January 2012<br />
|publisher= JavaWorld<br />
|accessdate = 2012-08-03<br />
}}</ref><br />
<br />
Every node in the Bitcoin network collects all the unacknowledged transactions it knows of in a file called a ''block'', which also contains a reference to the previous valid block known to that node. It then appends a [[nonce]] value to this previous block and computes the SHA-256 cryptographic hash of the block and the appended nonce value. The node repeats this process until it adds a nonce that allows for the generation of a hash with a value lower than a specified ''target''. Because computers cannot practically reverse the hash function, finding such a nonce is hard and requires on average a predictable amount of repetitious trial and error. This is where the ''[[proof-of-work]]'' concept comes in to play. When a node finds such a solution, it announces it to the rest of the network. Peers receiving the new solved block validate it by computing the hash and checking that it really starts with the given number of zero bits (i.e., that the hash is within the target). Then they accept it and add it to the chain.<br />
<br />
===Mining rewards===<br />
In addition to receiving the pending transactions confirmed in the block, a generating node adds a ''generate'' transaction, which awards new Bitcoins to the operator of the node that generated the block. The system sets the payout of this generated transaction according to its defined inflation schedule. The miner that generates a block also receives the fees that users have paid as an incentive to give particular transactions priority for faster confirmation.<br />
<br />
The network never creates more than a 50&nbsp;BTC reward per block and this amount will decrease over time towards zero, such that no more than 21 million BTC will ever exist.<ref name="lwn" /> As this payout decreases, the incentive for users to run block-generating nodes is intended to change to earning [[#Transaction fees|transaction fees]].<br />
<br />
===Mining pools===<br />
:Main article: [[Pooled mining]]<br />
<br />
Bitcoin users often pool computational effort to increase the stability of the collected fees and subsidy they receive.<ref name="We Use Coins Mining">{{cite web|title=About Bitcoin Mining|url=http://www.weusecoins.com/mining-guide.php|publisher=We Use Coins|accessdate=18 October 2012}}</ref><br />
<br />
===Mining difficulty===<br />
:Main article: [[Difficulty]]<br />
<br />
In order to throttle the creation of blocks, the difficulty of generating new blocks is adjusted over time. If mining output increases or decreases, the difficulty increases or decreases accordingly.<br />
<br />
The adjustment is done by changing the threshold that a hash is required to be less than. A lower threshold means fewer possible hashes can be accepted, and thus a higher degree of difficulty. The target rate of block generation is one block every 10 minutes, or 2016 blocks every two weeks. Bitcoin changes the difficulty of finding a valid block every 2016 blocks, using the difficulty that would have been most likely to cause the prior 2016 blocks to have taken two weeks to generate, according to the timestamps on the blocks. Technically, this is done by modeling the generation of Bitcoins as Poisson process. All nodes perform and enforce the same difficulty calculation.<br />
<br />
Difficulty is intended as an automatic stabilizer allowing mining for Bitcoins to remain profitable in the long run for the most efficient miners, independently of the fluctuations in demand of Bitcoin in relation to other currencies.<br />
<br />
===Mining hardware===<br />
:Main article: [[Mining Hardware Comparison]]<br />
<br />
Bitcoins used to be mined through Intel/AMD CPUs. {{As of | 2012}}, mining has gradually moved to [[GPU]] and [[FPGA]] hardware.<ref name="bitcoinmag-butterfly" /> [[Application-specific integrated circuit|ASIC]]-based hardware for Bitcoin mining has been announced by several manufacturers who intend to ship products from late 2012 to early 2013.<ref name="bitcoinmag-butterfly">{{Cite web|title=Bitpay Breaks Daily Volume Record with Butterfly ASIC mining release|url=http://bitcoinmagazine.net/bitpay-breaks-daily-volume-record-with-butterfly-asic-mining-release/|publisher=Bitcoin Magazine}}</ref><br />
<br />
==Concerns==<br />
<br />
===As an investment===<br />
Bitcoin describes itself as an experimental digital currency. Reuben Grinberg has noted that Bitcoin's supporters have argued that Bitcoin is neither a security or an investment because it fails to meet the criteria for either category.<ref name="grinberg">{{cite web | url=http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1817857 | title=Bitcoin: An Innovative Alternative Digital Currency | publisher=SSRN | date=9 December 2011 | accessdate=4 December 2012 | author=Grinberg, Reuben}}</ref> Although it is a virtual currency, some people see it as an investment<ref name="cnbc">{{cite web | url=http://www.cnbc.com/id/45030812/The_Pros_And_Cons_Of_Biting_on_Bitcoins | title=The Pros And Cons Of Biting on Bitcoins | publisher=CNBC | date=23 November 2011 | accessdate=4 December 2012 | author=Gustke, Constance}}</ref> or accuse it of being a form of investment fraud known as a Ponzi scheme.<ref>{{cite web |url=http://www.theregister.co.uk/2011/06/08/bitcoin_under_attack/ |title=US senators draw a bead on Bitcoin |last1=Chirgwin |first1=Richard |date=8 June 2011 |publisher=The Register |accessdate=14 November 2012}}</ref><ref>{{cite web |url=http://uk.reuters.com/article/2012/04/01/uk-traders-bitcoin-idUKBRE8300JL20120401 |title=Bitcoin, the City traders' anarchic new toy |last1=O'Leary |first1=Naomi |date=2 April 2012 |publisher=Reuters |accessdate=14 November 2012}}</ref> A report by the European Central Bank, using the U.S. Securities and Exchange Commission's definition of a Ponzi scheme, found that the use of bitcoins shares some characteristics with Ponzi schemes, but also has characteristics of its own which contradict several common aspects of Ponzi schemes.<ref name="ecbreport">{{cite web | url=http://www.ecb.europa.eu/pub/pdf/other/virtualcurrencyschemes201210en.pdf | title=Virtual Currency Schemes | publisher=European Central Bank | date=October 2012 | accessdate=4 December 2012}}</ref><br />
<br />
===Privacy===<br />
Because transactions are broadcast to the entire network, they are inherently public. Unlike regular banking,<ref>{{cite web<br />
|url= http://spectrum.ieee.org/computing/software/bitcoin-the-cryptoanarchists-answer-to-cash/0<br />
|title= Bitcoin: The Cryptoanarchists' Answer to Cash<br />
|publisher= IEEE.org<br />
|date= June 2012<br />
|accessdate = 2012-06-05<br />
}}</ref> which preserves customer privacy by keeping transaction records private, loose transactional privacy is accomplished in Bitcoin by using many unique addresses for every wallet, while at the same time publishing all transactions. As an example, if Alice sends 123.45 BTC to Bob, the network creates a public record that allows anyone to see that 123.45 has been sent from one address to another. However, unless Alice or Bob make their ownership of these addresses known, it is difficult for anyone else to connect the transaction with them. However, if someone connects an address to a user at any point they could follow back a series of transactions as each participant likely knows who paid them and may disclose that information on request or under duress.<br />
<br />
It can be difficult to associate Bitcoin identities with real-life identities.<ref name="An Analysis of Anonymity in the Bitcoin System">Fergal Reid and Martin Harrigan (24 July 2011). [http://anonymity-in-bitcoin.blogspot.com/2011/07/bitcoin-is-not-anonymous.html An Analysis of Anonymity in the Bitcoin System]. An Analysis of Anonymity in the Bitcoin System.</ref> This property makes Bitcoin transactions attractive to sellers of illegal products.<ref name="Forbes">Andy Greenberg (20 April 2011). [http://www.forbes.com/forbes/2011/0509/technology-psilocybin-bitcoins-gavin-andresen-crypto-currency.html Crypto Currency]. Forbes Magazine.</ref><ref>{{cite web<br />
|last= Madrigal<br />
|first= Alexis<br />
|title= Libertarian Dream? A Site Where You Buy Drugs With Digital Dollars<br />
|publisher= The Atlantic Monthly<br />
|date= 2011-06-01<br />
|url= http://www.theatlantic.com/technology/archive/2011/06/libertarian-dream-a-site-where-you-buy-drugs-with-digital-dollars/239776/<br />
|accessdate = 2011-06-05<br />
}}</ref><br />
<br />
===Illicit use===<br />
<br />
====Cracking====<br />
The cracking organization "LulzSec" accepted donations in Bitcoin, having said that the group "needs Bitcoin donations to continue their hacking efforts".<ref name="CNET">{{cite web<br />
|last= Reisinger<br />
