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| {{Use dmy dates|date=December 2013}} | |||
| {{Infobox currency | |||
| | image_1 = Bitcoin logo.svg | |||
| | image_title_1 = Logo of the bitcoin reference client | |||
| | issuing_authority = ]{{refn | group = note | Bitcoin does not have a ].<ref name="JSC" />}} | |||
| | issuing_authority_title = Administration | |||
| | date_of_introduction = {{Start date and age|df=yes|2009|1|3}} | |||
| | using_countries = Worldwide | |||
| | inflation_title = ] | |||
| | inflation_rate = 25 bitcoins per block (approximately every ten minutes) until mid 2016,<ref name=quantitative>{{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 | author2 = Adi Shamir | year=2012}}</ref> and then afterwards 12.5 bitcoins per block for 4 years until next halving. This halving continues until 2110-2140 when 21 million bitcoins have been issued. | |||
| | inflation_source_date = | |||
| | subunit_ratio_3 = {{val|e=-8}} | |||
| | subunit_name_3 = satoshi<ref name="satoshi unit">{{cite web | title = Cracking the Bitcoin: Digging Into a $131M USD Virtual Currency | url = http://www.dailytech.com/Cracking+the+Bitcoin+Digging+Into+a+131M+USD+Virtual+Currency/article21878.htm | author = Jason Mick | publisher = Daily Tech | date = 12 June 2011 | accessdate = 30 September 2012 | deadurl = no}}</ref> | |||
| | subunit_ratio_2 = {{val|e=-6}} | |||
| | subunit_name_2 = microbitcoin, bit<ref name="bits unit">{{cite web | title = BitPay, Bitcoin, and where to put that decimal point | url = http://blog.bitpay.com/2014/05/02/bitpay-bitcoin-and-where-to-put-that-decimal-point.html}}</ref> | |||
| | symbol_subunit_2 = μBTC | |||
| | subunit_ratio_1 = {{val|e=-3}} | |||
| | subunit_name_1 = millibitcoin | |||
| | symbol_subunit_1 = mBTC | |||
| | symbol = BTC,{{refn | group = note | name = BTCcode | {{as of | 2014}}, BTC is the most commonly used code.<ref name = "standardize">{{cite web | publisher = ] | author = Nermin Hajdarbegovic | date = 7 October 2014 | accessdate = 28 January 2015 | title = Bitcoin Foundation to Standardise Bitcoin Symbol and Code Next Year | url = http://www.coindesk.com/bitcoin-foundation-standardise-bitcoin-symbol-code-next-year/}}</ref>}} XBT,{{refn | group = note | name = XBTcode | {{as of | 2014}}, XBT is used by ],<ref>{{cite news | title = Bitcoin Ticker Available On Bloomberg Terminal For Employees | publisher = ] | url = http://techcrunch.com/2013/08/09/bitcoin-ticker-available-on-bloomberg-terminal/ | date = 9 August 2013 | author = Romain Dillet | accessdate = 2 November 2014}}</ref> ],<ref>{{cite web | title = Bitcoin Composite Quote (XBT) | url = http://money.cnn.com/quote/quote.html?symb=XBT | publisher = CNN | work = CNN Money | accessdate = 2 November 2014}}</ref> ],<ref>{{cite news | title = Bitcoin Price Index | publisher = ] | url = http://www.coindesk.com/price/ | accessdate = 17 November 2014}}</ref> and ].<ref>{{cite web | title = XBT - Bitcoin | publisher = xe.com | accessdate = 2 November 2014 | url = http://www.xe.com/currency/xbt-bitcoin?}}</ref>}} {{nowrap|]}}{{refn | group = note | name = BTCsym | Bitcoin Foundation will attempt to establish a Unicode symbol for bitcoin. The leading candidates are B⃦ (letter B with combining double vertical stroke overlay), ฿ (the ] symbol), and Ƀ (]).<ref name="standardize" />}} | |||
| | used_coins = unspent outputs of transactions denominated in any multiple of satoshis<ref name="Antonopoulos2014">{{cite book | author = Andreas M. Antonopoulos | date = April 2014 | url = http://chimera.labs.oreilly.com/books/1234000001802/ch01.html | publisher = O'Reilly Media | accessdate = 23 October 2014 | title = Mastering Bitcoin. Unlocking Digital Crypto-Currencies}}</ref>{{rp|ch. 5}} | |||
| }} | |||
| {{Special characters}} | |||
| '''Bitcoin'''{{refn | group = note |The word ''bitcoin'' is a ] of the words '']'', being itself a compound of the words '']'' and '']'', and ''coin'', originally meaning wedge, stamp, corner.<ref>{{cite web|title=bitcoin|url=http://www.oxforddictionaries.com/definition/english/bitcoin|publisher=Oxford University Press|accessdate=28 December 2014}}</ref> The white paper that defined bitcoin<ref name="paper" /> frequently uses just the shorter ''coin''. | |||
| }} is an online ] invented by ],<ref group="note" name="Satoshi">It is not known whether the name ''Satoshi Nakamoto'' is real or a pseudonym, or if it represents one person or a group.</ref> published in 2008<ref name="paper">{{cite web|url= https://bitcoin.org/bitcoin.pdf |title= Bitcoin: A Peer-to-Peer Electronic Cash System |date= October 2008 |publisher= bitcoin.org |accessdate= 28 April 2014}}</ref> and introduced as ] in 2009.<ref>{{cite web | last = Davis | first = Joshua | title = The Crypto-Currency: Bitcoin and its mysterious inventor | url = http://www.newyorker.com/reporting/2011/10/10/111010fa_fact_davis | work = The New Yorker | date = 10 October 2011 | accessdate = 31 October 2014}}</ref> The system is ]; users can transact directly without needing an intermediary.<ref name="primer" />{{rp|4}} Transactions are verified by network ] and recorded in a public ] called the ''block chain''.<ref> | |||
| * {{cite news|author1=John Phillips|title=How bitcoin really changed the world|url=http://www.cnbc.com/id/101517959#.|accessdate=31 December 2014|publisher=CNBC|date=4 Mar 2014}} | |||
