Bitcoin is an online payment system invented by Satoshi Nakamoto, who published his invention in 2008, and released it as open-source software in 2009. The system is peer-to-peer; users can transact directly without needing an intermediary. Transactions are verified by network nodes and recorded in a public distributed ledger called the block chain. The ledger uses its own unit of account, also called bitcoin. The system works without a central repository or single administrator, which has led the US Treasury to categorize it as a decentralized virtual currency. Bitcoin is often called the first cryptocurrency, although prior proposals existed. Bitcoin is more correctly described as the first decentralized digital currency. It is the largest of its kind in terms of total market value.
Bitcoins are created as a reward for payment processing work in which users offer their computing power to verify and record payments into the public ledger. This activity is called mining and is rewarded by transaction fees and newly created bitcoins. Besides mining, bitcoins can be obtained in exchange for fiat money, products, and services. Users can send and receive bitcoins for an optional transaction fee.
Bitcoin as a form of payment for products and services has grown, and merchants have an incentive to accept it because fees are lower than the 2–3% typically imposed by credit card processors. Despite a big increase in the number of merchants accepting bitcoin, the cryptocurrency doesn’t have much momentum in retail transactions. Unlike credit cards, any fees are paid by the purchaser, not the vendor. The European Banking Authority and other sources have warned that bitcoin users are not protected by refund rights or chargebacks.
The use of bitcoin by criminals has attracted the attention of financial regulators, legislative bodies, law enforcement, and media. They listed money laundering, financing of illicit activities, theft, fraud, tax evasion, and use in black markets as possible. As of 2013, the criminal activities centered around theft and black markets. Officials in countries such as the United States also recognized that bitcoin can provide legitimate financial services.
On March 22, 2011 We Use Coins published the video What Is Bitcoin which generated over 6,300,000 views.
A bitcoin documentary film called The Rise and Rise of Bitcoin made its debut at the Tribeca Film Festival in New York on 23 April 2014, chronicling its origins to its explosive growth in 2013.
Several lighthearted songs celebrating bitcoin have been released. Numerous U.S. comedians have made fun of “bitcoin confusion”.
In the fall of 2014, undergraduate students at the Massachusetts Institute of Technology (MIT) each received bitcoins worth 0 “to better understand this emerging technology”. One student had the idea of a Bitcoin Club and raised more than half a million dollars from an MIT alumnus working in high-frequency trading.
In Season 3 CBS show The Good Wife featured an episode alluding to the creator of bitcoin as well as the FBI investigating the case. The episode titled ‘Bitcoin for Dummies’ was telecasted on January 15, 2012.
On February 19, 2015, Morgan Spurlock aired an episode about bitcoin on his CNN docu-series Inside Man. Filmed in July 2014, the episode featured him living off bitcoin for a week to figure out whether the world is ready for a new kind of money.