|first= Don<br />
|url= http://news.cnet.com/8301-13506_3-20070268-17/senators-target-bitcoin-currency-citing-drug-sales/<br />
|title= Senators target Bitcoin currency, citing drug sales &#124; The Digital Home – CNET News<br />
|publisher= News.cnet.com<br />
|date= 2011-06-09<br />
|accessdate = 2011-06-22<br />
}}</ref><ref>{{cite news<br />
|last= Olson<br />
|first= Parmy<br />
|url= http://blogs.forbes.com/parmyolson/2011/06/06/lulzsec-hackers-posts-sony-dev-source-code-get-7k-donation/<br />
|title= LulzSec Hackers Post Sony Dev. Source Code, Get $7K Donation – Parmy Olson – Disruptors – Forbes<br />
|publisher= Blogs.forbes.com<br />
|date= 6 June 2011<br />
|accessdate = 2011-06-22<br />
}}</ref><br />
<br />
====Silk Road====<br />
[[Silk Road]] is an anonymous black market that uses only the Bitcoin.<ref name="npr-06-12-11"><br />
{{Cite news<br />
|url= http://www.npr.org/2011/06/12/137138008/silk-road-not-your-fathers-amazon-com<br />
|date= 12 June 2011<br />
|newspaper= NPR<br />
|title= Silk Road: Not Your Father's Amazon.com<br />
|author= Staff<br />
}}</ref> <br />
<br />
In a 2011 letter to Attorney General Eric Holder and the Drug Enforcement Administration, senators Charles Schumer of New York and Joe Manchin of West Virginia called for an investigation into Silk Road and the Bitcoin.<ref name="npr-06-12-11"/><br />
Schumer described the use of Bitcoins at Silk Road as a form of money laundering.<ref name="ars-06-08-11"/><br />
<br />
====Botnet mining====<br />
In June 2011, Symantec warned about the possibility of botnets engaging in covert "mining" of Bitcoins,<ref>{{Cite web|author=Updated: 17 June 2011 | Translations available: 日本語 |url=http://www.symantec.com/connect/blogs/bitcoin-botnet-mining |title=Bitcoin Botnet Mining &#124; Symantec Connect Community |publisher=Symantec.com |date=2011-06-17 |accessdate = 2012-01-24}}</ref><ref>{{Cite web|url=http://www.zdnet.com/blog/security/researchers-find-malware-rigged-with-bitcoin-miner/8934 |title=Researchers find malware rigged with Bitcoin miner |publisher=ZDNet |date=2011-06-29 |accessdate = 2012-01-24}}</ref> consuming computing cycles, using extra electricity and possibly increasing the temperature of the computer. Later that month, the Australian Broadcasting Corporation caught an employee using the company's servers to generate Bitcoins without permission.<ref>{{Cite web|url=http://thenextweb.com/au/2011/06/23/abc-employee-caught-mining-for-bitcoins-on-company-servers/ |title=ABC employee caught mining for Bitcoins on company servers |publisher=The Next Web |date=2011-06-23 |accessdate = 2012-01-24}}</ref> Some malware also uses the parallel processing capabilities of the GPUs built into many modern-day video cards.<ref>{{Cite news |url=http://www.theregister.co.uk/2011/08/16/gpu_bitcoin_brute_forcing/ |title=Malware mints virtual currency using victim's GPU |date=16 August 2011<!-- 20:00 GMT -->|first=Dan |last=Goodin }}</ref> In mid August 2011, Bitcoin miner botnets were found;<ref>{{Cite web|url=http://www.infosecurity-magazine.com/view/20211/researcher-discovers-distributed-bitcoin-cracking-trojan-malware/ |title=Infosecurity – Researcher discovers distributed bitcoin cracking trojan malware |publisher=Infosecurity-magazine.com |date=2011-08-19 |accessdate = 2012-01-24}}</ref> trojans infecting Mac OS X have also been uncovered.<ref>{{Cite web|url=http://www.techworld.com.au/article/405849/mac_os_x_trojan_steals_processing_power_produce_bitcoins |title=Mac OS X Trojan steals processing power to produce Bitcoins – sophos, security, malware, Intego – Vulnerabilities – Security |publisher=Techworld |date=2011-11-01 |accessdate = 2012-01-24}}</ref><br />
<br />
===Theft and fraud===<br />
On 19 June 2011, a security breach of the Mt.Gox (an acronym for ''M''agic: ''T''he ''G''athering ''O''nline E''x''change, its original purpose) Bitcoin Exchange caused the price of a Bitcoin to briefly drop to US$0.01 on the Mt.Gox exchange (though it remained unaffected on other exchanges) after a hacker allegedly used credentials from a Mt.Gox auditor's compromised computer to illegally transfer a large number of Bitcoins to him- or herself and sell them all, creating a massive "ask" order at any price. Within minutes the price rebounded to over $15 before Mt.Gox shut down their exchange and canceled all trades that happened during the hacking period.<ref>[https://mtgox.com/press_release_20110630.html Clarification of Mt Gox Compromised Accounts and Major Bitcoin Sell-Off]</ref><ref>[http://www.youtube.com/watch?v=T1X6qQt9ONg YouTube. Bitcoin Report]</ref> The exchange rate of Bitcoins quickly returned to near pre-crash values.<ref name="mick">Jason Mick, 19 June 2011, [http://www.dailytech.com/Inside+the+MegaHack+of+Bitcoin+the+Full+Story/article21942.htm Inside the Mega-Hack of Bitcoin: the Full Story], DailyTech</ref><ref>Timothy B. Lee, 19 June 2011, [http://arstechnica.com/tech-policy/news/2011/06/bitcoin-price-plummets-on-compromised-exchange.ars Bitcoin prices plummet on hacked exchange], Ars Technica</ref><ref>Mark Karpeles, 20 June 2011, [https://support.mtgox.com/entries/20208066-huge-bitcoin-sell-off-due-to-a-compromised-account-rollback Huge Bitcoin sell off due to a compromised account – rollback], Mt.Gox Support</ref><ref name="register1">{{Cite news<br />
|title= Bitcoin collapses on malicious trade – Mt Gox scrambling to raise the Titanic<br />
|url= http://www.theregister.co.uk/2011/06/19/bitcoin_values_collapse_again/<br />
|date= 2011-06-19<br />
|author= Chirgwin, Richard<br />
|publisher= The Register<br />
}}</ref> Accounts with the equivalent of more than USD 8,750,000 were affected.<ref name="mick" /><br />
<br />
In July 2011, The operator of Bitomat, the third largest Bitcoin exchange, announced that he lost access to his wallet.dat file with about 17,000 BitCoins (roughly equivalent to 220,000 USD at that time). He announced that he would sell the service for the missing amount, aiming to use funds from the sale to refund his customers.<ref>[http://siliconangle.com/blog/2011/08/01/third-largest-bitcoin-exchange-bitomat-lost-their-wallet-over-17000-bitcoins-missing/ Third Largest Bitcoin Exchange Bitomat Lost Their Wallet, Over 17,000 Bitcoins Missing]. SiliconAngle</ref><br />
<br />
In August 2011, MyBitcoin, one of popular Bitcoin transaction processors, declared that it was hacked, which resulted in it being shut down, with paying 49% on customer deposits, leaving more than 78,000 BitCoins (roughly equivalent to 800,000 USD at that time) unaccounted for.<ref>[http://betabeat.com/2011/08/mybitcoin-spokesman-finally-comes-forward-what-did-you-think-we-did-after-the-hack-we-got-shitfaced/ MyBitcoin Spokesman Finally Comes Forward: “What Did You Think We Did After the Hack? We Got Shitfaced”]. BetaBeat</ref><ref>[http://betabeat.com/2011/08/search-for-owners-of-mybitcoin-loses-steam/ Search for Owners of MyBitcoin Loses Steam]. BetaBeat</ref><br />
<br />
In early August 2012, a lawsuit was filed in San Francisco court against Bitcoinica, claiming about 460,000 USD from the company. Bitcoinica was hacked twice in 2012, which led to allegations of neglecting the safety of customers' money and cheating them out of withdrawal requests.<ref>[http://arstechnica.com/tech-policy/2012/08/bitcoinica-users-sue-for-460k-in-lost-bitcoins/ Bitcoinica users sue for $460k in lost Bitcoins]. Arstechnica</ref><ref>[http://spectrum.ieee.org/tech-talk/computing/networks/first-bitcoin-lawsuit-filed-in-san-francisco First Bitcoin Lawsuit Filed In San Francisco]. IEEE Spectrum</ref><br />
<br />
In late August 2012, Bitcoin Savings and Trust was shut down by the owner, allegedly leaving around $5.6 million in debts; this led to allegations of the operation being a Ponzi scheme.<ref>{{Cite web|title=Bitcoin ponzi scheme – investors lose $5 million USD in online hedge fund|url=http://rt.com/usa/news/investors-currency-digital-fund-868/|publisher=RT}}</ref><ref>{{Cite web|last=Jeffries|first=Adrianne|title=Suspected multi-million dollar Bitcoin pyramid scheme shuts down, investors revolt|url=http://www.theverge.com/2012/8/27/3271637/bitcoin-savings-trust-pyramid-scheme-shuts-down|publisher=The Verge}}</ref><ref>{{Cite web|last=Mick|first=Jason|title="Pirateat40" Makes Off $5.6M USD in BitCoins From Pyramid Scheme|url=http://www.dailytech.com/Pirateat40+Makes+Off+56M+USD+in+BitCoins+From+Pyramid+Scheme/article25538.htm|publisher=DailyTech}}</ref><ref>[http://pandodaily.com/2012/08/31/bitcoin-how-a-virtual-currency-became-real-with-a-5-6m-fraud/ Bitcoin: How a Virtual Currency Became Real with a $5.6M Fraud]. PandoDaily</ref> In September 2012, it was reported that U.S. Securities and Exchange Commission has started an investigation on the case.<ref>[http://blogs.telegraph.co.uk/technology/willardfoxton2/100007836/bitcoin-pirate-scandal-sec-steps-in-amid-allegations-that-the-whole-thing-was-a-ponzi-scheme/ Bitcoin 'Pirate' scandal: SEC steps in amid allegations that the whole thing was a Ponzi scheme ]. The Telegraph</ref><br />
