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Decentralized digital currency

"₿" redirects here. Not to be confused with "฿" for Thai baht.

Bitcoin
Plural	bitcoins
Symbol	₿ (Unicode: U+20BF ₿BITCOIN SIGN (HTML &#;))[a]
Code	BTC,[b] XBT[c]
Precision	10−8
Subunits
&#;1&#;	millibitcoin
&#;1&#;	microbitcoin
&#;1&#;	satoshi[2]
Original author(s)	Satoshi Nakamoto
White paper	"Bitcoin: A Peer-to-Peer Electronic Cash System"[4]
Implementation(s)	Bitcoin Core
Initial release	/ 9&#;January (13 years ago)&#;()
Latest release	/ 13&#;September (6 months ago)&#;()[3]
Code repository	www.oldyorkcellars.com
Development status	Active
Website	www.oldyorkcellars.com
Ledger start	3&#;January (13 years ago)&#;()
Timestamping scheme	Proof-of-work (partial hash inversion)
Hash function	SHA (two rounds)
Issuance schedule	Decentralized (block reward) Initially ₿50 per block, halved every , blocks[7]
Block reward	₿[d]
Block time	10 minutes
Circulating supply	₿18,,[e]
Supply limit	₿21,,[5][f]
Exchange rate	Floating
Market cap	>US$ billion[g]
Official user(s)	&#;El Salvador[8]
^The symbol was encoded in Unicode version at position U+20BF ₿BITCOIN SIGN in the Currency Symbols block in June [1] ^Very early software versions used the code "BC". ^Compatible with ISO ^May to approximately , halved approximately every four years ^As of ^The supply will approach, but never reach, ₿21 million. Issuance will permanently halt c. at ₿20,,[6]:&#;ch. 8&#; ^As of

Bitcoin (₿) is a decentralized digital currency, without a central bank or single administrator, that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries.^[7] Transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain. The cryptocurrency was invented in by an unknown person or group of people using the name Satoshi Nakamoto.^[9] The currency began use in ^[10] when its implementation was released as open-source software.^{[6]:&#;ch. 1&#;}

Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services. Bitcoin has been criticized for its use in illegal transactions, the large amount of electricity (and thus carbon footprint) used by mining, price volatility, and thefts from exchanges. Some investors and economists have characterized it as a speculative bubble at various times. Others have used it as an investment, although several regulatory agencies have issued investor alerts about bitcoin.^[11][12][13]

A few local and national governments are officially using Bitcoin in some capacity, with one country, El Salvador, adopting it as a legal tender.

The word bitcoin was defined in a white paper published on 31 October ^[4][14] It is a compound of the words bit and coin.^[15] No uniform convention for bitcoin capitalization exists; some sources use Bitcoin, capitalized, to refer to the technology and network and bitcoin, lowercase, for the unit of account.^[16]The Wall Street Journal,^[17]The Chronicle of Higher Education,^[18] and the Oxford English Dictionary^[15] advocate the use of lowercase bitcoin in all cases.

Design

Units and divisibility

The unit of account of the bitcoin system is the bitcoin. Currency codes for representing bitcoin are BTC^[a] and XBT.^{[b][22]:&#;2&#;} Its Unicode character is ₿.^[1] One bitcoin is divisible to eight decimal places.^{[6]:&#;ch. 5&#;} Units for smaller amounts of bitcoin are the millibitcoin (mBTC), equal to 1&#; bitcoin, and the satoshi (sat), which is the smallest possible division, and named in homage to bitcoin's creator, representing 1&#; (one hundred millionth) bitcoin.^[2] , satoshis are one mBTC.^[23]

Blockchain

Data structure of blocks in the ledger.

The bitcoin blockchain is a public ledger that records bitcoin transactions.^[26] It is implemented as a chain of blocks, each block containing a hash of the previous block up to the genesis block^[c] in the chain. A network of communicating nodes running bitcoin software maintains the blockchain.^{[27]:&#;–&#;} Transactions of the form payer X sends Y bitcoins to payee Z are broadcast to this network using readily available software applications.

Network nodes can validate transactions, add them to their copy of the ledger, and then broadcast these ledger additions to other nodes. To achieve independent verification of the chain of ownership each network node stores its own copy of the blockchain.^[28] At varying intervals of time averaging to every 10 minutes, a new group of accepted transactions, called a block, is created, added to the blockchain, and quickly published to all nodes, without requiring central oversight. This allows bitcoin software to determine when a particular bitcoin was spent, which is needed to prevent double-spending. A conventional ledger records the transfers of actual bills or promissory notes that exist apart from it, but the blockchain is the only place that bitcoins can be said to exist in the form of unspent outputs of transactions.^{[6]:&#;ch. 5&#;}

Individual blocks, public addresses and transactions within blocks can be examined using a blockchain explorer.^{[citation needed]}

Transactions

See also: Bitcoin network

Transactions are defined using a Forth-like scripting language.^{[6]:&#;ch. 5&#;} Transactions consist of one or more inputs and one or more outputs. When a user sends bitcoins, the user designates each address and the amount of bitcoin being sent to that address in an output. To prevent double spending, each input must refer to a previous unspent output in the blockchain.^[29] The use of multiple inputs corresponds to the use of multiple coins in a cash transaction. Since transactions can have multiple outputs, users can send bitcoins to multiple recipients in one transaction. As in a cash transaction, the sum of inputs (coins used to pay) can exceed the intended sum of payments. In such a case, an additional output is used, returning the change back to the payer.^[29] Any input satoshis not accounted for in the transaction outputs become the transaction fee.^[29]

Though transaction fees are optional, miners can choose which transactions to process and prioritize those that pay higher fees.^[29] Miners may choose transactions based on the fee paid relative to their storage size, not the absolute amount of money paid as a fee. These fees are generally measured in satoshis per byte (sat/b). The size of transactions is dependent on the number of inputs used to create the transaction, and the number of outputs.^{[6]:&#;ch. 8&#;}

The blocks in the blockchain were originally limited to 32 megabytes in size. The block size limit of one megabyte was introduced by Satoshi Nakamoto in Eventually the block size limit of one megabyte created problems for transaction processing, such as increasing transaction fees and delayed processing of transactions.^[30]Andreas Antonopoulos has stated Lightning Network is a potential scaling solution and referred to lightning as a second-layer routing network.^{[6]:&#;ch. 8&#;}

Ownership

Simplified chain of ownership as illustrated in the bitcoin whitepaper.^[4]In practice, a transaction can have more than one input and more than one output.^[29]

In the blockchain, bitcoins are registered to bitcoin addresses. Creating a bitcoin address requires nothing more than picking a random valid private key and computing the corresponding bitcoin address. This computation can be done in a split second. But the reverse, computing the private key of a given bitcoin address, is practically unfeasible.^{[6]:&#;ch. 4&#;} Users can tell others or make public a bitcoin address without compromising its corresponding private key. Moreover, the number of valid private keys is so vast that it is extremely unlikely someone will compute a key-pair that is already in use and has funds. The vast number of valid private keys makes it unfeasible that brute force could be used to compromise a private key. To be able to spend their bitcoins, the owner must know the corresponding private key and digitally sign the transaction.^[d] The network verifies the signature using the public key; the private key is never revealed.^{[6]:&#;ch. 5&#;}

If the private key is lost, the bitcoin network will not recognize any other evidence of ownership;^[27] the coins are then unusable, and effectively lost. For example, in one user claimed to have lost 7, bitcoins, worth $ million at the time, when he accidentally discarded a hard drive containing his private key.^[33] About 20% of all bitcoins are believed to be lost -they would have had a market value of about $20 billion at July prices.^[34]

To ensure the security of bitcoins, the private key must be kept secret.^{[6]:&#;ch. 10&#;} If the private key is revealed to a third party, e.g. through a data breach, the third party can use it to steal any associated bitcoins.^[35] As of December&#;^[update], around , bitcoins have been stolen from cryptocurrency exchanges.^[36]

Regarding ownership distribution, as of 16 March , % of bitcoin wallets own 87% of all bitcoins ever mined.^[37]

Mining

See also: Bitcoin network §&#;Mining

Mining is a record-keeping service done through the use of computer processing power.^[f] Miners keep the blockchain consistent, complete, and unalterable by repeatedly grouping newly broadcast transactions into a block, which is then broadcast to the network and verified by recipient nodes.^[26] Each block contains a SHAcryptographic hash of the previous block,^[26] thus linking it to the previous block and giving the blockchain its name.^{[6]:&#;ch. 7&#;[26]}