| * {{cite news|author1=Joshua Kopstein|title=The Mission to Decentralize the Internet|url=http://www.newyorker.com/tech/elements/the-mission-to-decentralize-the-internet|accessdate=30 December 2014|publisher=The New Yorker|date=12 December 2013 |quote=The network’s "nodes"—users running the bitcoin software on their computers—collectively check the integrity of other nodes to ensure that no one spends the same coins twice. All transactions are published on a shared public ledger, called the "block chain"}}</ref><ref name="Antonopoulos2014" />{{rp|ch. 6}} The ] uses its own ], also called '''bitcoin'''.{{refn | group = note | There is no uniform convention for ''bitcoin'' capitalization. Some sources use ''Bitcoin'', capitalized, to refer to the ] and ] and ''bitcoin'', lowercase, to refer to the unit of account.<ref name="capitalization">{{cite web | url = http://www.newyorker.com/online/blogs/elements/2013/04/the-future-of-bitcoin.html | title = The Bitcoin Boom | publisher = Condé Nast | work = The New Yorker | date = 2 April 2013 | accessdate = 22 December 2013 | author = Bustillos, Maria | quote = Standards vary, but there seems to be a consensus forming around Bitcoin, capitalized, for the system, the software, and the network it runs on, and bitcoin, lowercase, for the currency itself.}}</ref> The ]<ref>{{cite news|last= Vigna |first= Paul |title= BitBeat: Is It Bitcoin, or bitcoin? The Orthography of the Cryptography |url= http://blogs.wsj.com/moneybeat/2014/03/14/bitbeat-is-it-bitcoin-or-bitcoin-the-orthography-of-the-cryptography |accessdate= 21 April 2014 |newspaper= ] |date=3 March 2014}}</ref> and ]<ref>{{cite web|publisher= The Chronicle of Higher Education (chronicle.com) |title= The latest style |date= 14 April 2014 |last= Metcalf |first= Allan |series= Lingua Franca blog |url= http://chronicle.com/blogs/linguafranca/2014/04/11/the-latest-style/ |accessdate= 19 April 2014}}</ref> advocate use of lowercase ''bitcoin'' in all cases. This article follows the latter convention.}} The system works without a central repository or single administrator, which has led the ] to categorize it as a decentralized ].<ref name="JSC">{{cite web|url= http://www.fincen.gov/news_room/testimony/html/20131119.html |title= Statement of Jennifer Shasky Calvery, Director Financial Crimes Enforcement Network United States Department of the Treasury Before the United States Senate Committee on Banking, Housing, and Urban Affairs Subcommittee on National Security and International Trade and Finance Subcommittee on Economic Policy |publisher= Financial Crimes Enforcement Network |work= fincen.gov |date= 19 November 2013 |accessdate= 1 June 2014}}</ref> Bitcoin is often called the first ],<ref name="f_c">{{cite web | url=http://www.scmp.com/news/world/article/1482245/drug-market-moving-quickly-online-global-user-survey-finds | title=Drug market moving quickly online, global user survey finds | publisher=South China Morning Post Publishers | work=South China Morning Post | date=14 April 2014 | accessdate=7 January 2015}} | |||
| * {{cite web | url=http://www.telegraph.co.uk/technology/news/10881213/The-coming-digital-anarchy.html | title=The coming digital anarchy | publisher=Telegraph Media Group Limited | work=The Telegraph | date=9 June 2014 | accessdate=7 January 2015 | author=Sparkes, Matthew}} | |||
| * {{cite web | url=http://www.entrepreneur.com/article/234340 | title=This Company Is Now the Largest in the World to Accept Bitcoin | publisher=Entrepreneur Media, Inc | work=entrepreneur.com | date=30 May 2014 | accessdate=7 January 2015}}</ref> although prior proposals existed.{{refn|group=note|name=prior|David Chaum's electronic cash based on cryptography was first used for a transaction in 1994,<ref>{{cite web|title=World's first electronic cash payment over computer networks. | publisher=Electronic Frontier Foundation | date=26 May 1994 | url=https://w2.eff.org/Privacy/Digital_money/?f=digicash.announce.txt}}</ref> and OpenCoin, now known as ], had code written prior to November 2008.<ref>{{cite web| url=https://github.com/OpenCoin/opencoin-historic/commit/ecde30f6f5c00e4bf0381ee4df8cfbd3eba5552f | title= | |||
| open source electronic cash}}</ref>}} Bitcoin is more correctly described as the first decentralized ].<ref name="primer" /><ref name="Reuters101">{{Cite web|url = http://thomsonreuters.com/business-unit/legal/digital-economy/bitcoin-101.pdf|title = Bitcoin 101 white paper|accessdate = |website = |publisher = Thomson Reuters|last = Sagona-Stophel|first = Katherine}}</ref> It is the largest of its kind in terms of total market value.<ref name="WsjVolatile">{{cite news | last = Espinoza | first = Javier | title = Is It Time to Invest in Bitcoin? Cryptocurrencies Are Highly Volatile, but Some Say They Are Worth It | date = 22 September 2014 | url = http://online.wsj.com/articles/how-to-decipher-cryptocurrencies-1411333011 | work = Journal Reports | publisher = ] | accessdate = 3 November 2014}}</ref> | |||
| 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.<ref name="primer">{{cite web | url=http://mercatus.org/sites/default/files/Brito_BitcoinPrimer.pdf | title=Bitcoin: A Primer for Policymakers | publisher=George Mason University | work=Mercatus Center | year=2013 | accessdate=22 October 2013 | author=Jerry Brito and Andrea Castillo}}</ref> Besides mining, bitcoins can be obtained in exchange for ], products, and services.<ref name="bitpay130916" /> Users can send and receive bitcoins for an optional transaction fee.<ref name="EconOfBTC">{{cite web | url=http://www.weis2013.econinfosec.org/papers/KrollDaveyFeltenWEIS2013.pdf | title=The Economics of Bitcoin Mining, or Bitcoin in the Presence of Adversaries | work=The Twelfth Workshop on the Economics of Information Security (WEIS 2013) | |||
| | date= 11–12 June 2013 | accessdate=8 May 2014 | author=Joshua A. Kroll, Ian C. Davey, Edward W. Felten | |||
| | quote=A transaction fee is like a tip or gratuity left for the miner.}}</ref> | |||