<br />
In September 2012, Bitfloor Bitcoin exchange also reported being hacked, with 24,000 BitCoins (roughly equivalent to 250,000 USD) stolen. As a result, Bitfloor suspended operations.<ref>[http://www.bbc.co.uk/news/technology-19486695 Bitcoin theft causes Bitfloor exchange to go offline]. BBC</ref><ref>[http://www.theverge.com/2012/9/5/3293375/bitfloor-bitcoin-exchange-suspended-theft Bitcoin exchange BitFloor suspends operations after $250,000 theft Bitcoin exchange BitFloor suspends operations after $250,000 theft]. The Verge</ref> The same month, Bitfloor resumed operations, with its founder saying that he reported the theft to FBI, and that he is planning to repay the victims, though the time frame for such repayment is unclear.<ref>[http://www.pcworld.com/article/2010586/bitcoin-exchange-back-online-after-hack.html?tk=rel_news Bitcoin exchange back online after hack]. PCWorld</ref><br />
<br />
===Taxation===<br />
In September 2012, the Intra-European Organization of Tax Administrations (IOTA), in Tbilisi, Georgia, held a workshop titled "Auditing Individuals and Legal Entities in the Use of e-Money." The workshop was attended by representatives from 23 countries.<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> Jerry Taylor, IOTA's technical taxation expert, said, "There's an awful lot happening on the Internet environment which is fascinating at the moment and introducing new challenges for auditors when it comes to virtual currency."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> Bitcoin was mentioned during the workshop.<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> <br />
<br />
Matthew Elias, founder of the [[Cryptocurrency Legal Advocacy Group]] (CLAG) published "Staying Between the Lines: A Survey of U.S. Income Taxation and its Ramifications on Cryptocurrencies", which discusses "the taxability of cryptocurrencies such as bitcoin."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> CLAG "stressed the importance for taxpayers to determine on their own whether taxes are due on a bitcoin-related transaction based on whether one has "experienced a realization event."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> Such examples are "when a taxpayer has provided a service in exchange for bitcoins, a realization event has probably occurred, and any gain or loss would likely be calculated using fair market values for the service provided."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref><br />
<br />
[[Peter Vessenes]], [[Bitcoin Foundation|Bitcoin Foundation's]] executive director, said, since the foundation is trying to pay for everything in bitcoin, including salaries, "How do we W-2 someone for their bitcoins? Do we mark-to-market every time a transfer happens? Payroll companies cringe."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> The Bitcoin Foundation hopes "to push for solid guidance about its legal and tax treatment." [[Patrick Murck]], legal counsel for the Bitcoin Foundation, said he would like "to help regulators understand the technology better so they can make better decisions."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> Murck said, "Bitcoin has the potential to become much more than a niche currency, but it needs the guidance and understanding of regulators." and "The full potential of bitcoin could be realized through clearer guidelines and a better understanding by financial and tax regulators." and "Part of making that happen is to talk to regulators, the IRS, and tax professionals and helping them understand that bitcoin is not this nefarious thing, it's just software, it's a community, and there's nothing inherently nefarious about either of those things."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref><br />
<br />
==See Also==<br />
* [[Introduction]]<br />
* [[Getting started]]<br />
* [[Using_Bitcoin|Detailed tutorial]]<br />
* [[How bitcoin works]]<br />
* [[FAQ]]<br />
<br />
==References==<br />
<references /><br />
<br />
[[Category:Digital currencies]]</div>Anymhttps://tests.bitcoin.it/w/index.php?title=Bitcoin&diff=33687Bitcoin2012-12-12T19:27:51Z<p>Anym: 100-million units</p>
<hr />
<div><br />
'''Bitcoin''' is a decentralized [[digital currency]] created by programmer [[Satoshi Nakamoto]], who also developed the [[original Bitcoin client]].<br />
It allows for pseudonymous and secure ownership and transfers of amounts of bitcoins, without relying on any central server to process the transactions or store the accounts.<br />
<br />
Each Bitcoin is divisible up to 100-million units, allowing the currency to adapt in cases of high valuation.<br />
<br />
It is the most widely used alternative currency,<ref name="Quantitative Analysis of the Full Bitcoin Transaction Graph">{{cite web|title=Quantitative Analysis of the Full Bitcoin Transaction Graph|url=http://eprint.iacr.org/2012/584.pdf|publisher=Cryptology ePrint Archive|accessdate=18 October 2012|author=Ron Dorit|coauthors=Adi Shamir|page=17|quote=The Bitcoin system is the best known and most widely used alternative payment scheme,...}}</ref> with the total market cap at over 100 million US dollars.<ref>{{cite web|last=Koch|first=Rüdiger|title=Bitcoin - a Means for Redistribution of Wealth|url=http://ieet.org/index.php/IEET/more/koch20120927|publisher=Institute for Ethics & Emerging Technologies|accessdate=27 October 2012|quote=We’re currently at 50,000 users and a market cap of $100 Million.}}</ref><ref>{{cite web|title=Market Capitalization|url=http://blockchain.info/charts/market-cap|publisher=Blockchain.info|accessdate=28 October 2012}}</ref><ref name="Mt.Gox data">{{Cite web|title=Mt.Gox data|url=http://bitcoincharts.com/markets/mtgoxUSD.html|publisher=Bitcoincharts}}</ref> <br />
<br />
Bitcoin has no central issuer; instead, the peer-to-peer network regulates Bitcoins, transactions and issuance according to consensus in network software.<br />
Bitcoins are issued to various nodes that verify transactions through computing power;<br />
it is established that there will be a limited and scheduled release of no more than 21 million BTC worth of coins, which will be fully issued by the year 2140.<br />
<br />
Internationally, Bitcoins can be exchanged and managed through various websites and [[software]] along with physical banknotes and coins.<ref>{{Cite web|title=Physical Bitcoins by Casascius|url=https://www.casascius.com/|publisher=Casascius Coins|accessdate=29 September 2012}}</ref><ref>{{Cite web|title=Bitbills|url=http://www.bitbills.com/|publisher=Bitbills|accessdate=29 September 2012}}</ref><br />
<br />
==History==<br />
:Main article: [[History]]<br />
<br />
A cryptographic system for untraceable payments was first described by David Chaum in 1982.<ref>[http://blog.koehntopp.de/uploads/Chaum.BlindSigForPayment.1982.PDF David Chaum, Blind signatures for untraceable payments], Advances in Cryptology - Crypto '82, Springer-Verlag (1983), 199–203.</ref> In 1990 Chaum extended this system to create the first cryptographic anonymous electronic cash system.,<ref>{{cite journal|journal=Lecture Notes in Computer Science|last1=Chaum|first1=David|last2=Fiat|first2=Amos|last3=Naor|first3=Moni|title=Untraceable Electronic Cash|url=http://blog.koehntopp.de/uploads/chaum_fiat_naor_ecash.pdf}}</ref> which became known as ecash.<br />
<ref>{{cite web|url=http://www.wired.com/wired/archive/2.12/emoney.html|publisher=Wired|title=E-Money (That's What I Want)|date=1994–2012|author=Steven Levy}}</ref> In 1998 Wei Dai published a description of an anonymous, distributed electronic cash system which he called "b-money".<ref>{{cite web|title=B-Money|url=http://www.weidai.com/bmoney.txt|author=Wei Dai|year=1998}}</ref> Around the same time, Nick Szabo created ''bit gold''.<ref>{{cite web|url=http://spectrum.ieee.org/computing/software/bitcoin-the-cryptoanarchists-answer-to-cash/0|title=Bitcoin: The Cryptoanarchists’ Answer to Cash|publisher=IEEE Spectrum|quote=Around the same time, Nick Szabo, a computer scientist who now blogs about law and the history of money, was one of the first to imagine a new digital currency from the ground up. Although many consider his scheme, which he calls “bit gold,” to be a precursor to Bitcoin}}</ref><ref name="bitgold">{{cite web|title=Bit gold|url=http://unenumerated.blogspot.co.uk/2005/12/bit-gold.html|author=Nick Szabo|quote=My proposal for bit gold is based on computing a string of bits from a string of challenge bits, using functions called variously "client puzzle function," "proof of work function," or "secure benchmark function.". The resulting string of bits is the proof of work.... The last-created string of bit gold provides the challenge bits for the next-created string.}}</ref> Like Bitcoin, ''Bit gold'' was a currency system where users would compete to solve a [[proof of work]] function, with solutions being cryptographically chained together and published via a distributed property title registry. A variant of ''Bit gold'', called ''Reusable Proofs of Work'', was implemented by Hal Finney.<ref name="bitgold"/><br />