To be accepted by the rest of the network, a new block must contain a proof-of-work (PoW).^[26][g] The PoW requires miners to find a number called a nonce (number used once), such that when the block content is hashed along with the nonce, the result is numerically smaller than the network's difficulty target.^{[6]:&#;ch. 8&#;} This proof is easy for any node in the network to verify, but extremely time-consuming to generate, as for a secure cryptographic hash, miners must try many different nonce values (usually the sequence of tested values is the ascending natural numbers: 0, 1, 2, 3, ) before a result happens to be less than the difficulty target. Because the difficulty target is extremely small compared to a typical SHA hash, block hashes have many leading zeros^{[6]:&#;ch. 8&#;} as can be seen in this example block hash:

fc0f3ebaab2b37ee1aca

By adjusting this difficulty target, the amount of work needed to generate a block can be changed. Every 2, blocks (approximately 14 days given roughly 10 minutes per block), nodes deterministically adjust the difficulty target based on the recent rate of block generation, with the aim of keeping the average time between new blocks at ten minutes. In this way the system automatically adapts to the total amount of mining power on the network.^{[6]:&#;ch. 8&#;} As of September ^[update], it takes on average 79 sextillion (79 thousand billion billion) attempts to generate a block hash smaller than the difficulty target.^[42] Computations of this magnitude are extremely expensive and utilize specialized hardware.^[43]

The proof-of-work system, alongside the chaining of blocks, makes modifications of the blockchain extremely hard, as an attacker must modify all subsequent blocks in order for the modifications of one block to be accepted.^[44] As new blocks are mined all the time, the difficulty of modifying a block increases as time passes and the number of subsequent blocks (also called confirmations of the given block) increases.^[26]

Computing power is often bundled together by a Mining pool to reduce variance in miner income. Individual mining rigs often have to wait for long periods to confirm a block of transactions and receive payment. In a pool, all participating miners get paid every time a participating server solves a block. This payment depends on the amount of work an individual miner contributed to help find that block.^[45]

Supply

The successful miner finding the new block is allowed by the rest of the network to collect for themselves all transaction fees from transactions they included in the block, as well as a pre-determined reward of newly created bitcoins.^[46] As of 11&#;May&#;^[update], this reward is currently newly created bitcoins per block.^[47] To claim this reward, a special transaction called a coinbase is included in the block, with the miner as the payee.^{[6]:&#;ch. 8&#;} All bitcoins in existence have been created through this type of transaction. The bitcoin protocol specifies that the reward for adding a block will be reduced by half every , blocks (approximately every four years). Eventually, the reward will round down to zero, and the limit of 21 million bitcoins^[h] will be reached c. ; the record keeping will then be rewarded by transaction fees only.^[48]

Decentralization

Bitcoin is decentralized thus:^[7]

• Bitcoin does not have a central authority.^[7]
• The bitcoin network is peer-to-peer,^[10] without central servers.
• The network also has no central storage; the bitcoin ledger is distributed.^[49]
• The ledger is public; anybody can store it on a computer.^{[6]:&#;ch. 1&#;}
• There is no single administrator;^[7] the ledger is maintained by a network of equally privileged miners.^{[6]:&#;ch. 1&#;}
• Anyone can become a miner.^{[6]:&#;ch. 1&#;}
• The additions to the ledger are maintained through competition. Until a new block is added to the ledger, it is not known which miner will create the block.^{[6]:&#;ch. 1&#;}
• The issuance of bitcoins is decentralized. They are issued as a reward for the creation of a new block.^[46]
• Anybody can create a new bitcoin address (a bitcoin counterpart of a bank account) without needing any approval.^{[6]:&#;ch. 1&#;}
• Anybody can send a transaction to the network without needing any approval; the network merely confirms that the transaction is legitimate.^{[50]:&#;32&#;}

Conversely, researchers have pointed out at a "trend towards centralization". Although bitcoin can be sent directly from user to user, in practice intermediaries are widely used.^{[27]:&#;–&#;} Bitcoin miners join large mining pools to minimize the variance of their income.^{[27]:&#;,&#;–&#;[51]:&#;3&#;[52]} Because transactions on the network are confirmed by miners, decentralization of the network requires that no single miner or mining pool obtains 51% of the hashing power, which would allow them to double-spend coins, prevent certain transactions from being verified and prevent other miners from earning income.^[53] As of ^[update] just six mining pools controlled 75% of overall bitcoin hashing power.^[53] In mining pool www.oldyorkcellars.com obtained 51% hashing power which raised significant controversies about the safety of the network. The pool has voluntarily capped their hashing power at % and requested other pools to act responsibly for the benefit of the whole network.^[54] Around the year , over 70% of the hashing power and 90% of transactions were operating from China.^[55]

According to researchers, other parts of the ecosystem are also "controlled by a small set of entities", notably the maintenance of the client software, online wallets and simplified payment verification (SPV) clients.^[53]

Privacy and fungibility

Bitcoin is pseudonymous, meaning that funds are not tied to real-world entities but rather bitcoin addresses. Owners of bitcoin addresses are not explicitly identified, but all transactions on the blockchain are public. In addition, transactions can be linked to individuals and companies through "idioms of use" (e.g., transactions that spend coins from multiple inputs indicate that the inputs may have a common owner) and corroborating public transaction data with known information on owners of certain addresses.^[56] Additionally, bitcoin exchanges, where bitcoins are traded for traditional currencies, may be required by law to collect personal information.^[57] To heighten financial privacy, a new bitcoin address can be generated for each transaction.^[58]

Wallets and similar software technically handle all bitcoins as equivalent, establishing the basic level of fungibility. Researchers have pointed out that the history of each bitcoin is registered and publicly available in the blockchain ledger, and that some users may refuse to accept bitcoins coming from controversial transactions, which would harm bitcoin's fungibility.^[59] For example, in , Mt. Gox froze accounts of users who deposited bitcoins that were known to have just been stolen.^[60]

Wallets

For broader coverage of this topic, see Cryptocurrency wallet.

Bitcoin Core, a full client

Electrum, a lightweight client

A wallet stores the information necessary to transact bitcoins. While wallets are often described as a place to hold^[61] or store bitcoins, due to the nature of the system, bitcoins are inseparable from the blockchain transaction ledger. A wallet is more correctly defined as something that "stores the digital credentials for your bitcoin holdings" and allows one to access (and spend) them.^{[6]:&#;ch. 1, glossary&#;} Bitcoin uses public-key cryptography, in which two cryptographic keys, one public and one private, are generated.^[62] At its most basic, a wallet is a collection of these keys.

Software wallets

The first wallet program, simply named Bitcoin, and sometimes referred to as the Satoshi client, was released in by Satoshi Nakamoto as open-source software.^[10] In version the client moved from the wxWidgets user interface toolkit to Qt, and the whole bundle was referred to as Bitcoin-Qt.^[63] After the release of version , the software bundle was renamed Bitcoin Core to distinguish itself from the underlying network.^[64][65] Bitcoin Core is, perhaps, the best known implementation or client. Alternative clients (forks of Bitcoin Core) exist, such as Bitcoin XT, Bitcoin Unlimited,^[66] and Parity Bitcoin.^[67]

There are several modes which wallets can operate in. They have an inverse relationship with regards to trustlessness and computational requirements.

• Full clients verify transactions directly by downloading a full copy of the blockchain (over &#;GB as of January&#;^[update]).^[68] They are the most secure and reliable way of using the network, as trust in external parties is not required. Full clients check the validity of mined blocks, preventing them from transacting on a chain that breaks or alters network rules.^{[6]:&#;ch. 1&#;} Because of its size and complexity, downloading and verifying the entire blockchain is not suitable for all computing devices.
• Lightweight clients consult full nodes to send and receive transactions without requiring a local copy of the entire blockchain (see simplified payment verification – SPV). This makes lightweight clients much faster to set up and allows them to be used on low-power, low-bandwidth devices such as smartphones. When using a lightweight wallet, however, the user must trust full nodes, as it can report faulty values back to the user. Lightweight clients follow the longest blockchain and do not ensure it is valid, requiring trust in full nodes.^[69]

Third-party internet services called online wallets or webwallets offer similar functionality but may be easier to use. In this case, credentials to access funds are stored with the online wallet provider rather than on the user's hardware.^[70] As a result, the user must have complete trust in the online wallet provider. A malicious provider or a breach in server security may cause entrusted bitcoins to be stolen. An example of such a security breach occurred with Mt. Gox in ^[71]

Cold storage

A paper wallet with the address visible for adding or checking stored funds. The part of the page containing the private key is folded over and sealed.

A hardware wallet peripheral which processes bitcoin payments without exposing any credentials to the computer.