| Bitcoin as a form of payment for products and services has grown,<ref name="bitpay130916">{{cite web | url = http://techcrunch.com/2013/09/16/bitpay-10000-merchants/ | title = BitPay Passes 10,000 Bitcoin-Accepting Merchants On Its Payment Processing Network | author = Natasha Lomas | publisher = Techcrunch.com | work = Techcrunch | date = 16 September 2013 | accessdate = 21 October 2013}}</ref> and merchants have an incentive to accept it because fees are lower than the 2–3% typically imposed by ] processors.<ref name="merchantfee">{{cite news | url=http://www.nytimes.com/2013/10/31/technology/bitcoin-pursues-the-mainstream.html | title=Bitcoin Pursues the Mainstream | work=The New York Times | date=30 October 2013 | accessdate=4 November 2013 | author=Wingfield, Nick}}</ref> Despite a big increase in the number of merchants accepting bitcoin, the cryptocurrency doesn’t have much momentum in retail transactions.<ref name=MIT Technology Review>{{cite news|last=Orcutt|first=Mike|title=Is Bitcoin Stalling?|url=http://www.technologyreview.com/news/535221/is-bitcoin-stalling/|accessdate=20 Feb 2015|newspaper=MIT Technology Review|date=18 February 2015}}</ref> Unlike credit cards, any fees are paid by the purchaser, not the vendor. The ]<ref name="ebawarn"/> and other sources<ref name="primer" />{{rp|11}} have warned that bitcoin users are not protected by refund rights or ]s. | |||
| The use of bitcoin by criminals has attracted the attention of financial regulators,<ref name="Lavin, Tim"/> legislative bodies,<ref>{{cite web | url=http://blogs.wsj.com/washwire/2013/11/05/bitcoin-comes-under-senate-scrutiny | title=Bitcoin Comes Under Senate Scrutiny | publisher=Wall Street Journal | work=Washington Wire | date=Nov 5, 2013 | accessdate=20 December 2014 | author=Tracy, Ryan}}</ref> law enforcement,<ref name="fbi_report" /> and media.<ref name="washp" /> 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 ] also recognized that bitcoin can provide legitimate financial services to customers.<ref>{{cite news | url = http://online.wsj.com/articles/SB10001424052702304439804579205740125297358 | title = Authorities See Worth of Bitcoin | date = 18 November 2013 | first = Ryan | last = Tracy | publisher = The Wall Street Journal | work = Markets | accessdate = 28 November 2014}}</ref> | |||
| {{TOC limit|3}} | |||
| ==Design== | |||
| ===The block chain=== | |||
| The ''block chain'' is a public ] that records bitcoin transactions. A novel solution accomplishes this without any trusted central authority: maintenance of the block chain is performed by a ] of communicating ] running bitcoin software.<ref name="primer" /> 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.<ref name="Antonopoulos2014" />{{rp|ch. 8}} | |||
| The block chain is a ]; in order to independently verify the chain of ownership of any and every bitcoin (amount), each network node stores its own copy of the block chain. Approximately six times per hour, a new group of accepted transactions, a block, is created, added to the block chain, and quickly published to all nodes. This allows bitcoin software to determine when a particular bitcoin amount has been spent, which is necessary in order to prevent ] in an environment without central oversight. Whereas a conventional ledger records the transfers of actual ] or ]s that exist apart from it, the block chain is the only place that bitcoins can be said to exist in the form of unspent outputs of transactions.<ref name="Antonopoulos2014" />{{rp|ch. 5}} | |||
| ===Units=== | |||
| The unit of account of the bitcoin system is bitcoin. {{As of|2014}}, symbols used to represent bitcoin are BTC,<ref group="note" name="BTCcode" /> XBT,<ref group="note" name="XBTcode" /> and {{nowrap|]}}.<ref group="note" name="BTCsym" /><ref name=btcregs />{{rp|1}} Small multiples of bitcoin used as alternative units are millibitcoin (mBTC), microbitcoin (µBTC), and satoshi. Named in homage to bitcoin's creator, a ''satoshi'' is the smallest multiple of bitcoin representing 0.00000001 bitcoin, which is one hundred millionth of a bitcoin.<ref name="satoshi unit" /> A ''millibitcoin'' equals to 0.001 bitcoin, which is one thousandth of bitcoin.<ref>{{cite web|last1=Siluk|first1=Shirley|title=June 2 "M Day" promotes millibitcoin as unit of choice|url=http://www.coindesk.com/june-2-m-day-promotes-millibitcoin-as-unit-of-choice/|publisher=CoinDesk|accessdate=26 February 2015|date=2 June 2013}}</ref> One ''microbitcoin'' equals to 0.000001 bitcoin, which is one millionth of bitcoin. A microbitcoin is sometimes referred to as a ''bit''. | |||
| On 7 October 2014, the ] revealed a plan to apply for an ] currency code for bitcoin,<ref name = "standardize" /> and mentioned BTC and XBT as the leading candidates.<ref>{{cite web | title = Press Release October 7, 2014: Bitcoin Foundation Financial Standards Working Group Leads the Way for Mainstream Bitcoin Adoption | url = https://bitcoinfoundation.org/press-releases/press-release-october-7-2014-bitcoin-foundation-financial-standards-working-group-leads-the-way-for-mainstream-bitcoin-adoption-2/ | publisher = ] | work = Press Release | date = 7 October 2014 | accessdate = 7 November 2014}}</ref> | |||
| ===Ownership=== | |||
| ] | |||
| Ownership of bitcoins implies that a user can spend bitcoins associated with a specific address. To do so, a payer must ] the transaction using the corresponding ]. Without knowledge of the private key the transaction cannot be signed and bitcoins cannot be spent. The network verifies the signature using the ].<ref name="Antonopoulos2014" />{{rp|ch. 5}} If the private key is lost, the ] will not recognize any other evidence of ownership;<ref name="primer" /> the coins are then lost and cannot be recovered. For example, in 2013 one user said he lost 7,500 bitcoins, worth $7.5 million at the time, when he discarded a hard drive containing his private key.<ref>{{cite news|title=Man Throws Away 7,500 Bitcoins, Now Worth $7.5 Million|date=29 November 2013|url=http://washington.cbslocal.com/2013/11/29/man-throws-away-7500-bitcoins-now-worth-7-5-million/|work=CBS DC|accessdate=23 January 2014}}</ref> | |||