<br />
In 2008, Satoshi Nakamoto published a paper<ref name="whitepaper">{{cite web<br />
|last= Nakamoto<br />
|first= Satoshi<br />
|title= Bitcoin: A Peer-to-Peer Electronic Cash System<br />
|url= http://www.cs.kent.edu/~JAVED/class-P2P12F/papers-2012/PAPER2012-p2p-bitcoin-satoshinakamoto.pdf<br />
|accessdate = 14 December 2010<br />
|date= 24 May 2009<br />
|postscript=<br />
}}</ref><ref>{{cite web<br />
|url= http://article.gmane.org/gmane.comp.encryption.general/12588/<br />
|title= Bitcoin P2P e-cash paper<br />
}}</ref> on The Cryptography Mailing list at metzdowd.com<ref>[http://www.mail-archive.com/search?l=cryptography@metzdowd.com&q=from:%22Satoshi+Nakamoto%22 Satoshi's posts to Cryptography mailing list]</ref> describing the Bitcoin protocol.<br />
<br />
The Bitcoin network came into existence on 3 January 2009 with the release of the first Bitcoin client, [[wxBitcoin]], and the issuance of the first Bitcoins.<ref>{{cite web |title=Block 0 – Bitcoin Block Explorer |url=http://blockexplorer.com/block/000000000019d6689c085ae165831e934ff763ae46a2a6c172b3f1b60a8ce26f }}</ref><ref>{{cite web |url=http://www.mail-archive.com/cryptography@metzdowd.com/msg10142.html |title=Bitcoin v0.1 released}}</ref><ref>{{cite web |url=http://sourceforge.net/news/?group_id=244765 |title=SourceForge.net: Bitcoin}}</ref><br />
A year after, the initial exchange rates for Bitcoin were set by individuals on the bitcointalk forums.{{Citation needed|date=October 2012}} The most significant transaction involved a 10,000 BTC pizza.<ref>{{cite web|title=The Rise and Fall of Bitcoin|url=http://www.wired.com/magazine/2011/11/mf_bitcoin/|publisher=Wired|accessdate=13 October 2012}}</ref><br />
Today, the majority of Bitcoin exchanges occur on the [[MtGox]] Bitcoin exchange.<br />
<br />
In 2011, Wikileaks,<ref>{{cite news<br />
|last= Greenberg<br />
|first= Andy<br />
|url= http://blogs.forbes.com/andygreenberg/2011/06/14/wikileaks-asks-for-anonymous-bitcoin-donations/<br />
|title= WikiLeaks Asks For Anonymous Bitcoin Donations – Andy Greenberg – The Firewall – Forbes<br />
|publisher= Blogs.forbes.com<br />
|date= 2011-06-14<br />
|accessdate = 2011-06-22<br />
}}</ref> [[Freenet]],<ref>{{cite web<br />
|url= https://freenetproject.org/donate.html<br />
|title= /donate<br />
|publisher= The Freenet Project<br />
|date=<br />
|accessdate = 2011-06-22<br />
}}</ref> Singularity Institute,<ref>[http://singinst.org/donate/ SIAI donation page]</ref> Internet Archive,<ref>[http://www.archive.org/donate/index.php Internet Archive donation page]</ref> Free Software Foundation<ref>[https://my.fsf.org/donate/other/ Other ways to donate]</ref> and others, began to accept donations in Bitcoin. The Electronic Frontier Foundation did so for a while but has since stopped, citing concerns about a lack of legal precedent about new currency systems, and because they "generally don't endorse any type of product or service."<ref>{{cite web<br />
|url= https://www.eff.org/deeplinks/2011/06/eff-and-bitcoin<br />
|title= EFF and Bitcoin &#124; Electronic Frontier Foundation<br />
|publisher= Eff.org<br />
|date= 2011-06-14<br />
|accessdate = 2011-06-22<br />
}}</ref> Some small businesses had started to adopt Bitcoin. LaCie, a public company, accepts Bitcoin for its Wuala service.<ref>{{Cite web|url=http://www.wuala.com/en/bitcoin |title=Secure Online Storage – Backup. Sync. Share. Access Everywhere |publisher=Wuala |date= |accessdate = 2012-01-24}}</ref><br />
<br />
In 2012, BitPay reports of having over 1000 merchants accepting Bitcoin under its payment processing service.<ref>{{cite web|title=BitPay Signs 1,000 Merchants to Accept Bitcoin Payments|url=http://www.americanbanker.com/issues/177_176/bitpay-signs-1000-merchants-to-accept-bitcoin-payments-1052538-1.html|publisher=American Banker|accessdate=12 October 2012}}</ref><br />
<br />
==Administration==<br />
Bitcoin is administered through a decentralized peer-to-peer network.<ref name="whitepaper"/> Cryptographic technologies and the peer-to-peer network of computing power enables users to make and verify irreversible, instant online Bitcoin payments, without an obligation to trust and use centralized banking institutions and authorities. Dispute resolution services are not made directly available. Instead it is left to the users to verify and trust the parties they are sending money to through their choice of methods. <br />
<br />
Bitcoins are issued according to rules agreed to by the majority of the computing power within the Bitcoin network. The core rules describing the predictable issuance of Bitcoins to its verifying servers, a voluntary and competitive transaction fee system and the hard limit of no more than 21 million BTC issued in total.<ref name="whitepaper"/><br />
<br />
Bitcoin does not require a central bank, State,<ref>{{cite web<br />
|url= http://spectrum.ieee.org/computing/software/bitcoin-the-cryptoanarchists-answer-to-cash/3<br />
|title= Bitcoin: The Cryptoanarchists' Answer to Cash<br />
|publisher= IEEE.org<br />
|date= June 2012<br />
|accessdate = 2012-06-05<br />
}}</ref> or incorporated backers.<br />
<br />
==Services==<br />
:Main article: [[Wallet]]<br />
<br />
Bitcoins are sent and received through software and websites called wallets. They send and confirm transactions to the network through Bitcoin addresses, the identifiers for users' Bitcoin wallets within the network.<ref name="whitepaper"/><br />
<br />
===Bitcoin addresses===<br />
:Main article: [[Address]]<br />
<br />
Payments are made to Bitcoin "addresses": human-readable strings of numbers and letters around 33 characters in length, always beginning with the digit 1 or 3, as in the example of ''31uEbMgunupShBVTewXjtqbBv5MndwfXhb''.<br />
<br />
Users obtain new Bitcoin addresses from their Bitcoin software. Creating a new address can be a completely offline process and require no communication with the Bitcoin network.<br />
<br />
===Transaction fees===<br />
:Main article: [[Transaction fees]]<br />
Transaction fees may be included with any transfer of Bitcoins. {{As of|2012}} many transactions are processed in a way which makes no charge for the transaction. For transactions which consume or produce many coins (and therefore have a large data size), a small transaction fee is usually expected.<br />
<br />
===Confirmations===<br />
:Main article: [[Confirmation]]<br />
<br />
The network's software confirms a transaction when it records it in a block. Further blocks of transactions confirm it even further. After six confirmations/blocks, a transaction is confirmed beyond reasonable doubt.<br />
<br />
The network must store the whole transaction history inside the blockchain, which grows constantly as new records are added and never removed. Nakamoto conceived that as the database became larger, users would desire applications for Bitcoin that didn't store the entire database on their computer. To enable this, the blockchain uses a [[merkle tree]] to organize the transaction records in such a way that client software can locally delete portions of its own database it knows it will never need, such as earlier transaction records of Bitcoins that have changed ownership multiple times.<br />
<br />
==Economics==<br />
<br />
===Initial distribution===<br />
<br />
Bitcoin has no centralized issuing authority.<ref name="ars-06-08-11"><br />
{{Cite news<br />
|first= Thomas<br />
|last= Lowenthal<br />
|title= Bitcoin: inside the encrypted, peer-to-peer digital currency<br />
|newspaper= Ars Technica<br />
|date= 8 June 2011<br />
|url= http://arstechnica.com/tech-policy/news/2011/06/bitcoin-inside-the-encrypted-peer-to-peer-currency.ars<br />
}}</ref><ref>{{cite news<br />
|author= Sponsored by<br />
|url= http://www.economist.com/blogs/babbage/2011/06/virtual-currency<br />
|title= Virtual currency: Bits and bob<br />
|publisher= The Economist<br />
|date=<br />
|accessdate = 2011-06-22<br />
}}</ref><ref>{{cite web<br />
|last= Geere<br />
|first= Duncan<br />
|url= http://www.wired.co.uk/news/archive/2011-05/16/bitcoin-p2p-currency<br />
|title= Peer-to-peer currency Bitcoin sidesteps financial institutions (Wired UK)<br />
|publisher= Wired.co.uk<br />