Wallet software is targeted by hackers because of the lucrative potential for stealing bitcoins.^[35] A technique called "cold storage" keeps private keys out of reach of hackers; this is accomplished by keeping private keys offline at all times^{[72][6]:&#;ch. 4&#;} by generating them on a device that is not connected to the internet.^{[73]:&#;39&#;} The credentials necessary to spend bitcoins can be stored offline in a number of different ways, from specialized hardware wallets to simple paper printouts of the private key.^{[6]:&#;ch. 10&#;}

Hardware wallets

A hardware wallet is a computer peripheral that signs transactions as requested by the user. These devices store private keys and carry out signing and encryption internally,^[72] and do not share any sensitive information with the host computer except already signed (and thus unalterable) transactions.^[74] Because hardware wallets never expose their private keys, even computers that may be compromised by malware do not have a vector to access or steal them.^{[73]:&#;42–45&#;}

The user sets a passcode when setting up a hardware wallet.^[72] As hardware wallets are tamper-resistant,^{[74][6]:&#;ch. 10&#;} the passcode will be needed to extract any money.^[74]

Paper wallets

A paper wallet is created with a keypair generated on a computer with no internet connection; the private key is written or printed onto the paper^[i] and then erased from the computer.^{[6]:&#;ch. 4&#;} The paper wallet can then be stored in a safe physical location for later retrieval.^{[73]:&#;39&#;}

Physical wallets can also take the form of metal token coins^[75] with a private key accessible under a security hologram in a recess struck on the reverse side.^{[76]:&#;38&#;} The security hologram self-destructs when removed from the token, showing that the private key has been accessed.^[77] Originally, these tokens were struck in brass and other base metals, but later used precious metals as bitcoin grew in value and popularity.^{[76]:&#;80&#;} Coins with stored face value as high as ₿ have been struck in gold.^{[76]:&#;–&#;} The British Museum's coin collection includes four specimens from the earliest series^{[76]:&#;83&#;} of funded bitcoin tokens; one is currently on display in the museum's money gallery.^[78] In , a Utah manufacturer of these tokens was ordered by the Financial Crimes Enforcement Network (FinCEN) to register as a money services business before producing any more funded bitcoin tokens.^{[75][76]:&#;80&#;}

History

Main article: History of bitcoin

Creation

The domain name www.oldyorkcellars.com was registered on 18 August ^[79] On 31 October , a link to a paper authored by Satoshi Nakamoto titled Bitcoin: A Peer-to-Peer Electronic Cash System^[4] was posted to a cryptography mailing list.^[80] Nakamoto implemented the bitcoin software as open-source code and released it in January ^[81][82][10] Nakamoto's identity remains unknown.^[9]

On 3 January , the bitcoin network was created when Nakamoto mined the starting block of the chain, known as the genesis block.^[83][84] Embedded in the coinbase of this block was the text "The Times 03/Jan/ Chancellor on brink of second bailout for banks".^[10] This note references a headline published by The Times and has been interpreted as both a timestamp and a comment on the instability caused by fractional-reserve banking.^{[85]:&#;18&#;}

The receiver of the first bitcoin transaction was Hal Finney, who had created the first reusable proof-of-work system (RPoW) in ^[86] Finney downloaded the bitcoin software on its release date, and on 12 January received ten bitcoins from Nakamoto.^[87][88] Other early cypherpunk supporters were creators of bitcoin predecessors: Wei Dai, creator of b-money, and Nick Szabo, creator of bit gold.^[83] In , the first known commercial transaction using bitcoin occurred when programmer Laszlo Hanyecz bought two Papa John's pizzas for ₿10, from Jeremy Sturdivant.^{[89][91][92][93]}

Blockchain analysts estimate that Nakamoto had mined about one million bitcoins^[94] before disappearing in when he handed the network alert key and control of the code repository over to Gavin Andresen. Andresen later became lead developer at the Bitcoin Foundation.^[95][96] Andresen then sought to decentralize control. This left opportunity for controversy to develop over the future development path of bitcoin, in contrast to the perceived authority of Nakamoto's contributions.^[66][96]

–

After early "proof-of-concept" transactions, the first major users of bitcoin were black markets, such as Silk Road. During its 30 months of existence, beginning in February , Silk Road exclusively accepted bitcoins as payment, transacting million in bitcoins, worth about $ million.^[27]:&#;&#;

In , the price started at $ per bitcoin, growing to $ for the year. The price rose to $ on 8 June. Within a month, the price fell to $ The next month it fell to $, and in another month to $^[97]

In , bitcoin prices started at $, growing to $ for the year.^[97] By 9 January the price had risen to $, but then crashed by 49% to $ over the next 16 days. The price then rose to $ on 17 August, but fell by 57% to $ over the next three days.^[98]

The Bitcoin Foundation was founded in September to promote bitcoin's development and uptake.^[99]

On 1 November , the reference implementation Bitcoin-Qt version was released. It introduced a front end that used the Qt user interface toolkit.^[] The software previously used Berkeley DB for database management. Developers switched to LevelDB in release in order to reduce blockchain synchronization time.^{[citation needed]} The update to this release resulted in a minor blockchain fork on 11 March The fork was resolved shortly afterwards.^{[citation needed]} Seeding nodes through IRC was discontinued in version From version the software was renamed to Bitcoin Core. Transaction fees were reduced again by a factor of ten as a means to encourage microtransactions.^{[citation needed]} Although Bitcoin Core does not use OpenSSL for the operation of the network, the software did use OpenSSL for remote procedure calls. Version was released to remove the network's vulnerability to the Heartbleed bug.^{[citation needed]}

–

In , prices started at $ rising to $ by 1 January ^[97]

In March the blockchain temporarily split into two independent chains with different rules due to a bug in version of the bitcoin software. The two blockchains operated simultaneously for six hours, each with its own version of the transaction history from the moment of the split. Normal operation was restored when the majority of the network downgraded to version of the bitcoin software, selecting the backwards-compatible version of the blockchain. As a result, this blockchain became the longest chain and could be accepted by all participants, regardless of their bitcoin software version.^[] During the split, the Mt. Gox exchange briefly halted bitcoin deposits and the price dropped by 23% to $37^[][] before recovering to the previous level of approximately $48 in the following hours.^[]

The US Financial Crimes Enforcement Network (FinCEN) established regulatory guidelines for "decentralized virtual currencies" such as bitcoin, classifying American bitcoin miners who sell their generated bitcoins as Money Service Businesses (MSBs), that are subject to registration or other legal obligations.^[][]

In April, exchanges BitInstant and Mt. Gox experienced processing delays due to insufficient capacity^[] resulting in the bitcoin price dropping from $ to $76 before returning to $ within six hours.^[] The bitcoin price rose to $ on 10 April, but then crashed by 83% to $45 over the next three days.^[98]

On 15 May , US authorities seized accounts associated with Mt. Gox after discovering it had not registered as a money transmitter with FinCEN in the US.^[][] On 23 June , the US Drug Enforcement Administration listed ₿ as a seized asset in a United States Department of Justice seizure notice pursuant to 21 U.S.C. § This marked the first time a government agency had seized bitcoin.^[] The FBI seized about ₿30,^[] in October from the dark web website Silk Road, following the arrest of Ross William Ulbricht.^[][][] These bitcoins were sold at blind auction by the United States Marshals Service to venture capital investor Tim Draper.^[] Bitcoin's price rose to $ on 19 November and crashed by 50% to $ the same day. On 30 November , the price reached $1, before starting a long-term crash, declining by 87% to $ in January ^[98]

On 5 December , the People's Bank of China prohibited Chinese financial institutions from using bitcoins.^[] After the announcement, the value of bitcoins dropped,^[] and Baidu no longer accepted bitcoins for certain services.^[] Buying real-world goods with any virtual currency had been illegal in China since at least ^[]

In , prices started at $ and fell to $ for the year.^[97] On 30 July , the Wikimedia Foundation started accepting donations of bitcoin.^[]

In , prices started at $ and rose to $ for the year. In , prices rose and climbed up to $ by 1 January ^[97]

Release of the software was made public on 16 February It introduced a consensus library which gave programmers easy access to the rules governing consensus on the network. In version developers added a new feature which allowed transactions to be made unspendable until a specific time in the future.^[] Bitcoin Core was released on 15 April , and enabled multiple soft forks to occur concurrently.^[] Around contributors worked on Bitcoin Core which was released on 23 August

In July , the CheckSequenceVerify soft fork activated.^[] In August , the Bitfinex cryptocurrency exchange platform was hacked in the second-largest breach of a Bitcoin exchange platform up to that time, and , bitcoin,^[] worth about $72 million at the time, were stolen.^[]

In October , Bitcoin Core's release featured the "Segwit" soft fork that included a scaling improvement aiming to optimize the bitcoin blocksize.^{[citation needed]} The patch which was originally finalised in April, and 35 developers were engaged to deploy it.^{[citation needed]} This release featured Segregated Witness (SegWit) which aimed to place downward pressure on transaction fees as well as increase the maximum transaction capacity of the network.^{[][non-primary source needed]} The release endured extensive testing and research leading to some delays in its release date.^{[citation needed]} SegWit prevents various forms of transaction malleability.^{[][non-primary source needed]}