| ===Transactions=== | |||
| {{ see also | Bitcoin network }} | |||
| A transaction must have one or more inputs. For the transaction to be valid, every input must be an unspent output of a previous transaction. Every input must be digitally signed. The use of multiple inputs corresponds to the use of multiple coins in a cash transaction. A transaction can also have multiple outputs, allowing one to make multiple payments in one go. A transaction output can be specified as an arbitrary multiple of satoshi. Similarly as in a cash transaction, the sum of inputs (coins used to pay) can exceed the intended sum of payments. In such case, an additional output is used, returning the change back to the payer.<ref name="Antonopoulos2014" />{{rp|ch. 5}} | |||
| To send money to a bitcoin address, users can click links on webpages; this is accomplished with a provisional Bitcoin ] using a template registered with ]. Bitcoin clients like ] and ] support Bitcoin URIs. Mobile clients recognize Bitcoin URIs in ]s, so that the user does not have to type the bitcoin address and amount in manually. The ] is generated from the user input based on the payment amount. The QR code is displayed on the mobile device screen and can be scanned by a second mobile device.<ref name=QRpatent>{{cite web|author1=Don W. Tyler, Jeff Isenhart, Anne Mueller, Christoph Sadil|title=Qr code-enabled p2p payment systems and methods.US 20140129428 A1|url=http://appft1.uspto.gov/netacgi/nph-Parser?Sect1=PTO1&Sect2=HITOFF&d=PG01&p=1&u=/netahtml/PTO/srchnum.html&r=1&f=G&l=50&s1=20140129428.PGNR.|publisher=uspto.gov|accessdate=20 January 2015|format=Patent application|date=8 May 2014}}</ref> | |||
| ===Mining=== | |||
| {{see also | Cryptographic nonce | Proof of work}} | |||
| ]<ref name="Blockchain.info">{{cite web | url = https://blockchain.info/charts | title = Charts | accessdate = 2 November 2014 | publisher = ]}}</ref>}} Vertical axis: relative mining difficulty, the scale is ]. Horizontal axis: date ranging from 2009-01-09 to 2014-12-31.]] | |||
| ] (Mhash/J).}}]] | |||
| ''Mining'' is a record-keeping service.{{refn | group = note | It is misleading to think that there is an analogy between gold mining and bitcoin mining. The fact is that gold miners are rewarded for producing gold, while bitcoin miners are not rewarded for producing bitcoins; they are rewarded for their record-keeping services.<ref name="Andolfatto2014-03" />}} Miners keep the block chain consistent, complete, and unalterable by repeatedly verifying and collecting newly broadcast transactions into a new group of transactions called a ''block''. A new block contains information that "chains" it to the previous block thus giving the block chain its name. It is a ] of the previous block, using the ] hashing algorithm.<ref name="Antonopoulos2014" />{{rp|ch. 7}} | |||
| A new block must also contain a so-called ''proof-of-work''. The proof-of-work consists of a number called a ''difficulty target'' and a number called a ''nonce'', which is ] for "a number used only once". Miners have to find a nonce that yields a hash of the new block numerically smaller than the number provided in the difficulty target. When the new block is created and distributed to the network, every network node can easily verify the proof.<ref name="Antonopoulos2014" />{{rp|ch. 8}} On the other hand, finding the proof requires significant work since for a secure cryptographic hash there is only one method to find the requisite nonce: miners try different integer values one at a time, e.g., 1, then 2, then 3, and so on until the requisite output is obtained. The fact that the hash of the new block is smaller than the difficulty target serves as a proof that this tedious work has been done, hence the name "proof-of-work". | |||
| By changing the difficulty target number, the average time required to find a nonce can be shortened or extended (A smaller number reduces the range of accepted nonces and increases the time required.) The bitcoin system adjusts the difficulty target number every 2016 blocks so that the average time the entire network needs to find a nonce always remains about ten minutes. In this way the bitcoin protocol ensures that it will always take about ten minutes to add a new block regardless of the size of the network or the sophistication of the mining hardware it employs.<ref name="Antonopoulos2014" />{{rp|ch. 8}} For example, at the end of April 2014 miners had to try 34.4 quintillion values at average before finding the requisite nonce, while at the end of October 2014 it was 154.6 quintillion values at average. | |||
| The proof-of-work system alongside the chaining of blocks makes modifications of the block chain extremely hard as an attacker must modify all subsequent blocks in order for modifications of one block to be accepted. As new blocks are mined all the time, the difficulty of modifying a block increases as time passes and the number of subsequent blocks increases.<ref name="khanbitcoin">{{cite web | last = Ramzan | first = Zulfikar | title = Bitcoin: What is it? | url = http://www.khanacademy.org/economics-finance-domain/core-finance/money-and-banking/bitcoin/v/bitcoin-what-is-it | publisher = The Khan Academy | date = 2014 | accessdate = 5 April 2014}}</ref> | |||
| ====Environmental costs==== | |||