|date=<br />
|accessdate = 2011-06-22<br />
}}</ref> The network is programmed to increase the money supply as a geometric series until the total number of Bitcoins reaches 21 million BTC.<ref name="Quantitative Analysis of the Full Bitcoin Transaction Graph"/> {{As of|2012|10}} slightly over 10 million of the total 21 million BTC had been created; the current total number created is available online.<ref>{{cite web<br />
|title= Total Number of Bitcoins in Existence<br />
|url= http://blockexplorer.com/q/totalbc<br />
|work= Bitcoin Block Explorer<br />
|accessdate = 2012-10-03<br />
}}</ref> By 2013 half of the total supply will have been generated, and by 2017, three-quarters will have been generated. To ensure sufficient granularity of the [[money supply]], clients can divide each BTC unit down to eight decimal places (a total of 2.1&nbsp;×&nbsp;10<sup>15</sup> or 2.1 quadrillion units).<ref name="lwn">{{Cite news<br />
|author= Nathan Willis<br />
|date= 2010-11-10<br />
|title= Bitcoin: Virtual money created by CPU cycles<br />
|publisher= LWN.net<br />
|url= http://lwn.net/Articles/414452/<br />
}}</ref><br />
<br />
The network {{As of|2012|lc=on}} required over one million times more work for confirming a block and receiving an award (25 BTC {{As of|2012|2|lc=on}}) than when the first blocks were confirmed.<br />
The difficulty is automatically adjusted every 2016 blocks based on the time taken to find the previous 2016 blocks such that one block is created roughly every 10 minutes.<br />
<br />
Those who chose to put computational and electrical resources toward mining early on had a greater chance at receiving awards for block generations. This served to make available enough processing power to process blocks. Indeed, without miners there are no transactions and the Bitcoin economy comes to a halt.<br />
<br />
===Exchange rate===<br />
Prices fluctuate relative to goods and services more than more widely accepted currencies;<br />
the price of a Bitcoin is not static.<br />
<br />
In August 2012, 1 BTC traded at around $10.00 USD. Taking into account the total number of Bitcoins mined, the monetary base of the Bitcoin network stands at over 110 million USD.<ref>[http://www.bitcoinwatch.com/ http://www.bitcoinwatch.com/] Bitcoin statistics</ref><br />
<br />
== Security ==<!--Please keep as starting template--><br />
:Main article: [[Weaknesses]]<br />
<br />
In the history of bitcoin, there have been a few [[incidents]], caused by problematic as well as malicious transactions. In the worst such incident, and the only one of its type, a person was able to pretend that he had a practically infinite supply of bitcoins, for almost 9 hours.<br />
<br />
Bitcoin relies, among other things, on [http://en.wikipedia.org/wiki/Public-key_cryptography public key cryptography] and thus may be vulnerable to [http://en.wikipedia.org/wiki/Elliptic_curve_cryptography#Quantum_computing_attacks quantum computing attacks] if and when practical quantum computers can be constructed.<br />
<br />
If multiple different software packages, whose usage becomes widespread on the Bitcoin network, disagree on the protocol and the rules for transactions, this could potentially cause a fork in the block chain, with each faction of users being able to accept only their own version of the history of transactions. This could influence the price of bitcoins.<br />
<br />
A global, organized campaign against the currency or the software could also influence the demand for bitcoins, and thus the exchange price.<br />
<br />
==Bitcoin mining==<br />
:Main article: [[Mining]]<br />
<br />
Bitcoin mining nodes are responsible for managing the Bitcoin network.<br />
<br />
Bitcoins are awarded to Bitcoin nodes known as "miners" for the solution to a difficult [[proof-of-work]] problem which confirms transactions and prevents double-spending. This incentive, as the Nakamoto white paper describes it, encourages "nodes to support the network, and provides a way to initially distribute coins into circulation, since no central authority issues them."<ref name="whitepaper" /><br />
<br />
Nakamoto compared the generation of new coins by expending CPU time and electricity to gold miners expending resources to add gold to circulation.<ref name="whitepaper"/><br />
<br />
===Node operation===<br />
<br />
The node software for the Bitcoin network is based on peer-to-peer networking, digital signatures and cryptographic proof to make and verify transactions. Nodes broadcast transactions to the network, which records them in a public record of all transactions, called the ''blockchain'', after validating them with a [[proof-of-work|proof-of-work system]].<br />
<br />
Satoshi Nakamoto designed the first Bitcoin node and mining software<ref name="processors">{{Cite news<br />
|last= Davis<br />
|first= Joshua<br />
|title= The Crypto-Currency<br />
|url= http://www.wired.com/magazine/2011/11/mf_bitcoin/all<br />
|accessdate = 11 November 2011<br />
|newspaper= Wired Magazine<br />
|date= 10 November 2011<br />
}}</ref> and developed the majority of the first implementation, Bitcoind, from 2007 to mid-2010.<ref name="code_start">{{cite web<br />
|url= https://bitcointalk.org/index.php?topic=13.msg46#msg46<br />
|title= Questions about Bitcoin<br />
|publisher= Bitcoin forum<br />
|date= 2009-12-10<br />
}}</ref><br />
<br />
Node implementations include core software such as Bitcoind/Bitcoin-Qt, [[libbitcoin]], [[cbitcoin]]<ref>{{Cite web|title=cbitcoin|url=https://github.com/MatthewLM/cbitcoin|accessdate=3 October 2012}}</ref> and BitCoinJ.<ref>{{cite web<br />
|url= http://news.slashdot.org/story/11/03/23/0210207/Google-Engineer-Releases-Open-Source-Bitcoin-Client<br />
|title= Google Engineer Releases Open Source Bitcoin Client<br />
|author= angry tapir, timothy<br />
|date= 23 March 2011<br />
|publisher= Slashdot<br />
|accessdate = 2011-05-18<br />
}}</ref><ref>{{cite web<br />
|url= http://www.javaworld.com/javaworld/jw-01-2012/120110-bitcoin-for-beginners-3.html?page=1<br />
|title= Bitcoin for beginners: The BitcoinJ API<br />
|author= Dirk Merkel<br />
|date= 10 January 2012<br />
|publisher= JavaWorld<br />
|accessdate = 2012-08-03<br />
}}</ref><br />
<br />
Every node in the Bitcoin network collects all the unacknowledged transactions it knows of in a file called a ''block'', which also contains a reference to the previous valid block known to that node. It then appends a [[nonce]] value to this previous block and computes the SHA-256 cryptographic hash of the block and the appended nonce value. The node repeats this process until it adds a nonce that allows for the generation of a hash with a value lower than a specified ''target''. Because computers cannot practically reverse the hash function, finding such a nonce is hard and requires on average a predictable amount of repetitious trial and error. This is where the ''[[proof-of-work]]'' concept comes in to play. When a node finds such a solution, it announces it to the rest of the network. Peers receiving the new solved block validate it by computing the hash and checking that it really starts with the given number of zero bits (i.e., that the hash is within the target). Then they accept it and add it to the chain.<br />
<br />
===Mining rewards===<br />
In addition to receiving the pending transactions confirmed in the block, a generating node adds a ''generate'' transaction, which awards new Bitcoins to the operator of the node that generated the block. The system sets the payout of this generated transaction according to its defined inflation schedule. The miner that generates a block also receives the fees that users have paid as an incentive to give particular transactions priority for faster confirmation.<br />
<br />
The network never creates more than a 50&nbsp;BTC reward per block and this amount will decrease over time towards zero, such that no more than 21 million BTC will ever exist.<ref name="lwn" /> As this payout decreases, the incentive for users to run block-generating nodes is intended to change to earning [[#Transaction fees|transaction fees]].<br />
<br />
===Mining pools===<br />
:Main article: [[Pooled mining]]<br />
<br />
Bitcoin users often pool computational effort to increase the stability of the collected fees and subsidy they receive.<ref name="We Use Coins Mining">{{cite web|title=About Bitcoin Mining|url=http://www.weusecoins.com/mining-guide.php|publisher=We Use Coins|accessdate=18 October 2012}}</ref><br />
<br />
===Mining difficulty===<br />
:Main article: [[Difficulty]]<br />
<br />
In order to throttle the creation of blocks, the difficulty of generating new blocks is adjusted over time. If mining output increases or decreases, the difficulty increases or decreases accordingly.<br />