–

Research produced by the University of Cambridge estimated that in , there were to million unique users using a cryptocurrency wallet, most of them using bitcoin.^[] On 15 July , the controversial Segregated Witness [SegWit] software upgrade was approved ("locked-in"). Segwit was intended to support the Lightning Network as well as improve scalability.^[] SegWit was subsequently activated on the network on 24 August The bitcoin price rose almost 50% in the week following SegWit's approval.^[] On 21 July , bitcoin was trading at $2,, up 52% from 14 July 's $1,^[] Supporters of large blocks who were dissatisfied with the activation of SegWit forked the software on 1 August to create Bitcoin Cash, becoming one of many forks of bitcoin such as Bitcoin Gold.^[]

Prices started at $ in and rose to $13, on 1 January ,^[97] after reaching its all-time high of $19, on 17 December ^[]

China banned trading in bitcoin, with first steps taken in September , and a complete ban that started on 1 February Bitcoin prices then fell from $9, to $6, on 5 February ^[98] The percentage of bitcoin trading in the Chinese renminbi fell from over 90% in September to less than 1% in June ^[]

Throughout the rest of the first half of , bitcoin's price fluctuated between $11, and $5, On 1 July , bitcoin's price was $6,^[][] The price on 1 January was $3,, down 72% for and down 81% since the all-time high.^[][]

In September , an anonymous party discovered and reported an invalid-block denial-of-server vulnerability to developers of Bitcoin Core, Bitcoin ABC and Bitcoin Unlimited. Further analysis by bitcoin developers showed the issue could also allow the creation of blocks violating the 21 million coin limit and CVE was assigned and the issue resolved.^{[][non-primary source needed]}

Bitcoin prices were negatively affected by several hacks or thefts from cryptocurrency exchanges, including thefts from Coincheck in January , Bithumb in June, and Bancor in July. For the first six months of , $ million worth of cryptocurrencies was reported stolen from exchanges.^[] Bitcoin's price was affected even though other cryptocurrencies were stolen at Coinrail and Bancor as investors worried about the security of cryptocurrency exchanges.^[][][] In September the Intercontinental Exchange (the owner of the NYSE) began trading of bitcoin futures on its exchange called Bakkt.^[] Bakkt also announced that it would launch options on bitcoin in December ^[] In December , YouTube removed bitcoin and cryptocurrency videos, but later restored the content after judging they had "made the wrong call."^[]

In February , Canadian cryptocurrency exchange Quadriga Fintech Solutions failed with approximately $ million missing.^[] By June the price had recovered to $13,^[]

–present

On 13 March , bitcoin fell below $4, during a broad market selloff, after trading above $10, in February ^[] On 11 March , , bitcoins were sold, held by owners for only thirty days.^[] This compared to ₿4, that had laid dormant for a year or more, indicating that the vast majority of the bitcoin volatility on that day was from recent buyers. During the week of 11 March , cryptocurrency exchange Kraken experienced an 83% increase in the number of account signups over the week of bitcoin's price collapse, a result of buyers looking to capitalize on the low price.^[] These events were attributed to the onset of the COVID pandemic.

In August , MicroStrategy invested $ million in bitcoin as a treasury reserve asset.^[] In October , Square, Inc. placed approximately 1% of total assets ($50 million) in bitcoin.^[] In November , PayPal announced that US users could buy, hold, or sell bitcoin.^[] On 30 November , the bitcoin value reached a new all-time high of $19,, topping the previous high of December ^[]Alexander Vinnik, founder of BTC-e, was convicted and sentenced to five years in prison for money laundering in France while refusing to testify during his trial.^[] In December Massachusetts Mutual Life Insurance Company announced a bitcoin purchase of US$ million, or roughly % of its general investment account.^[]

On 19 January , Elon Musk placed the handle #Bitcoin in his Twitter profile, tweeting "In retrospect, it was inevitable", which caused the price to briefly rise about $ in an hour to $37,^[] On 25 January , Microstrategy announced that it continued to buy bitcoin and as of the same date it had holdings of ₿70, worth $ billion.^[] On 8 February Tesla's announcement of a bitcoin purchase of US$ billion and the plan to start accepting bitcoin as payment for vehicles, pushed the bitcoin price to $44,^[] On 18 February , Elon Musk stated that "owning bitcoin was only a little better than holding conventional cash, but that the slight difference made it a better asset to hold".^[] After 49 days of accepting the digital currency, Tesla reversed course on 12 May , saying they would no longer take Bitcoin due to concerns that "mining" the cryptocurrency was contributing to the consumption of fossil fuels and climate change.^[] The decision resulted in the price of Bitcoin dropping around 12% on 13 May.^[] During a July Bitcoin conference, Musk suggested Tesla could possibly help Bitcoin miners switch to renewable energy in the future and also stated at the same conference that if Bitcoin mining reaches, and trends above 50 percent renewable energy usage, that "Tesla would resume accepting bitcoin." The price for bitcoin rose after this announcement.^[]

In June , the Legislative Assembly of El Salvador voted legislation to make Bitcoin legal tender in El Salvador.^[j][][][] The law took effect on 7 September.^[][8] The implementation of the law has been met with protests^[] and calls to make the currency optional, not compulsory.^[] According to a survey by the Central American University, the majority of Salvadorans disagreed with using cryptocurrency as a legal tender,^[][] and a survey by the Center for Citizen Studies (CEC) showed that 91% of the country prefers the dollar over Bitcoin.^[] As of October , the country's government was exploring mining bitcoin with geothermal power and issuing bonds tied to bitcoin.^[] According to a survey done by the Central American University days after the Bitcoin Law came into force: % of the population has no confidence in Bitcoin, % has little confidence, % has some confidence, and % has a lot of confidence. % of respondents have downloaded the government Bitcoin wallet; among them % has never used it or only once whereas % uses Bitcoin at least once a month.^[][] In , the International Monetary Fund (IMF) urged El Salvador to reverse its decision after Bitcoin lost half its value in two months. The IMF also warned that it would be difficult to get a loan from the institution.^[]

Also In June, the Taproot network software upgrade was approved, adding support for Schnorr signatures, improved functionality of Smart contracts and Lightning Network.^[] The upgrade was installed in November.^[]

On 16 October , the SEC approved the ProShares Bitcoin Strategy ETF, a cash-settled futuresexchange-traded fund (ETF). The first bitcoin ETF in the United States gained 5% on its first trading day on 19 October ^[][]

Associated ideologies

Satoshi Nakamoto stated in an essay accompanying bitcoin's code that: "The root problem with conventional currencies is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust."^[]

Austrian economics roots

According to the European Central Bank, the decentralization of money offered by bitcoin has its theoretical roots in the Austrian school of economics, especially with Friedrich von Hayek in his book Denationalisation of Money: The Argument Refined,^[] in which Hayek advocates a complete free market in the production, distribution and management of money to end the monopoly of central banks.^[]:&#;22&#;

Anarchism and libertarianism

Further information: Crypto-anarchism

According to The New York Times, libertarians and anarchists were attracted to the philosophical idea behind bitcoin. Early bitcoin supporter Roger Ver said: "At first, almost everyone who got involved did so for philosophical reasons. We saw bitcoin as a great idea, as a way to separate money from the state."^[]The Economist describes bitcoin as "a techno-anarchist project to create an online version of cash, a way for people to transact without the possibility of interference from malicious governments or banks".^[] Economist Paul Krugman argues that cryptocurrencies like bitcoin are "something of a cult" based in "paranoid fantasies" of government power.^[]

Nigel Dodd argues in The Social Life of Bitcoin that the essence of the bitcoin ideology is to remove money from social, as well as governmental, control.^[] Dodd quotes a YouTube video, with Roger Ver, Jeff Berwick, Charlie Shrem, Andreas Antonopoulos, Gavin Wood, Trace Meyer and other proponents of bitcoin reading The Declaration of Bitcoin's Independence. The declaration includes a message of crypto-anarchism with the words: "Bitcoin is inherently anti-establishment, anti-system, and anti-state. Bitcoin undermines governments and disrupts institutions because bitcoin is fundamentally humanitarian."^[][]

David Golumbia says that the ideas influencing bitcoin advocates emerge from right-wing extremist movements such as the Liberty Lobby and the John Birch Society and their anti-Central Bank rhetoric, or, more recently, Ron Paul and Tea Party-style libertarianism.^[]Steve Bannon, who owns a "good stake" in bitcoin, considers it to be "disruptive populism. It takes control back from central authorities. It's revolutionary."^[]

A study of Google Trends data found correlations between bitcoin-related searches and ones related to computer programming and illegal activity, but not libertarianism or investment topics.^[]

Economics

Main article: Economics of bitcoin

Bitcoin is a digital asset designed to work in peer-to-peer transactions as a currency.^[4][] Bitcoins have three qualities useful in a currency, according to The Economist in January they are "hard to earn, limited in supply and easy to verify."^[] Per some researchers, as of ^[update], bitcoin functions more as a payment system than as a currency.^[27]