| The environmental costs of mining include first and foremost electricity cost. Even if all miners used energy efficient processes, the combined electricity consumption would be 1.46 terawatt-h per year, equal to the consumption of about 135,000 American homes.<ref name=ec1305>{{cite news|title=The magic of minig|url=http://www.economist.com/news/business/21638124-minting-digital-currency-has-become-big-ruthlessly-competitive-business-magic|accessdate=13 January 2015|work=The economist|date=13 January 2015}}</ref> It has been estimated that the annual environmental impact due to bitcoin mining represents approximately 0.13% of the amount of impact created by fiat and gold-based monetary systems.<ref>{{cite web|last1=McCook|first1=Hass|title=Under the Microscope: Conclusions on the Costs of Bitcoin|url=http://www.coindesk.com/microscope-conclusions-costs-bitcoin/|accessdate=15 February 2015}}</ref> | |||
| ====Mining pools==== | |||
| {{as of|2014}}, it has become common for miners to join organized ]s,<ref name=boise>{{cite web | url=http://arbiteronline.com/2014/04/03/bitcoins-likely-viable-future/ | title=Bitcoins lose viability | publisher=Boise State Student Media | work=The Arbiter | date=3 April 2014 | accessdate=14 April 2014 | author=Mills, Kelly}}</ref> which are used primarily to reduce variance.<ref>{{cite web|last1=Wang|first1=Luqin|last2=Liu|first2=Yong|title=Exploring Miner Evolution in Bitcoin Network|url=http://wan.poly.edu/pam2015/papers/23.pdf|publisher=NYU Polytechnic School of Engineering|accessdate=15 February 2015}}</ref> A pool splits the work among its members and has a much larger chance to win the reward. The reward is then split among the members creating a more steady stream of income without necessarily lowering the total expected amount of rewards for each miner when averaged over time, although a fee may be charged for the service.<ref>{{cite web|last1=Rosenfeld|first1=Meni|title=Analysis of Bitcoin Pooled Mining Reward Systems|url=http://arxiv.org/pdf/1112.4980.pdf|accessdate=14 February 2015}}</ref><ref>{{cite news|author1=Peter Svensson|title=Bitcoin faces biggest threat yet: a miner takeover|url=http://phys.org/news/2014-06-bitcoin-biggest-threat-miner-takeover.html|accessdate=8 January 2015|date=17 June 2014}}</ref> Even for those who join pools, the cost of the electricity necessary to mine may outweigh the rewards from doing so.<ref name=purdue>{{cite web | url=http://www.purdueexponent.org/features/article_46e4aefa-dc11-5c5e-972b-80b4e45a70e1.html | title=Bitcoin offers speedy currency, poses high risks | publisher=The Exponent Online | work=Purdue Exponent | date=9 April 2014 | accessdate=14 April 2014 | author=Bays, Jason}}</ref> | |||
| ===Supply=== | |||
| ] | |||
| The successful miner finding the new block is rewarded with newly created bitcoins and transaction fees.<ref name="bloombergvance111413">{{cite web | url = http://www.businessweek.com/articles/2013-11-14/2014-outlook-bitcoin-mining-chips-a-high-tech-arms-race | title = 2014 Outlook: Bitcoin Mining Chips, a High-Tech Arms Race | publisher = Businessweek | date = 14 November 2013 | author = Ashlee Vance | accessdate = 24 November 2013}}</ref> {{as of|2012|11|28}},<ref name="BlockChain.info">{{cite web | url = https://blockchain.info/block/000000000000048b95347e83192f69cf0366076336c639f9b7228e9ba171342e | title = Block #210000 | publisher = Blockchain }}</ref> the reward amounts to 25 newly created bitcoins per block added to the block chain. To claim the reward, a special transaction called a ''coinbase'' is included with the processed payments.<ref name="Antonopoulos2014" />{{rp|ch. 8}} All bitcoins in circulation can be traced back to such coinbase transactions. The ] specifies that the reward for adding a block will be halved approximately every four years. Eventually, the reward will be removed entirely when an arbitrary limit of 21 million bitcoins is reached ] 2140, and record keeping will then be rewarded by transaction fees solely.<ref name="KWY">{{cite web | url = http://qz.com/154877/by-reading-this-page-you-are-mining-bitcoins/ | title = By reading this article, you're mining bitcoins | publisher = Atlantic Media Co | work = qz.com | date = 17 December 2013 | accessdate = 17 December 2013 | author = Ritchie S. King, Sam Williams, David Yanofsky}}</ref> | |||
| ===Transaction fees=== | |||
| Paying a transaction fee is optional, but may speed up confirmation of the transaction.<ref name="txnfee">{{cite web|title=How much will the transaction fee be?|url=https://bitcoin.org/en/faq#how-much-will-the-transaction-fee-be|work=FAQ|publisher=Bitcoin Foundation|accessdate=19 March 2014}}</ref> Payers have an incentive to include such fees because doing so means their transaction will likely be added to the block chain sooner; miners can choose which transactions to process<ref name="EconOfBTC" /> and prioritize those that pay fees. Fees are based on the storage size of the transaction generated, which in turn is dependent on the number of inputs used to create the transaction. Furthermore, priority is given to older unspent inputs.<ref name="bitcoinfees">{{cite web|title=How much will the transaction fee be?|url=http://bitcoinfees.com/|publisher=Bitcoinfees.com|accessdate=30 November 2014}}</ref> | |||
| ===Wallets=== | |||
| {{see also | Digital wallet | Armory (software)}} | |||
| ] | |||
| ] | |||
| ] | |||