<br />
The adjustment is done by changing the threshold that a hash is required to be less than. A lower threshold means fewer possible hashes can be accepted, and thus a higher degree of difficulty. The target rate of block generation is one block every 10 minutes, or 2016 blocks every two weeks. Bitcoin changes the difficulty of finding a valid block every 2016 blocks, using the difficulty that would have been most likely to cause the prior 2016 blocks to have taken two weeks to generate, according to the timestamps on the blocks. Technically, this is done by modeling the generation of Bitcoins as Poisson process. All nodes perform and enforce the same difficulty calculation.<br />
<br />
Difficulty is intended as an automatic stabilizer allowing mining for Bitcoins to remain profitable in the long run for the most efficient miners, independently of the fluctuations in demand of Bitcoin in relation to other currencies.<br />
<br />
===Mining hardware===<br />
:Main article: [[Mining Hardware Comparison]]<br />
<br />
Bitcoins used to be mined through Intel/AMD CPUs. {{As of | 2012}}, mining has gradually moved to [[GPU]] and [[FPGA]] hardware.<ref name="bitcoinmag-butterfly" /> [[Application-specific integrated circuit|ASIC]]-based hardware for Bitcoin mining has been announced by several manufacturers who intend to ship products from late 2012 to early 2013.<ref name="bitcoinmag-butterfly">{{Cite web|title=Bitpay Breaks Daily Volume Record with Butterfly ASIC mining release|url=http://bitcoinmagazine.net/bitpay-breaks-daily-volume-record-with-butterfly-asic-mining-release/|publisher=Bitcoin Magazine}}</ref><br />
<br />
==Concerns==<br />
<br />
===As an investment===<br />
Bitcoin describes itself as an experimental digital currency. Reuben Grinberg has noted that Bitcoin's supporters have argued that Bitcoin is neither a security or an investment because it fails to meet the criteria for either category.<ref name="grinberg">{{cite web | url=http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1817857 | title=Bitcoin: An Innovative Alternative Digital Currency | publisher=SSRN | date=9 December 2011 | accessdate=4 December 2012 | author=Grinberg, Reuben}}</ref> Although it is a virtual currency, some people see it as an investment<ref name="cnbc">{{cite web | url=http://www.cnbc.com/id/45030812/The_Pros_And_Cons_Of_Biting_on_Bitcoins | title=The Pros And Cons Of Biting on Bitcoins | publisher=CNBC | date=23 November 2011 | accessdate=4 December 2012 | author=Gustke, Constance}}</ref> or accuse it of being a form of investment fraud known as a Ponzi scheme.<ref>{{cite web |url=http://www.theregister.co.uk/2011/06/08/bitcoin_under_attack/ |title=US senators draw a bead on Bitcoin |last1=Chirgwin |first1=Richard |date=8 June 2011 |publisher=The Register |accessdate=14 November 2012}}</ref><ref>{{cite web |url=http://uk.reuters.com/article/2012/04/01/uk-traders-bitcoin-idUKBRE8300JL20120401 |title=Bitcoin, the City traders' anarchic new toy |last1=O'Leary |first1=Naomi |date=2 April 2012 |publisher=Reuters |accessdate=14 November 2012}}</ref> A report by the European Central Bank, using the U.S. Securities and Exchange Commission's definition of a Ponzi scheme, found that the use of bitcoins shares some characteristics with Ponzi schemes, but also has characteristics of its own which contradict several common aspects of Ponzi schemes.<ref name="ecbreport">{{cite web | url=http://www.ecb.europa.eu/pub/pdf/other/virtualcurrencyschemes201210en.pdf | title=Virtual Currency Schemes | publisher=European Central Bank | date=October 2012 | accessdate=4 December 2012}}</ref><br />
<br />
===Privacy===<br />
Because transactions are broadcast to the entire network, they are inherently public. Unlike regular banking,<ref>{{cite web<br />
|url= http://spectrum.ieee.org/computing/software/bitcoin-the-cryptoanarchists-answer-to-cash/0<br />
|title= Bitcoin: The Cryptoanarchists' Answer to Cash<br />
|publisher= IEEE.org<br />
|date= June 2012<br />
|accessdate = 2012-06-05<br />
}}</ref> which preserves customer privacy by keeping transaction records private, loose transactional privacy is accomplished in Bitcoin by using many unique addresses for every wallet, while at the same time publishing all transactions. As an example, if Alice sends 123.45 BTC to Bob, the network creates a public record that allows anyone to see that 123.45 has been sent from one address to another. However, unless Alice or Bob make their ownership of these addresses known, it is difficult for anyone else to connect the transaction with them. However, if someone connects an address to a user at any point they could follow back a series of transactions as each participant likely knows who paid them and may disclose that information on request or under duress.<br />
<br />
It can be difficult to associate Bitcoin identities with real-life identities.<ref name="An Analysis of Anonymity in the Bitcoin System">Fergal Reid and Martin Harrigan (24 July 2011). [http://anonymity-in-bitcoin.blogspot.com/2011/07/bitcoin-is-not-anonymous.html An Analysis of Anonymity in the Bitcoin System]. An Analysis of Anonymity in the Bitcoin System.</ref> This property makes Bitcoin transactions attractive to sellers of illegal products.<ref name="Forbes">Andy Greenberg (20 April 2011). [http://www.forbes.com/forbes/2011/0509/technology-psilocybin-bitcoins-gavin-andresen-crypto-currency.html Crypto Currency]. Forbes Magazine.</ref><ref>{{cite web<br />
|last= Madrigal<br />
|first= Alexis<br />
|title= Libertarian Dream? A Site Where You Buy Drugs With Digital Dollars<br />
|publisher= The Atlantic Monthly<br />
|date= 2011-06-01<br />
|url= http://www.theatlantic.com/technology/archive/2011/06/libertarian-dream-a-site-where-you-buy-drugs-with-digital-dollars/239776/<br />
|accessdate = 2011-06-05<br />
}}</ref><br />
<br />
===Illicit use===<br />
<br />
====Cracking====<br />
The cracking organization "LulzSec" accepted donations in Bitcoin, having said that the group "needs Bitcoin donations to continue their hacking efforts".<ref name="CNET">{{cite web<br />
|last= Reisinger<br />
|first= Don<br />
|url= http://news.cnet.com/8301-13506_3-20070268-17/senators-target-bitcoin-currency-citing-drug-sales/<br />
|title= Senators target Bitcoin currency, citing drug sales &#124; The Digital Home – CNET News<br />
|publisher= News.cnet.com<br />
|date= 2011-06-09<br />
|accessdate = 2011-06-22<br />
}}</ref><ref>{{cite news<br />
|last= Olson<br />
|first= Parmy<br />
|url= http://blogs.forbes.com/parmyolson/2011/06/06/lulzsec-hackers-posts-sony-dev-source-code-get-7k-donation/<br />
|title= LulzSec Hackers Post Sony Dev. Source Code, Get $7K Donation – Parmy Olson – Disruptors – Forbes<br />
|publisher= Blogs.forbes.com<br />
|date= 6 June 2011<br />
|accessdate = 2011-06-22<br />
}}</ref><br />
<br />
====Silk Road====<br />
[[Silk Road]] is an anonymous black market that uses only the Bitcoin.<ref name="npr-06-12-11"><br />
{{Cite news<br />
|url= http://www.npr.org/2011/06/12/137138008/silk-road-not-your-fathers-amazon-com<br />
|date= 12 June 2011<br />
|newspaper= NPR<br />
|title= Silk Road: Not Your Father's Amazon.com<br />
|author= Staff<br />
}}</ref> <br />
<br />
In a 2011 letter to Attorney General Eric Holder and the Drug Enforcement Administration, senators Charles Schumer of New York and Joe Manchin of West Virginia called for an investigation into Silk Road and the Bitcoin.<ref name="npr-06-12-11"/><br />
Schumer described the use of Bitcoins at Silk Road as a form of money laundering.<ref name="ars-06-08-11"/><br />
<br />
====Botnet mining====<br />
In June 2011, Symantec warned about the possibility of botnets engaging in covert "mining" of Bitcoins,<ref>{{Cite web|author=Updated: 17 June 2011 | Translations available: 日本語 |url=http://www.symantec.com/connect/blogs/bitcoin-botnet-mining |title=Bitcoin Botnet Mining &#124; Symantec Connect Community |publisher=Symantec.com |date=2011-06-17 |accessdate = 2012-01-24}}</ref><ref>{{Cite web|url=http://www.zdnet.com/blog/security/researchers-find-malware-rigged-with-bitcoin-miner/8934 |title=Researchers find malware rigged with Bitcoin miner |publisher=ZDNet |date=2011-06-29 |accessdate = 2012-01-24}}</ref> consuming computing cycles, using extra electricity and possibly increasing the temperature of the computer. Later that month, the Australian Broadcasting Corporation caught an employee using the company's servers to generate Bitcoins without permission.<ref>{{Cite web|url=http://thenextweb.com/au/2011/06/23/abc-employee-caught-mining-for-bitcoins-on-company-servers/ |title=ABC employee caught mining for Bitcoins on company servers |publisher=The Next Web |date=2011-06-23 |accessdate = 2012-01-24}}</ref> Some malware also uses the parallel processing capabilities of the GPUs built into many modern-day video cards.<ref>{{Cite news |url=http://www.theregister.co.uk/2011/08/16/gpu_bitcoin_brute_forcing/ |title=Malware mints virtual currency using victim's GPU |date=16 August 2011<!-- 20:00 GMT -->|first=Dan |last=Goodin }}</ref> In mid August 2011, Bitcoin miner botnets were found;<ref>{{Cite web|url=http://www.infosecurity-magazine.com/view/20211/researcher-discovers-distributed-bitcoin-cracking-trojan-malware/ |title=Infosecurity – Researcher discovers distributed bitcoin cracking trojan malware |publisher=Infosecurity-magazine.com |date=2011-08-19 |accessdate = 2012-01-24}}</ref> trojans infecting Mac OS X have also been uncovered.<ref>{{Cite web|url=http://www.techworld.com.au/article/405849/mac_os_x_trojan_steals_processing_power_produce_bitcoins |title=Mac OS X Trojan steals processing power to produce Bitcoins – sophos, security, malware, Intego – Vulnerabilities – Security |publisher=Techworld |date=2011-11-01 |accessdate = 2012-01-24}}</ref><br />