Economists define money as serving the following three purposes: a store of value, a medium of exchange, and a unit of account.^[] According to The Economist in , bitcoin functions best as a medium of exchange.^[] However, this is debated, and a assessment by The Economist stated that cryptocurrencies met none of these three criteria.^[] Yale economist Robert J. Shiller writes that bitcoin has potential as a unit of account for measuring the relative value of goods, as with Chile's Unidad de Fomento, but that "Bitcoin in its present form [] doesn't really solve any sensible economic problem".^[]

According to research by Cambridge University, between million and million unique users used a cryptocurrency wallet in , most of them for bitcoin. The number of users has grown significantly since , when there were ,– million users.^[]

Acceptance by merchants

The overwhelming majority of bitcoin transactions take place on a cryptocurrency exchange, rather than being used in transactions with merchants.^[] Delays processing payments through the blockchain of about ten minutes make bitcoin use very difficult in a retail setting. Prices are not usually quoted in units of bitcoin and many trades involve one, or sometimes two, conversions into conventional currencies.^[27] Merchants that do accept bitcoin payments may use payment service providers to perform the conversions.^[]

In and bitcoin's acceptance among major online retailers included only three of the top U.S. online merchants, down from five in ^[] Reasons for this decline include high transaction fees due to bitcoin's scalability issues and long transaction times.^[]

Bloomberg reported that the largest 17 crypto merchant-processing services handled $69 million in June , down from $ million in September Bitcoin is "not actually usable" for retail transactions because of high costs and the inability to process chargebacks, according to Nicholas Weaver, a researcher quoted by Bloomberg. High price volatility and transaction fees make paying for small retail purchases with bitcoin impractical, according to economist Kim Grauer. However, bitcoin continues to be used for large-item purchases on sites such as www.oldyorkcellars.com, and for cross-border payments to freelancers and other vendors.^[]

Financial institutions

Bitcoins can be bought on digital currency exchanges.

Per researchers, "there is little sign of bitcoin use" in international remittances despite high fees charged by banks and Western Union who compete in this market.^[27] The South China Morning Post, however, mentions the use of bitcoin by Hong Kong workers to transfer money home.^[]

In , the National Australia Bank closed accounts of businesses with ties to bitcoin,^[] and HSBC refused to serve a hedge fund with links to bitcoin.^[] Australian banks in general have been reported as closing down bank accounts of operators of businesses involving the currency.^[]

On 10 December , the Chicago Board Options Exchange started trading bitcoin futures,^[] followed by the Chicago Mercantile Exchange, which started trading bitcoin futures on 17 December ^[]

In September the Central Bank of Venezuela, at the request of PDVSA, ran tests to determine if bitcoin and ether could be held in central bank's reserves. The request was motivated by oil company's goal to pay its suppliers.^[]

François R. Velde, Senior Economist at the Chicago Fed, described bitcoin as "an elegant solution to the problem of creating a digital currency".^[] David Andolfatto, Vice President at the Federal Reserve Bank of St. Louis, stated that bitcoin is a threat to the establishment, which he argues is a good thing for the Federal Reserve System and other central banks, because it prompts these institutions to operate sound policies.^{[40]:&#;33&#;[][]}

As an investment

The Winklevoss twins have purchased bitcoin. In , The Washington Post reported a claim that they owned 1% of all the bitcoins in existence at the time.^[]

Other methods of investment are bitcoin funds. The first regulated bitcoin fund was established in Jersey in July and approved by the Jersey Financial Services Commission.^[]

Forbes named bitcoin the best investment of ^[] In , Bloomberg named bitcoin one of its worst investments of the year.^[] In , bitcoin topped Bloomberg's currency tables.^[]

According to www.oldyorkcellars.com, in , there were 9, bitcoin wallets with more than $1 million worth of bitcoins.^[] The exact number of bitcoin millionaires is uncertain as a single person can have more than one bitcoin wallet.

Venture capital

Peter Thiel's Founders Fund invested US$3 million in BitPay.^[] In , an incubator for bitcoin-focused start-ups was founded by Adam Draper, with financing help from his father, venture capitalist Tim Draper, one of the largest bitcoin holders after winning an auction of 30, bitcoins,^[] at the time called "mystery buyer".^[] The company's goal is to fund bitcoin businesses within 2–3 years with $10, to $20, for a 6% stake.^[] Investors also invest in bitcoin mining.^[] According to a study by Paolo Tasca, bitcoin startups raised almost $1 billion in three years (Q1 – Q1 ).^[]

Price and volatility

The price of bitcoins has gone through cycles of appreciation and depreciation referred to by some as bubbles and busts.^[] In , the value of one bitcoin rapidly rose from about US$ to US$32 before returning to US$2.^[] In the latter half of and during the –13 Cypriot financial crisis, the bitcoin price began to rise,^[] reaching a high of US$ on 10 April , before crashing to around US$ On 29 November , the cost of one bitcoin rose to a peak of US$1,^[] In , the price fell sharply, and as of April remained depressed at little more than half prices. As of August&#;^[update] it was under US$^[]

According to Mark T. Williams, as of 30&#;September&#;^[update], bitcoin has volatility seven times greater than gold, eight times greater than the S&P , and 18 times greater than the US dollar.^[] Hodl is a meme created in reference to holding (as opposed to selling) during periods of volatility. Unusual for an asset, bitcoin weekend trading during December was higher than for weekdays.^[]Hedge funds (using high leverage and derivates)^[] have attempted to use the volatility to profit from downward price movements. At the end of January , such positions were over $1&#;billion, their highest of all time.^[] As of 8&#;February&#;^[update], the closing price of bitcoin equaled US$44,^[]

Legal status, tax and regulation

Further information: Legality of bitcoin by country or territory

Because of bitcoin's decentralized nature and its trading on online exchanges located in many countries, regulation of bitcoin has been difficult. However, the use of bitcoin can be criminalized, and shutting down exchanges and the peer-to-peer economy in a given country would constitute a de facto ban.^[] The legal status of bitcoin varies substantially from country to country and is still undefined or changing in many of them. Regulations and bans that apply to bitcoin probably extend to similar cryptocurrency systems.^[]

According to the Library of Congress, an "absolute ban" on trading or using cryptocurrencies applies in nine countries: Algeria, Bolivia, Egypt, Iraq, Morocco, Nepal, Pakistan, Vietnam, and the United Arab Emirates. An "implicit ban" applies in another 15 countries, which include Bahrain, Bangladesh, China, Colombia, the Dominican Republic, Indonesia, Kuwait, Lesotho, Lithuania, Macau, Oman, Qatar, Saudi Arabia and Taiwan.^[]

Regulatory warnings

The U.S. Commodity Futures Trading Commission has issued four "Customer Advisories" for bitcoin and related investments.^[12] A July warning emphasized that trading in any cryptocurrency is often speculative, and there is a risk of theft from hacking, and fraud.^[] In May the U.S. Securities and Exchange Commission warned that investments involving bitcoin might have high rates of fraud, and that investors might be solicited on social media sites.^[] An earlier "Investor Alert" warned about the use of bitcoin in Ponzi schemes.^[]

The European Banking Authority issued a warning in focusing on the lack of regulation of bitcoin, the chance that exchanges would be hacked, the volatility of bitcoin's price, and general fraud.^[]FINRA and the North American Securities Administrators Association have both issued investor alerts about bitcoin.^[][]

Price manipulation investigation

An official investigation into bitcoin traders was reported in May ^[] The U.S. Justice Department launched an investigation into possible price manipulation, including the techniques of spoofing and wash trades.^[][][]

The U.S. federal investigation was prompted by concerns of possible manipulation during futures settlement dates. The final settlement price of CME bitcoin futures is determined by prices on four exchanges, Bitstamp, Coinbase, itBit and Kraken. Following the first delivery date in January , the CME requested extensive detailed trading information but several of the exchanges refused to provide it and later provided only limited data. The Commodity Futures Trading Commission then subpoenaed the data from the exchanges.^[][]

State and provincial securities regulators, coordinated through the North American Securities Administrators Association, are investigating "bitcoin scams" and ICOs in 40 jurisdictions.^[]

Academic research published in the Journal of Monetary Economics concluded that price manipulation occurred during the Mt Gox bitcoin theft and that the market remains vulnerable to manipulation.^[] The history of hacks, fraud and theft involving bitcoin dates back to at least ^[]

Research by John M. Griffin and Amin Shams in suggests that trading associated with increases in the amount of the Tether cryptocurrency and associated trading at the Bitfinex exchange account for about half of the price increase in bitcoin in late ^[][]

J.L. van der Velde, CEO of both Bitfinex and Tether, denied the claims of price manipulation: "Bitfinex nor Tether is, or has ever, engaged in any sort of market or price manipulation. Tether issuances cannot be used to prop up the price of bitcoin or any other coin/token on Bitfinex."^[]

Adoption by governments

El Salvador officially adopted Bitcoin as legal tender, in the face of internal and international criticism, becoming the first nation to do so.^[]