| A ''wallet'' stores the information necessary to transact bitcoins. While wallets are often described as a place to hold<ref>{{cite web | url = http://www.motherjones.com/politics/2013/04/what-is-bitcoin-explained | title = Bitcoin, Explained | publisher = Mother Jones | work = motherjones.com | date = 10 April 2013 | accessdate = 26 April 2014 | author = Adam Serwer and Dana Liebelson}}</ref> or store bitcoins,<ref name=3ceos /> due to the nature of the system, bitcoins are inseparable from the block chain transaction ledger. Perhaps a better way to describe a wallet is something that "stores the digital credentials for your bitcoin holdings"<ref name=3ceos>{{cite web | url = http://www.forbes.com/sites/johnvillasenor/2014/04/26/secure-bitcoin-storage-a-qa-with-three-bitcoin-company-ceos/ | title = Secure Bitcoin Storage: A Q&A With Three Bitcoin Company CEOs | publisher = Forbes | work = forbes.com | date = 26 April 2014| accessdate = 26 April 2014 | author = Villasenor, John}}</ref> and "allows you to access (and spend) them". Bitcoin uses ], in which two cryptographic keys, one public and one private, are generated.<ref name="Economist113013Pressure">{{cite news | url = http://www.economist.com/news/technology-quarterly/21590766-virtual-currency-it-mathematically-elegant-increasingly-popular-and-highly | title = Bitcoin: Bitcoin under pressure | work = The Economist | date = 30 November 2013 | accessdate = 30 November 2013}}</ref> At its most basic, a wallet is a collection of these keys. | |||
| There are several types of wallets. ''Software wallets'' connect to the network and allow spending bitcoins in addition to holding the credentials that prove ownership.<ref name="Bitcoin Clients" /> Internet services called '']s'' like ], ], or ] offer similar functionality but may be easier to use.<ref>{{cite news | title = Be Your Own Bank: Bitcoin Wallet for Apple | url = http://www.forbes.com/sites/jonmatonis/2012/04/26/be-your-own-bank-bitcoin-wallet-for-apple/ | author = Jon Matonis | date = 26 April 2012 | accessdate = 17 November 2014 | publisher = Forbes}}</ref> ''Physical wallets'' also exist and are more secure, as they store the credentials necessary to spend bitcoins offline.<ref name=3ceos/> Examples combine a novelty coin with these credentials printed on metal,<ref name="theverge">{{cite web|last=Staff|first=Verge |url=http://www.theverge.com/2013/12/13/5207256/casascius-maker-of-shiny-physical-bitcoins-shut-down-by-treasury|title=Casascius, maker of shiny physical bitcoins, shut down by Treasury Department |publisher=The Verge |date=13 December 2013|accessdate=10 January 2014}}</ref> wood, or plastic. Others are simply paper printouts. Another type of wallet called a ''hardware wallet'' keeps credentials offline while facilitating transactions.<ref>{{cite news | title = Meet Trezor, A Bitcoin Safe That Fits Into Your Pocket | url = http://www.forbes.com/sites/ericxlmu/2014/10/15/meet-trezor-a-bitcoin-safe-that-can-fit-into-your-pocket/ | author = Eric Mu | date = 15 October 2014 | accessdate = 31 October 2014 | publisher = Forbes | work = Forbes Asia}}</ref> | |||
| ====Reference implementation==== | |||
| The first wallet program, called Bitcoin-Qt, was released in 2009 by ] as ] code.<ref name="Bitcoin Clients">{{Cite thesis | url = http://publications.theseus.fi/bitstream/handle/10024/47166/Skudnov_Rostislav.pdf?sequence=1 | first = Rostislav | last = Skudnov | title = Bitcoin Clients | type = Bachelor's Thesis | year = 2012 | publisher = ] | accessdate = 16 January 2014}}</ref> It can be used as a desktop wallet for payments or as a server utility for merchants and other payment services. Bitcoin-Qt, also called Satoshi client, is sometimes referred to as the ] because it serves to define the bitcoin protocol and acts as a standard for other implementations.<ref name="Bitcoin Clients"/> As of version 0.9, Bitcoin-Qt has been renamed Bitcoin Core to avoid confusion.<ref>{{cite web|title=Bitcoin Core version 0.9.0 released|url=https://bitcoin.org/en/release/v0.9.0|website=bitcoin.org|accessdate=8 January 2015}}</ref> | |||
| ===Privacy=== | |||
| Privacy is achieved by not identifying owners of bitcoin addresses while making other transaction data public. Bitcoin users are not identified by name, but transactions can be linked to individuals and companies.<ref>{{cite web | url=http://www.technologyreview.com/news/518816/mapping-the-bitcoin-economy-could-reveal-users-identities/ | title=Mapping the Bitcoin Economy Could Reveal Users’ Identities | work=MIT Technology Review | date=5 September 2013 | accessdate=2 April 2014 | author=Simonite, Tom}}</ref> Additionally, bitcoin exchanges, where people buy and sell bitcoins for fiat money, may be required by law to collect personal information.<ref name="5facts">{{cite news | url=http://www.washingtonpost.com/blogs/the-switch/wp/2013/08/21/five-surprising-facts-about-bitcoin-2/ | title=Five surprising facts about Bitcoin | publisher=The Washington Post | work=washingtonpost.com | date=21 August 2013 | accessdate=2 April 2014 | author=Lee, Timothy}}</ref> To maintain financial privacy, a different bitcoin address for each transaction is recommended.<ref>{{cite web | url=http://www.wired.co.uk/news/archive/2013-06/06/bitcoin-retail | title=How Bitcoin lets you spy on careless companies | publisher=Conde Nast | work=wired.co.uk | date=6 June 2013 | accessdate=2 April 2014 | author=McMillan, Robert}}</ref> Transactions that spend coins from multiple inputs can reveal that the inputs may have a common owner. Users concerned about privacy can use so-called mixing services that swap coins they own for coins with different transaction histories.<ref>{{cite news | url=http://www.forbes.com/sites/jonmatonis/2013/06/05/the-politics-of-bitcoin-mixing-services/ | title=The Politics Of Bitcoin Mixing Services | publisher=Forbes | work=forbes.com | date=5 June 2013 | accessdate=2 April 2014 | author=Matonis, Jon}}</ref> It has been suggested that bitcoin payments should not be considered more private than credit card payments.<ref>{{cite web | url = http://www.hbarel.com/bitcoin-does-not-provide-anonymity | publisher = hbarel.com | title = Bitcoin does not provide anonymity | date = 3 April 2014 | author = Bar-El, Hagai | accessdate = 31 October 2014}}</ref> | |||