<br />
===Theft and fraud===<br />
On 19 June 2011, a security breach of the Mt.Gox (an acronym for ''M''agic: ''T''he ''G''athering ''O''nline E''x''change, its original purpose) Bitcoin Exchange caused the price of a Bitcoin to briefly drop to US$0.01 on the Mt.Gox exchange (though it remained unaffected on other exchanges) after a hacker allegedly used credentials from a Mt.Gox auditor's compromised computer to illegally transfer a large number of Bitcoins to him- or herself and sell them all, creating a massive "ask" order at any price. Within minutes the price rebounded to over $15 before Mt.Gox shut down their exchange and canceled all trades that happened during the hacking period.<ref>[https://mtgox.com/press_release_20110630.html Clarification of Mt Gox Compromised Accounts and Major Bitcoin Sell-Off]</ref><ref>[http://www.youtube.com/watch?v=T1X6qQt9ONg YouTube. Bitcoin Report]</ref> The exchange rate of Bitcoins quickly returned to near pre-crash values.<ref name="mick">Jason Mick, 19 June 2011, [http://www.dailytech.com/Inside+the+MegaHack+of+Bitcoin+the+Full+Story/article21942.htm Inside the Mega-Hack of Bitcoin: the Full Story], DailyTech</ref><ref>Timothy B. Lee, 19 June 2011, [http://arstechnica.com/tech-policy/news/2011/06/bitcoin-price-plummets-on-compromised-exchange.ars Bitcoin prices plummet on hacked exchange], Ars Technica</ref><ref>Mark Karpeles, 20 June 2011, [https://support.mtgox.com/entries/20208066-huge-bitcoin-sell-off-due-to-a-compromised-account-rollback Huge Bitcoin sell off due to a compromised account – rollback], Mt.Gox Support</ref><ref name="register1">{{Cite news<br />
|title= Bitcoin collapses on malicious trade – Mt Gox scrambling to raise the Titanic<br />
|url= http://www.theregister.co.uk/2011/06/19/bitcoin_values_collapse_again/<br />
|date= 2011-06-19<br />
|author= Chirgwin, Richard<br />
|publisher= The Register<br />
}}</ref> Accounts with the equivalent of more than USD 8,750,000 were affected.<ref name="mick" /><br />
<br />
In July 2011, The operator of Bitomat, the third largest Bitcoin exchange, announced that he lost access to his wallet.dat file with about 17,000 BitCoins (roughly equivalent to 220,000 USD at that time). He announced that he would sell the service for the missing amount, aiming to use funds from the sale to refund his customers.<ref>[http://siliconangle.com/blog/2011/08/01/third-largest-bitcoin-exchange-bitomat-lost-their-wallet-over-17000-bitcoins-missing/ Third Largest Bitcoin Exchange Bitomat Lost Their Wallet, Over 17,000 Bitcoins Missing]. SiliconAngle</ref><br />
<br />
In August 2011, MyBitcoin, one of popular Bitcoin transaction processors, declared that it was hacked, which resulted in it being shut down, with paying 49% on customer deposits, leaving more than 78,000 BitCoins (roughly equivalent to 800,000 USD at that time) unaccounted for.<ref>[http://betabeat.com/2011/08/mybitcoin-spokesman-finally-comes-forward-what-did-you-think-we-did-after-the-hack-we-got-shitfaced/ MyBitcoin Spokesman Finally Comes Forward: “What Did You Think We Did After the Hack? We Got Shitfaced”]. BetaBeat</ref><ref>[http://betabeat.com/2011/08/search-for-owners-of-mybitcoin-loses-steam/ Search for Owners of MyBitcoin Loses Steam]. BetaBeat</ref><br />
<br />
In early August 2012, a lawsuit was filed in San Francisco court against Bitcoinica, claiming about 460,000 USD from the company. Bitcoinica was hacked twice in 2012, which led to allegations of neglecting the safety of customers' money and cheating them out of withdrawal requests.<ref>[http://arstechnica.com/tech-policy/2012/08/bitcoinica-users-sue-for-460k-in-lost-bitcoins/ Bitcoinica users sue for $460k in lost Bitcoins]. Arstechnica</ref><ref>[http://spectrum.ieee.org/tech-talk/computing/networks/first-bitcoin-lawsuit-filed-in-san-francisco First Bitcoin Lawsuit Filed In San Francisco]. IEEE Spectrum</ref><br />
<br />
In late August 2012, Bitcoin Savings and Trust was shut down by the owner, allegedly leaving around $5.6 million in debts; this led to allegations of the operation being a Ponzi scheme.<ref>{{Cite web|title=Bitcoin ponzi scheme – investors lose $5 million USD in online hedge fund|url=http://rt.com/usa/news/investors-currency-digital-fund-868/|publisher=RT}}</ref><ref>{{Cite web|last=Jeffries|first=Adrianne|title=Suspected multi-million dollar Bitcoin pyramid scheme shuts down, investors revolt|url=http://www.theverge.com/2012/8/27/3271637/bitcoin-savings-trust-pyramid-scheme-shuts-down|publisher=The Verge}}</ref><ref>{{Cite web|last=Mick|first=Jason|title="Pirateat40" Makes Off $5.6M USD in BitCoins From Pyramid Scheme|url=http://www.dailytech.com/Pirateat40+Makes+Off+56M+USD+in+BitCoins+From+Pyramid+Scheme/article25538.htm|publisher=DailyTech}}</ref><ref>[http://pandodaily.com/2012/08/31/bitcoin-how-a-virtual-currency-became-real-with-a-5-6m-fraud/ Bitcoin: How a Virtual Currency Became Real with a $5.6M Fraud]. PandoDaily</ref> In September 2012, it was reported that U.S. Securities and Exchange Commission has started an investigation on the case.<ref>[http://blogs.telegraph.co.uk/technology/willardfoxton2/100007836/bitcoin-pirate-scandal-sec-steps-in-amid-allegations-that-the-whole-thing-was-a-ponzi-scheme/ Bitcoin 'Pirate' scandal: SEC steps in amid allegations that the whole thing was a Ponzi scheme ]. The Telegraph</ref><br />
<br />
In September 2012, Bitfloor Bitcoin exchange also reported being hacked, with 24,000 BitCoins (roughly equivalent to 250,000 USD) stolen. As a result, Bitfloor suspended operations.<ref>[http://www.bbc.co.uk/news/technology-19486695 Bitcoin theft causes Bitfloor exchange to go offline]. BBC</ref><ref>[http://www.theverge.com/2012/9/5/3293375/bitfloor-bitcoin-exchange-suspended-theft Bitcoin exchange BitFloor suspends operations after $250,000 theft Bitcoin exchange BitFloor suspends operations after $250,000 theft]. The Verge</ref> The same month, Bitfloor resumed operations, with its founder saying that he reported the theft to FBI, and that he is planning to repay the victims, though the time frame for such repayment is unclear.<ref>[http://www.pcworld.com/article/2010586/bitcoin-exchange-back-online-after-hack.html?tk=rel_news Bitcoin exchange back online after hack]. PCWorld</ref><br />
<br />
===Taxation===<br />
In September 2012, the Intra-European Organization of Tax Administrations (IOTA), in Tbilisi, Georgia, held a workshop titled "Auditing Individuals and Legal Entities in the Use of e-Money." The workshop was attended by representatives from 23 countries.<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> Jerry Taylor, IOTA's technical taxation expert, said, "There's an awful lot happening on the Internet environment which is fascinating at the moment and introducing new challenges for auditors when it comes to virtual currency."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> Bitcoin was mentioned during the workshop.<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> <br />
<br />
Matthew Elias, founder of the [[Cryptocurrency Legal Advocacy Group]] (CLAG) published "Staying Between the Lines: A Survey of U.S. Income Taxation and its Ramifications on Cryptocurrencies", which discusses "the taxability of cryptocurrencies such as bitcoin."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> CLAG "stressed the importance for taxpayers to determine on their own whether taxes are due on a bitcoin-related transaction based on whether one has "experienced a realization event."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> Such examples are "when a taxpayer has provided a service in exchange for bitcoins, a realization event has probably occurred, and any gain or loss would likely be calculated using fair market values for the service provided."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref><br />