Iran announced pending regulations that would require bitcoin miners in Iran to sell bitcoin to the Central Bank of Iran, and the central bank would use it for imports.^[] Iran, as of October , had issued over 1, bitcoin mining licenses.^[] The Iranian government initially took a stance against cryptocurrency, but later changed it after seeing that digital currency could be used to circumvent sanctions.^[] The US Office of Foreign Assets Control listed two Iranians and their bitcoin addresses as part of its Specially Designated Nationals and Blocked Persons List for their role in the Atlanta cyberattack whose ransom was paid in bitcoin.^[]

In Switzerland, the Canton of Zug accepts tax payments in bitcoin.^[][]

Criticisms

Economic concerns

Further information: Cryptocurrency bubble and Economics of bitcoin

Bitcoin, along with other cryptocurrencies, has been described as an economic bubble by at least eight Nobel Memorial Prize in Economic Sciences laureates at various times, including Robert Shiller on 1 March ,^[]Joseph Stiglitz on 29 November ,^[] and Richard Thaler on 21 December ^[][] On 29 January , a noted Keynesian economist Paul Krugman has described bitcoin as "a bubble wrapped in techno-mysticism inside a cocoon of libertarian ideology",^[] on 2 February , professor Nouriel Roubini of New York University has called bitcoin the "mother of all bubbles",^[] and on 27 April , a University of Chicago economist James Heckman has compared it to the 17th-century tulip mania.^[]

Journalists, economists, investors, and the central bank of Estonia have voiced concerns that bitcoin is a Ponzi scheme.^[][][][] In April , Eric Posner, a law professor at the University of Chicago, stated that "a real Ponzi scheme takes fraud; bitcoin, by contrast, seems more like a collective delusion."^[] A July report by the World Bank concluded that bitcoin was not a deliberate Ponzi scheme.^[]:&#;7&#; In June , the Swiss Federal Council examined concerns that bitcoin might be a pyramid scheme, and concluded that "since in the case of bitcoin the typical promises of profits are lacking, it cannot be assumed that bitcoin is a pyramid scheme."^[]:&#;21&#;

Bitcoin wealth is highly concentrated, with % holding 27% of in-circulation currency, as of ^[]

Energy consumption and carbon footprint

Main article: Environmental impact of cryptocurrencies

Bitcoin has been criticized for the amount of electricity consumed by mining.^[]

As of ^[update], the Cambridge Centre for Alternative Finance (CCAF) estimates that bitcoin consumes TWh annually, representing % of the world's energy production and ranking bitcoin mining between Ukraine and Egypt in terms of electricity consumption.^[][]

Until , according to the CCAF much of bitcoin mining was done in China.^[][] Chinese miners used to rely on cheap coal power in Xinjiang^[][] in late autumn, winter and spring, and then migrate to regions with overcapacities in low-cost hydropower, like Sichuan, between May and October. In June China banned Bitcoin mining^[] and Chinese miners moved to other countries such as the US and Kazakhstan.^[]

As of September , according to the New York Times, Bitcoin's use of renewables range from 40% to 75%.^[] According to the Bitcoin Mining Council and based on a survey of 32% of the current global bitcoin network, 56% of bitcoin mining came from renewable resources in Q2 ^[]

The development of intermittent renewable energy sources, such as wind power and solar power, is challenging because they cause instability in the electrical grid. Several papers concluded that these renewable power stations could use the surplus energy to mine Bitcoin and thereby reduce curtailment, hedgeelectricity price risk, stabilize the grid, increase the profitability of renewable energy infrastructure, and therefore accelerate transition to sustainable energy and decrease Bitcoin's carbon footprint.^{[][][][][][][][]}

Concerns about bitcoin's environmental impact relate bitcoin's energy consumption to carbon emissions.^[][] The difficulty of translating the energy consumption into carbon emissions lies in the decentralized nature of bitcoin impeding the localization of miners to examine the electricity mix used. The results of recent studies analyzing bitcoin's carbon footprint vary.^[][][][] A study published in Nature Climate Change by Mora et al. claimed that bitcoin "could alone produce enough CO₂ emissions to push warming above 2&#;°C within less than three decades."^[] However, three other studies also published in Nature Climate Change later dismissed this analysis on account of its poor methodology and false assumptions with one study concluding: "[T]he scenarios used by Mora et al are fundamentally flawed and should not be taken seriously by the public, researchers, or policymakers."^[][][] According to studies published in Joule and American Chemical Society in , bitcoin's annual energy consumption results in annual carbon emission ranging from 17^[] to &#;MtCO₂ which is comparable to the level of emissions of countries as Jordan and Sri Lanka or Kansas City.^[] George Kamiya, writing for the International Energy Agency, says that "predictions about bitcoin consuming the entire world's electricity" are sensational, but that the area "requires careful monitoring and rigorous analysis".^[] One study done by Michael Novogratz's Galaxy Digital claimed that Bitcoin mining used less energy than the traditional banking system.^[]

Electronic waste

Bitcoins annual e-waste is estimated to be about 30 metric tons as of May , which is comparabe to the small IT equipment waste produced by the Netherlands. One Bitcoin generates g of e-waste per transaction. The average lifespan of Bitcoin mining devices is estimated to be only years.^[][] Other estimates assume that a Bitcoin transaction generates about g of e-waste, equivalent of iPhones.^[] One reason for the e-waste problem of Bitcoin is that unlike most computing hardware the used application-specific integrated circuits have no alternative use beyond Bitcoin mining.^[]

Use in illegal transactions

Further information: Cryptocurrency and crime and Bitcoin network §&#;Alleged criminal activity

The use of bitcoin by criminals has attracted the attention of financial regulators, legislative bodies, law enforcement, and the media.^[]

Several news outlets have asserted that the popularity of bitcoins hinges on the ability to use them to purchase illegal goods.^[][] Nobel-prize winning economist Joseph Stiglitz says that bitcoin's anonymity encourages money laundering and other crimes.^[][]

Software implementation

Bitcoin Core is free and open-source software that serves as a bitcoin node (the set of which form the bitcoin network) and provides a bitcoin wallet which fully verifies payments. It is considered to be bitcoin's reference implementation.^[] Initially, the software was published by Satoshi Nakamoto under the name "Bitcoin", and later renamed to "Bitcoin Core" to distinguish it from the network.^[] It is also known as the Satoshi client.^[]

The MIT Digital Currency Initiative funds some of the development of Bitcoin Core.^[] The project also maintains the cryptography library libsecpk1.^[]

Bitcoin Core includes a transaction verification engine and connects to the bitcoin network as a full node.^[] Moreover, a cryptocurrency wallet, which can be used to transfer funds, is included by default.^[] The wallet allows for the sending and receiving of bitcoins. It does not facilitate the buying or selling of bitcoin. It allows users to generate QR codes to receive payment.

The software validates the entire blockchain, which includes all bitcoin transactions ever. This distributed ledger which has reached more than gigabytes in size as of Jan , must be downloaded or synchronized before full participation of the client may occur.^[] Although the complete blockchain is not needed all at once since it is possible to run in pruning mode. A command line-based daemon with a JSON-RPC interface, bitcoind, is bundled with Bitcoin Core. It also provides access to testnet, a global testing environment that imitates the bitcoin main network using an alternative blockchain where valueless "test bitcoins" are used. Regtest or Regression Test Mode creates a private blockchain which is used as a local testing environment.^[] Finally, bitcoin-cli, a simple program which allows users to send RPC commands to bitcoind, is also included.

Checkpoints which have been hard coded into the client are used only to prevent Denial of Service attacks against nodes which are initially syncing the chain. For this reason the checkpoints included are only as of several years ago.^{[][][failed verification]} A one megabyte block size limit was added in by Satoshi Nakamoto. This limited the maximum network capacity to about three transactions per second.^[] Since then, network capacity has been improved incrementally both through block size increases and improved wallet behavior. A network alert system was included by Satoshi Nakamoto as a way of informing users of important news regarding bitcoin.^[] In November it was retired. It had become obsolete as news on bitcoin is now widely disseminated.

Bitcoin Core includes a scripting language inspired by Forth that can define transactions and specify parameters.^[] ScriptPubKey is used to "lock" transactions based on a set of future conditions. scriptSig is used to meet these conditions or "unlock" a transaction. Operations on the data are performed by various OP_Codes. Two stacks are used – main and alt. Looping is forbidden.

Bitcoin Core uses OpenTimestamps to timestamp merge commits.^[]

The original creator of the bitcoin client has described their approach to the software's authorship as it being written first to prove to themselves that the concept of purely peer-to-peer electronic cash was valid and that a paper with solutions could be written. The lead developer is Wladimir J. van der Laan, who took over the role on 8 April ^[]Gavin Andresen was the former lead maintainer for the software client. Andresen left the role of lead developer for bitcoin to work on the strategic development of its technology.^[] Bitcoin Core in was central to a dispute with Bitcoin XT, a competing client that sought to increase the blocksize.^[] Over a dozen different companies and industry groups fund the development of Bitcoin Core.