| ===Fungibility=== | |||
| Wallets and similar software technically handle bitcoins as equivalent, establishing the basic level of ]. Researchers have pointed out that the history of every single bitcoin is registered and publicly available in the block chain ledger, and that some users may refuse to accept bitcoins coming from controversial transactions, which would harm bitcoin's fungibility.<ref>{{cite web | first1 = Eli | last1 = Ben-Sasson | first2 = Alessandro | last2 = Chiesa | first3 = Christina | last3 = Garman | first4 = Matthew | last4 = Green | first5 = Ian | last5 = Miers | first6 = Eran | last6 = Tromer | first7 = Madars | last7 = Virza | work = 2014 IEEE Symposium on Security and Privacy | title = Zerocash: Decentralized Anonymous Payments from Bitcoin | url = http://zerocash-project.org/media/pdf/zerocash-oakland2014.pdf | date = 2014 | accessdate = 31 October 2014 | publisher = IEEE computer society}}</ref><ref>{{cite web|last1=Matonis|first1=Jon|title=Why Bitcoin Fungibility is Essential|url=http://www.coindesk.com/bitcoin-fungibility-essential/|publisher=CoinDesk|accessdate=26 February 2015|date=1 December 2013}}</ref> Projects such as ] and ] aim to address these privacy and fungibility issues.<ref>{{cite web|last1=Miers|first1=Ian|last2=Garman|first2=Christina|last3=Green|first3=Matthew|last4=Rubin|first4=Aviel|title=Zerocoin: Anonymous Distributed E-Cash from Bitcoin|url=http://isi.jhu.edu/~mgreen/ZerocoinOakland.pdf|publisher=Johns Hopkins University|accessdate=15 February 2015}}</ref><ref>{{cite web|last1=Greenberg|first1=Andy|title=‘Dark Wallet’ Is About to Make Bitcoin Money Laundering Easier Than Ever|url=http://www.wired.com/2014/04/dark-wallet/|accessdate=15 February 2015}}</ref> | |||
| ==History== | |||
| {{main|History of Bitcoin|l1=History of bitcoin}} | |||
| Bitcoin was invented by Satoshi Nakamoto,<ref group="note" name="Satoshi" /> who published his invention on 31 October 2008 in a research paper called "Bitcoin: A Peer-to-Peer Electronic Cash system".<ref name="paper" /> It was implemented as ] and released in January 2009. Bitcoin is often called the first ]<ref name="f_c" /> although prior proposals existed.<ref group="note" name="prior" /> Bitcoin is more correctly described as the first decentralized ].<ref name="primer" /><ref name="Reuters101" /> | |||
| One of the first supporters, adopters, contributor to bitcoin and receiver of the first bitcoin transaction was programmer ]. Finney downloaded the bitcoin software the day it was released, and received 10 bitcoins from Nakamoto in the world's first bitcoin transaction.<ref>{{Cite news|url = http://www.washingtonpost.com/blogs/the-switch/wp/2014/01/03/hal-finney-received-the-first-bitcoin-transaction-heres-how-he-describes-it/|title = Hal Finney received the first Bitcoin transaction. Here’s how he describes it. Share on Facebook Share on Twitter Share on LinkedIn Share via Email More Options Resize Text Print Article Comments 11|last = |first = |work = |access-date = }}</ref><ref>{{cite news|last1=Popper|first1=Nathaniel|title=Hal Finney, Cryptographer and Bitcoin Pioneer, Dies at 58|url=http://www.nytimes.com/2014/08/31/business/hal-finney-cryptographer-and-bitcoin-pioneer-dies-at-58.html?_r=1|accessdate=2 September 2014|work=NYTimes|date=30 August 2014}}</ref> | |||
| Other early supporters were Wei Dai, creator of bitcoin predecessor ''b-money'', and Nick Szabo, creator of bitcoin predecessor ''bit gold''.<ref name="WallaceWired11">{{cite news | url = http://www.wired.com/magazine/2011/11/mf_bitcoin/ | title = The Rise and Fall of Bitcoin | work = Wired | date = 23 November 2011 | accessdate = 4 November 2013 | author = Wallace, Benjamin}}</ref> | |||
| In 2010, an ] in an early bitcoin client was found that allowed large numbers of bitcoins to be created.<ref>{{cite web|author1=Johannes Henning|author2=Robin Schreiber|title=Bitcoin Cloud Security Mechanisms Seminar|url=https://www.dcl.hpi.uni-potsdam.de/teaching/cloudsec/presentations/bitcoin.pdf|website=www.dcl.hpi.uni-potsdam.de|publisher=Hasso Plattner Institute|accessdate=15 February 2015|date=9 July 2013}}</ref> The artificially created bitcoins were removed when another chain overtook the bad chain.<ref name="satoshi bug response">{{cite web | last1=Nakamoto | first1=Satoshi | url=https://bitcointalk.org/index.php?topic=823.msg9734#msg9734 | title = Re overflow bug serious | website=Bitcointalk | accessdate=1 February 2015}}</ref> | |||
| Based on bitcoin's open source code, other cryptocurrencies started to emerge in 2011.<ref name="WsjVolatile">{{cite news | last = Espinoza | first = Javier | title = Is It Time to Invest in Bitcoin? Cryptocurrencies Are Highly Volatile, but Some Say They Are Worth It | date = 22 September 2014 | url = http://online.wsj.com/articles/how-to-decipher-cryptocurrencies-1411333011 | work = Journal Reports | publisher = ] | accessdate = 3 November 2014}}</ref> | |||
| In March 2013, a technical glitch caused a fork in the block chain, with one half of the network adding blocks to one version of the chain and the other half adding to another. For six hours two bitcoin networks operated at the same time, each with its own version of the transaction history. The core developers called for a temporary halt to transactions, sparking a sharp sell-off. Normal operation was restored when the majority of the network downgraded to version 0.7 of the bitcoin software.<ref name="bug events">{{cite web | last = Lee | first = Timothy | url = http://arstechnica.com/business/2013/03/major-glitch-in-bitcoin-network-sparks-sell-off-price-temporarily-falls-23/ | title = Major glitch in Bitcoin network sparks sell-off; price temporarily falls 23% | publisher = http://arstechnica.com | date = 11 March 2013 | accessdate = 15 February 2015}}</ref> | |||