<br />
[[Peter Vessenes]], [[Bitcoin Foundation|Bitcoin Foundation's]] executive director, said, since the foundation is trying to pay for everything in bitcoin, including salaries, "How do we W-2 someone for their bitcoins? Do we mark-to-market every time a transfer happens? Payroll companies cringe."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> The Bitcoin Foundation hopes "to push for solid guidance about its legal and tax treatment." [[Patrick Murck]], legal counsel for the Bitcoin Foundation, said he would like "to help regulators understand the technology better so they can make better decisions."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref> Murck said, "Bitcoin has the potential to become much more than a niche currency, but it needs the guidance and understanding of regulators." and "The full potential of bitcoin could be realized through clearer guidelines and a better understanding by financial and tax regulators." and "Part of making that happen is to talk to regulators, the IRS, and tax professionals and helping them understand that bitcoin is not this nefarious thing, it's just software, it's a community, and there's nothing inherently nefarious about either of those things."<ref name="BitCoin Tax issues Oct 2012">{{cite journal | title=2012 TNT 209-4 NEWS ANALYSIS: VIRTUAL CURRENCY: A NEW WORRY FOR TAX ADMINISTRATORS?. (Release Date: OCTOBER 17, 2012) (Doc 2012-21516) | author=Stewart, David D. and Soong Johnston, Stephanie D. | journal=Tax Notes Today | year=2012 | month=October 29 | volume=2012 TNT 209-4 | issue=2012 TNT 209-4}}</ref><br />
<br />
==See Also==<br />
* [[Introduction]]<br />
* [[Getting started]]<br />
* [[Using_Bitcoin|Detailed tutorial]]<br />
* [[How bitcoin works]]<br />
* [[FAQ]]<br />
<br />
==References==<br />
<references /><br />
<br />
[[Category:Digital currencies]]</div>Anymhttps://tests.bitcoin.it/w/index.php?title=Template:MainPage_Intro&diff=33686Template:MainPage Intro2012-12-12T19:24:15Z<p>Anym: </p>
<hr />
<div>[[Image:Bitcoin world map.png|left|200px|Bitcoin usage worldwide.]]<br />
<br />
'''Bitcoin''' is a decentralized, experimental [[digital currency]] that enables instant payments to anyone, anywhere in the world. Bitcoin uses peer-to-peer technology to operate with no central authority: managing transactions and issuing money are carried out collectively by the network. <br />
<br />
The original Bitcoin software by [[Satoshi Nakamoto]] was released under the MIT license.<br />
Most client software, derived or "from scratch", also use open source licensing.<br />
<br />
Bitcoin is one of the first implementations of a concept called ''crypto-currency'' which was first described in 1998 by Wei Dai on the cypherpunks mailing list. Building upon the notion that money is any object, or any sort of record, accepted as payment for goods and services and repayment of debts in a given country or socio-economic context, Bitcoin is designed around the idea of using cryptography to control the creation and transfer of money, rather than relying on central authorities.<br />
<br />
:''Sourced from [http://bitcoin.org Bitcoin.org] and [[wikipedia:Bitcoin|Wikipedia]].''<br />
<br />
'''Bitcoin-Qt:'''<br />
{|style="background-color: inherit;"<br />
|<br />
* [http://sourceforge.net/projects/bitcoin/files/Bitcoin/bitcoin-0.7.1/bitcoin-0.7.1-win32-setup.exe/download '''Windows (exe)'''] 9.3 MB [http://sourceforge.net/projects/bitcoin/files/Bitcoin/bitcoin-0.7.1/bitcoin-0.7.1-win32.zip/download '''(zip)'''] 13 MB<br />
* [http://sourceforge.net/projects/bitcoin/files/Bitcoin/bitcoin-0.7.1/bitcoin-0.7.1-linux.tar.gz/download '''GNU/Linux'''] 12 MB<br />
* [http://sourceforge.net/projects/bitcoin/files/Bitcoin/bitcoin-0.7.1/bitcoin-0.7.1-macosx.dmg/download '''Mac OS X'''] 13 MB<br />
|}<br />
<br />
[http://bitcoin.org/clients.html More Bitcoin Client Software]</div>Anymhttps://tests.bitcoin.it/w/index.php?title=Help:Getting_started&diff=33685Help:Getting started2012-12-12T19:22:53Z<p>Anym: </p>
<hr />
<div>Here is a generic [[Bitcoin_Newbie_Guide|Getting Started guide]].<br />
<br />
* Start by watching [http://weusecoins.com/ this 2 minute vid].<br />
* Learn why it [http://bitcoin.stackexchange.com/questions/2834/what-are-the-perceived-advantages-of-bitcoin-as-a-store-of-value could be a good investment]<br />
* Learn why it's objectively [http://bitcoin.stackexchange.com/questions/305/what-are-the-perceived-advantages-of-bitcoin-as-a-means-of-exchange better than as a means of exchange].<br />
* Get a [[Clients|client]] and try it out yourself (you can get a bit of free money from [[Bitcoin Faucet|The Bitcoin Faucet]]).<br />
* [http://bitcoin.stackexchange.com/ Ask questions]<br />
* [http://bitcoin.stackexchange.com/questions/118/how-much-bitcoin-will-i-mine-right-now-with-hardware-x Can I generate Free Money on my computer?] - TL;DR - Not really.<br />
* [https://en.bitcoin.it/wiki/FAQ Read the FAQ]<br />
* [[Buying Bitcoins (the noob version)|Where can I buy bitcoins?]] (Hint: [http://bitcoin.stackexchange.com/questions/2293/how-can-i-buy-bitcoin-via-a-credit-card-or-paypal You can't buy them with Paypal or credit cards])<br />
<br />
If you're looking for how to get started with Bitcoin-Qt, [[Getting started installing bitcoin-qt|this is the article you're looking for]].</div>Anymhttps://tests.bitcoin.it/w/index.php?title=Help:Getting_started&diff=33684Help:Getting started2012-12-12T19:22:09Z<p>Anym: </p>
<hr />
<div>Here is a generic [[Bitcoin_Newbie_Guide|Getting Started guide]].<br />
<br />
* Start by watching [http://weusecoins.com/ this 2 minute vid].<br />
* Learn why it [http://bitcoin.stackexchange.com/questions/2834/what-are-the-perceived-advantages-of-bitcoin-as-a-store-of-value could be a good investment]<br />
* Learn why it's objectively [http://bitcoin.stackexchange.com/questions/305/what-are-the-perceived-advantages-of-bitcoin-as-a-means-of-exchange better than as a means of exchange].<br />
* Get a [[Clients|client]] and try it out yourself (you can get a bit of free money from [[Bitcoin Faucet|The Bitcoin Faucet]]).<br />
* [http://bitcoin.stackexchange.com/ Ask questions]<br />
* [http://bitcoin.stackexchange.com/questions/118/how-much-bitcoin-will-i-mine-right-now-with-hardware-x Can I generate Free Money on my computer?] - TL;DR - Not really.<br />
* [https://en.bitcoin.it/wiki/FAQ Read the FAQ]<br />
* [[Buying Bitcoins (the noob version)|Where can I buy bitcoins?]] (Hint: [http://bitcoin.stackexchange.com/questions/2293/how-can-i-buy-bitcoin-via-a-credit-card-or-paypal You can't buy them with Paypal or credit cards])<br />
<br />
If you're looking for how to get started with the Bitcoin-Qt, [[Getting started installing bitcoin-qt|this is the article you're looking for]].</div>Anymhttps://tests.bitcoin.it/w/index.php?title=Help:Getting_started&diff=33683Help:Getting started2012-12-12T19:21:01Z<p>Anym: </p>
<hr />
<div>Here is a generic [[Bitcoin_Newbie_Guide|Getting Started guide]].<br />
<br />
* Start by watching [http://weusecoins.com/ this 2 minute vid].<br />
* Learn why it [http://bitcoin.stackexchange.com/questions/2834/what-are-the-perceived-advantages-of-bitcoin-as-a-store-of-value could be a good investment]<br />
* Learn why it's objectively [http://bitcoin.stackexchange.com/questions/305/what-are-the-perceived-advantages-of-bitcoin-as-a-means-of-exchange better than as a means of exchange].<br />
* Get a [[Clients|client]] and try it out yourself (you can get a bit of free money from [[Bitcoin Faucet|The Bitcoin Faucet]]).<br />
* [http://bitcoin.stackexchange.com/ Ask questions]<br />
* [http://bitcoin.stackexchange.com/questions/118/how-much-bitcoin-will-i-mine-right-now-with-hardware-x Can I generate Free Money on my computer?] - TL;DR - Not really.<br />
* [https://en.bitcoin.it/wiki/FAQ Read the FAQ]<br />
* [[Buying Bitcoins (the noob version)|Where can I buy bitcoins?]] (Hint: [http://bitcoin.stackexchange.com/questions/2293/how-can-i-buy-bitcoin-via-a-credit-card-or-paypal You can't buy them with Paypal or credit cards])<br />
* [[List_of_Community_Websites|Talk about Bitcoin]]<br />
<br />
If you're looking for how to get started with the Bitcoin-Qt client, [[Getting started installing bitcoin-qt|this is the article you're looking for]].</div>Anymhttps://tests.bitcoin.it/w/index.php?title=Help:Getting_started&diff=33682Help:Getting started2012-12-12T19:19:26Z<p>Anym: </p>
<hr />
<div>Here is a generic [[Bitcoin_Newbie_Guide|Getting Started guide]].<br />
<br />
If you're looking for how to get started with the Bitcoin-Qt client, [[Getting started installing bitcoin-qt|this is the article you're looking for]].</div>Anym