In popular culture

Term "HODL"

Hodl (HOD-əl; often written HODL) is slang in the cryptocurrency community for holding a cryptocurrency rather than selling it. A person who does this is known as a Hodler. It originated in a December post on the Bitcoin Forum message board by an apparently inebriated user who posted with a typo in the subject, "I AM HODLING."^[] It is often humorously suggested to be a backronym to "hold on for dear life".^[] In , Quartz listed it as one of the essential slang terms in Bitcoin culture, and described it as a stance, "to stay invested in bitcoin and not to capitulate in the face of plunging prices."^[]www.oldyorkcellars.com referred to it as the "favorite mantra" of Bitcoin holders.^[]Bloomberg News referred to it as a mantra for holders during market routs.^[]

Literature

In Charles Stross' science fiction novel, Neptune's Brood, the universal interstellar payment system is known as "bitcoin" and operates using cryptography.^[] Stross later blogged that the reference was intentional, saying "I wrote Neptune's Brood in Bitcoin was obscure back then, and I figured had just enough name recognition to be a useful term for an interstellar currency: it'd clue people in that it was a networked digital currency."^[]

Film

The documentary The Rise and Rise of Bitcoin portrays the diversity of motives behind the use of bitcoin by interviewing people who use it. These include a computer programmer and a drug dealer.^[] The documentary Banking on Bitcoin is an introduction to the beginnings of bitcoin and the ideas behind cryptocurrency today.^[]

Music

In , a Japanese band called Kasotsuka Shojo – Virtual Currency Girls – launched. Each of the eight members represented a cryptocurrency, including Bitcoin, Ethereum and Cardano.^[][]

Academia

In September , the establishment of the peer-reviewedacademic journalLedger (ISSN&#;) was announced. It covers studies of cryptocurrencies and related technologies, and is published by the University of Pittsburgh.^[] The journal encourages authors to digitally sign a file hash of submitted papers, which will then be timestamped into the bitcoin blockchain. Authors are also asked to include a personal bitcoin address in the first page of their papers.^[][]

See also

Notes

www.oldyorkcellars.com can grab investors’ attention with lower fees than many other cryptocurrency exchanges, but we’d recommend paying a bit more for added transparency. 

www.oldyorkcellars.com is an American partner of Binance, the world’s largest cryptocurrency exchange by trading volume, and which was founded in China in The original platform stopped accepting U.S. users in , and announced it would instead partner with a U.S.-based version of its platform called www.oldyorkcellars.com  

Since the introduction of www.oldyorkcellars.com, the international Binance has faced regulatory scrutiny. For example, regulators in the U.K. and Italy have banned Binance from operating in their countries, while officials in Hong Kong and Japan have warned investors about the exchange. Binance was also under investigation by the U.S. government for tax fraud, money laundering, and insider trading as recently as September , according to reporting by Bloomberg.

That level of scrutiny was recently extended to www.oldyorkcellars.com, which Binance has referred to in the past as a U.S. partner. The Securities and Exchange Commission is currently investigating the relationships between www.oldyorkcellars.com and two firms owned by Binance founder Changpeng Zhao, the Wall Street Journal reported.

We reached out to Binance and www.oldyorkcellars.com last year and again in February in an attempt to confirm details about reported regulatory investigations, as well as to better understand the relationship between the international and U.S-based platforms. We didn’t hear back from officials at Binance or www.oldyorkcellars.com after we first reached out, though a spokesperson contacted us on behalf of www.oldyorkcellars.com after our review originally published in to provide additional context on the relationship between Binance and www.oldyorkcellars.com They operate as separate companies, the spokesperson said in an email, with www.oldyorkcellars.com licensing software, trademarks, and wallet technology from Binance.

United States investors still cannot use the original Binance today, but www.oldyorkcellars.com offers over 65 cryptocurrencies for investors to choose from. The biggest draw of www.oldyorkcellars.com is its low fees compared to some other exchanges. It also has an easy-to-use buy/sell option for beginners, while more advanced traders can get the benefit of its in-depth “basic” and “advanced” trading platforms. 

Despite those benefits, www.oldyorkcellars.com offers limited crypto options and is much less transparent than many competitor exchanges when it comes to security, storage options, and customer assistance. For most long-term, retirement-minded investors, we’d recommend sticking with exchanges such as Coinbase or Gemini, which are much more transparent about these key operations. 

Pros and Cons of www.oldyorkcellars.com

www.oldyorkcellars.com At A Glance

• 65+ currencies available
• Not available in Hawaii, Idaho, Louisiana, New York, Texas, or Vermont
• Flat % fee for spot trades; % fee for instant buy/sell
• $10 minimum trade 
• Option for recurring investments, for dollar-cost averaging

Cryptocurrencies Available on www.oldyorkcellars.com

You can buy and sell over 65 cryptocurrencies on www.oldyorkcellars.com, including:

www.oldyorkcellars.com also offers a large number of trading pairs. This includes options to trade two cryptocurrencies without the need to cash out one for USD, as well as options to trade between crypto and a fiat currency like USD. Trading pairs vary between exchanges depending on the various cryptocurrencies offered.

www.oldyorkcellars.com Fees

www.oldyorkcellars.com has an option to automatically buy and sell crypto using U.S. dollars, using a simple interface that’s similar to what you’ll find on Coinbase and other competitors. Each of these buy/sell transactions charge a % fee.  

But to take advantage of its competitive % standard fee, you’ll need to spot trade through the www.oldyorkcellars.com trading platform. This can be confusing if you’re unfamiliar with exchange lingo; on other exchanges, this type of trading and fee structure is typically used in more advanced platform options, such as Coinbase’s Coinbase Pro or Gemini’s Active Trader.  

Spot trading means you’re not technically “buying” the cryptocurrency, but instead trading your USD for it through either a market or a limit order. A market order means you agree to trade for the currency at the current market price. A limit order lets you put in a designated price at which you want the trade to occur, and when the currency reaches that price, the trade happens automatically. These orders then incur “maker” (for limit orders) or “taker” (for market orders) fees — though on www.oldyorkcellars.com, there’s just a standard % fee.

Take Bitcoin for example, if you want to get Bitcoin on www.oldyorkcellars.com, here’s how you would do it to make sure you only pay that % fee, and not the % fee:

1. Transfer USD to your www.oldyorkcellars.com account for no fee
2. Set a market or limit order trade for USD to Bitcoin for a % fee 

That can mean serious savings for investors, especially compared to some other exchanges. For example, if you want to buy $ worth of Bitcoin on Coinbase, you’d actually end up with about $ in Bitcoin, after fees. On www.oldyorkcellars.com, you’d still have $ to purchase Bitcoin after accounting for the % fee. 

If you outright buy Bitcoin with USD, you will pay a % fee on www.oldyorkcellars.com If you want to spend $ to buy Bitcoin using this option, you’d end up trading about $ after fees.

There is also a 25% discount to your fee if you use Binance Coin (BNB) to pay your transaction fee. To do this, you just have to hold Binance Coin in your www.oldyorkcellars.com account, and your trading fee will be automatically deducted from your Binance Coin balance. 

If you use a dollar cost averaging method to regularly invest, these savings can be significant in the long run. But while it’s important to pay attention to an exchange’s fee structure, experts say that it may be worth it to pay more in fees for more advanced security, usability, or other features.

Deposit and Withdrawal Fees

Before you trade money for crypto, you’ll need to deposit — and when you sell, withdraw —  U.S. dollars into and out of your www.oldyorkcellars.com account. The fees for this are minimal, especially if you transfer from your bank account using ACH. 

There are also individual withdrawal fees for moving your crypto holdings from your www.oldyorkcellars.com account into your own crypto wallet. These fees vary based on the type of cryptocurrency.

www.oldyorkcellars.com Security

We found limited information from www.oldyorkcellars.com about its security measures and protections, and the company did not respond to a request for comment. www.oldyorkcellars.com says the following statement on its homepage: “We use state-of-the-art storage technology to protect your cryptocurrency and USD assets.”

In a blog post, Binance said the “vast majority” of its user funds and assets are stored in offline, cold storage facilities. Though it’s unclear exactly what percentage of assets held by the exchange are kept in secure, offline cold storage vs. online hot wallets. You must have a www.oldyorkcellars.com account to send queries to the help desk, so we were unable to get more information that way.

www.oldyorkcellars.com does not provide information on an internal wallet offering, but you can keep your coins within your account on the exchange. It also partners with Trust Wallet, a third-party hot wallet option. You can withdraw your coins from your account onto your own hot or cold storage option at any time (for a fee). 

There have been previous reports that www.oldyorkcellars.com keeps users’ USD in FDIC-insured accounts, but posts on the www.oldyorkcellars.com site containing that information have since been deleted. While it doesn’t guarantee the same in case of a www.oldyorkcellars.com hack, the international version of the exchange, Binance, covered all consumer losses after a $40 million hack in  

We reached out to www.oldyorkcellars.com for more information about its security measures and received no response. We’ll update the review if www.oldyorkcellars.com gets back to us.

Additional Details

Earn Rewards

You can earn rewards through the exchange by holding certain coins in your www.oldyorkcellars.com account — a strategy called “staking.” According to www.oldyorkcellars.com, staking helps support the operations of these coins’ blockchains.

Coins supported currently are: VET, XTZ, ATOM, and ALGO. You can earn up to % annually through staking with www.oldyorkcellars.com, and you may still make trades while taking part.

Binance Academy

Binance Academy is Binance’s education platform featuring hundreds of hours of content on blockchain, cryptocurrency, cryptoeconomics, security, and more. It essentially serves as a one-stop-shop for all things crypto and can be a helpful resource for beginner investors.

Tax Portal

www.oldyorkcellars.com launched a new free tax portal to help customers prepare their crypto taxes. According to its site, the portal allows users to access their transaction history and sync their crypto activity to “most” third-party, though it doesn’t specify which platforms it is compatible with except for TaxBit. The portal offers two tools to help customers generate, export, and download their www.oldyorkcellars.com transaction history: a tax API key tool and an export statement tool. The Tax API Key tool directly shares crypto transaction data, while the export statement tool allows users to  generate and download their own transaction history.

Who Is www.oldyorkcellars.com Best For?

www.oldyorkcellars.com is not available in Hawaii, Idaho, Louisiana, New York, Texas, or Vermont. For people outside of those states looking to invest in crypto, www.oldyorkcellars.com offers both an easy buy/sell interface and more advanced trading views. It has low fees, and further fee discounts for using its native currency, Binance Coin, and does offer some educational content through its on-site blog.

Despite its low fees, we do not recommend www.oldyorkcellars.com, especially for beginners. www.oldyorkcellars.com doesn’t offer any information about how your investment will be secured, stored, or protected by the firm, unlike other cryptocurrency exchanges. Plus, there are many other active exchanges that offer simple buy/sell interfaces for long-term investors. We believe that transparency about the safety of your investment is worth paying a bit more in fees. 

www.oldyorkcellars.com Compared to Others

Frequently Asked Questions

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If there&#x;s one word that describes Bitcoin and cryptocurrency, it&#x;s volatile. Crypto prices soar and then seem to crash almost as quickly, while rumors, sentiment and fundamental developments are quickly factored into the market.

For example, Bitcoin was skyrocketing in April , hitting an all-time high of more than $64, But just three months later the cryptocurrency had lost more than half its value, plummeting to under $30, Then in November , Bitcoin hit an all-time high again, at nearly $69,, but by late January had plummeted by more than 40 percent.

That volatility attracts traders looking to make a profit, but it&#x;s nerve-wracking, especially for new investors looking to get started. And traders can expect plenty more of this volatility in the future, as new cryptocurrencies emerge and others fall by the wayside.

With cryptocurrency so extremely volatile, what should investors be doing to manage their risk?

5 things to do when cryptocurrencies plummet

Scared by a plunge or thrilled at the prospect of buying in cheaper? Either way, here are five things that you need to do when cryptocurrency prices crumble.

1. Stay calm

Whether you decide to sell your cryptocurrency or see a dip as an opportunity to buy more, you need to act with a cool head. Making emotional decisions, especially when trading, rarely results in anything good happening. So before you rush into the market in a panic, you&#x;ll want to reflect on why you&#x;re trading crypto in the first place.

• Are you investing because you believe in the long-term opportunity?
• Or are you here to make a quick buck on short-term trading?

The answer to these questions can help guide you to the proper decision. In either case, you&#x;ll want to act in accordance with your own goals. In other words, if you believe in the long-term opportunity, think with that mindset. If you&#x;re here for a quick trade, think with that mindset.

2. Assess the situation

Is there news driving the trading price of Bitcoin and other cryptos? It&#x;s possible that there&#x;s fundamental news that&#x;s shifted the market&#x;s sentiment and it&#x;s not just price action or rumor driving sentiment.

In Bitcoin&#x;s big plunge of , actual developments may have hurt prices. China&#x;s move to ban financial institutions from providing crypto-related services was a further clampdown, since the country had already banned crypto exchanges in , though it hadn&#x;t prohibited individuals from owning cryptocurrencies. Then late in the Federal Reserve decided to reduce liquidity in the financial system, and many cryptos have been on a significant downturn since then.

So these moves have been further significant blows to the burgeoning market, which had been enjoying significant capital inflows.

3. Remember that volatility is the name of the game

Cryptocurrency is volatile by nature. Because crypto generates no cash flow, traders have to rely on changes in sentiment to drive the price. That means the market can swing between rabid optimism, as it did in early , to pessimistic despair, as it did a few months later. The furor around the Coinbase IPO in helped drive positive sentiment to crypto, while the reduction in monetary stimulus drove pessimism at the end of and start of

So when you have an asset that&#x;s driven by sentiment, you have to realize that the emotions of traders propel the market. That&#x;s true in the case of stocks, too, but they also may have a real stream of growing cash flows from their issuing company to accelerate them higher.

This volatility is exactly what draws professional traders, who use high-powered algorithms to make sophisticated trades, something that mom and pop traders don&#x;t typically have the advantage of utilizing. Traders like volatility since it gives them a chance to make money &#x; that&#x;s Wall Street&#x;s game.

4. Evaluate the future

Is China&#x;s move to ban crypto a harbinger of things to come? Maybe. India has been mulling the idea of banning cryptocurrency, while the Russian central bank has also voiced opposition to it, too. But other countries, including the United States, may choose to further regulate cryptocurrency instead of prohibiting it outright.

How other major countries proceed remains to be seen, but it&#x;s clear that cryptocurrencies face real threats in the form of regulation, including regulation that could literally put them out of business. As crypto gains traction, it risks becoming a victim of its own success.

It doesn&#x;t help that crypto is used as part of ransom attacks and other criminal activities.

So it&#x;s not out of the question that the utopian dreams of crypto purveyors are simply legislated out of existence. Of course, the political implications are but one facet of their future. Crypto faces other significant hurdles, including the financial and environmental costs of mining them.

Another risk: because of their volatility, many cryptocurrencies are mostly unusable as currency and it&#x;s being sold to people who have no intention of using it as currency, as I discussed on Cheddar TV.

5. Determine how to act

After you&#x;re done cooling down and have assessed the situation and what it means for the future, you&#x;ll want to consider how to act.

• Are the risks really opportunities in disguise? If you see it that way, you may want to continue holding your position or use a dip in the price to invest more.
• Are the risks likely to persist or even grow worse? If so, you may want to take your losses now and stay out of the game for the future.
• Is the situation too murky? If it&#x;s tough to see the way ahead, you may consider splitting the difference, selling some of your position today while still having potential upside tomorrow.

Whichever way you go, you&#x;ll want an action plan that reflects your view on the potential risks and opportunities of cryptocurrencies. But it&#x;s worth noting that some of the world&#x;s smartest investors won&#x;t touch cryptocurrencies and strongly caution you about them, too. Legendary investor Charlie Munger, vice chairman of Berkshire Hathaway, said, I admire the Chinese, I think they made the correct decision, which was to simply ban them.

Alternatives to cryptocurrency

Cryptocurrencies are highly volatile and speculative, and many investors don&#x;t feel comfortable putting much, if any, money in them. The good news for investors is that they have alternatives to cryptocurrency that offer attractive long-term returns:

• Individual stocks. If you&#x;re willing to do the analysis and continue tracking the company, you can make very good returns by investing in individual stocks such as Amazon or Apple.
• Dividend stocks. If you&#x;re looking for a cash payout as part of your investment, you can buy dividend stocks. These tend to be less volatile than stocks overall.
• Index funds. If you don&#x;t want to do the work of finding individual stocks but still want high returns, then a good alternative is an index fund. An index fund owns stocks or other assets and is designed to track a specific collection of stocks (such as the S&P ).
• If you&#x;re looking for a healthy cash payout, REITs are another alternative to dividend stocks. REITs own and operate real estate and have a good long-term track record of returns. You can even buy a fund, so you don&#x;t have to pick individual REITs.

Those are some of the highest-potential alternatives to cryptocurrency.

Bottom line

A plunge in the cryptocurrency markets may have you feeling rattled, but use it as a wake-up call to re-assess why you&#x;re involved in the market to begin with. What opportunities and risks does it present?

While Bitcoin, for one, has rallied back hard following previous major declines, there&#x;s no guarantee that it does so again, especially if it&#x;s facing serious existential questions as countries ban the use of it and potentially the ability to even own it. And that&#x;s the kind of real risk that an investment can be destroyed by or profit from, if the reality is less severe than the expectation.

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Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.