| In 2013 some mainstream websites began accepting bitcoins. ] had started in November 2012,<ref>{{cite web |url=http://en.blog.wordpress.com/2012/11/15/pay-another-way-bitcoin/ |title=Pay Another Way: Bitcoin |last=Skelton |first=Andy |date=15 November 2012 |publisher=] |accessdate=24 April 2014}}</ref> followed by ] in April 2013,<ref>{{cite web |url=http://mashable.com/2013/04/17/okcupid-bitcoin/|title=OKCupid Now Accepts Bitcoin|last=Franceschi-Bicchierai|first=Lorenzo|date=18 April 2013 |publisher=] |accessdate=24 April 2014}}</ref> ] in November 2013,<ref name="powersellersunite.com">{{cite web | url = http://www.powersellersunite.com/about45219.html | title = Atomic Mall adds Bitcoin payments for approved merchants | author = AtomicMall.com | work = powersellersunite.com | date = 17 November 2013 | accessdate = 8 April 2014}}</ref> ]<ref name=tigger/> and ] in January 2014,<ref name=overstock/> ] in June 2014,<ref>{{cite web |url=http://techcrunch.com/2014/06/11/expedia-now-accepts-bitcoin-for-your-crypto-vacations/ |title=Expedia Now Accepts Bitcoin For Your Crypto-Vacations |last=Biggs |first=John |date=11 June 2014 |publisher=] |accessdate=12 June 2014}}</ref> ] and ] in July 2014,<ref>{{cite web |first=Mike |last=Flacy |title=Dell, Newegg Start Accepting Bitcoin as Payment |publisher=Digital Trends |date=19 July 2014 |url=http://www.digitaltrends.com/web/dell-newegg-start-accepting-bitcoin-payment/#!bv9oFm |accessdate=5 August 2014}}</ref> and ] in December 2014.<ref name="msftaccepts" />{{refn | group = note | name = processors | Some of these firms use bitcoin payment processors such as ] and ] and do not handle or store bitcoins themselves.<ref>{{cite news | first1 = Gertrude | last1 = Chavez-Dreyfuss | first2 = Michael | last2 = Connor | title = Bitcoin shows staying power as online merchants chase digital sparkle | date = 28 August 2014 | publisher = Reuters | url = http://www.reuters.com/article/2014/08/28/us-usa-bitcoin-retailers-analysis-idUSKBN0GS0AG20140828| accessdate = 28 August 2014}}</ref>}} Certain ] or ] groups such as the ] accept bitcoin donations.<ref name="EFF2013">{{cite web | url=https://www.eff.org/deeplinks/2013/05/eff-will-accept-bitcoins-support-digital-liberty | title=EFF Will Accept Bitcoins to Support Digital Liberty | publisher=Electronic Frontier Foundation | date=17 May 2013 | accessdate=27 April 2014 | author=Cindy Cohn, Peter Eckersley, Rainey Reitman, and Seth Schoen}}</ref> (The organization started accepting bitcoins in January 2011,<ref>{{cite web | url = https://www.eff.org/deeplinks/2011/01/bitcoin-step-toward-censorship-resistant | title = Bitcoin - a Step Toward Censorship-Resistant Digital Currency | publisher = Electronic Frontier Foundation | date = 20 January 2011 | accessdate = 21 November 2014 | author = Rainey Reitman}}</ref> stopped accepting them in June 2011,<ref>{{cite web | url=https://www.eff.org/deeplinks/2011/06/eff-and-bitcoin | title=EFF and Bitcoin | publisher=Electronic Frontier Foundation | date=20 June 2011 | accessdate=16 April 2014 | author=Cohn, Cindy}}</ref> and began again in May 2013.<ref name="EFF2013" />) | |||
| In May 2013, the ] seized assets belonging to the ] exchange.<ref>{{cite news |last=Dillet |first=Romain |title=Feds Seize Assets From Mt. Gox's Dwolla Account, Accuse It Of Violating Money Transfer Regulations |url= http://techcrunch.com/2013/05/16/mt-gox-dwolla-account-money-seizure/ |work=TechCrunch |date=16 May 2013 |accessdate=15 May 2013}}</ref> The U.S. ] (FBI) shut down the ] website in October 2013.<ref>{{cite news |url= http://www.bloomberg.com/news/2013-10-03/fbi-snags-silk-road-boss-with-own-methods.html|title=FBI Snags Silk Road Boss With Own Methods|work=Bloomberg|location=New York|date=3 October 2013|accessdate=27 October 2013|author=Farrell, Greg}}</ref> | |||
| In October 2013, Chinese internet giant ] had allowed clients of website security services to pay with bitcoins.<ref>{{cite web | url=http://www.businessinsider.com/chinas-google-is-now-accepting-bitcoin-2013-10 | title=China's Google Is Now Accepting Bitcoin | publisher=Business Insider, Inc | work=businessinsider.com | date=15 October 2013 | accessdate=26 December 2013 | author=Kapur, Saranya}}</ref> During November 2013, the ]-based bitcoin exchange ] overtook the Japan-based Mt. Gox and the Europe-based ] to become the largest bitcoin trading exchange by trade volume.<ref>{{cite web|url=http://techcrunch.com/2013/11/18/btc-china-series-a/ |title=As Chinese Investors Pile Into Bitcoin, China's Oldest Exchange, BTC China, Raises $5M From Lightspeed |publisher=TechCrunch|date=18 November 2013|author=Natasha Lomas|accessdate=10 January 2014}}</ref> On 19 November 2013, the value of a bitcoin on the Mt. Gox exchange soared to a peak of US$900 after a United States Senate committee hearing was told by the FBI that virtual currencies are a legitimate financial service.<ref>{{cite news|url=http://www.bbc.co.uk/news/technology-24986264 |title=BBC News - 'Legitimate' Bitcoin's value soars after Senate hearing |publisher=Bbc.co.uk|date=19 November 2013|accessdate=10 January 2014}}</ref> On the same day, one bitcoin traded for over ]¥6780 (US$1,100) in China.<ref>{{cite news|url=http://www.zdnet.com/cn/china-no-plans-yet-to-legalize-use-of-bitcoins-7000023512/|title=China no plans yet to legalize use of Bitcoins|work=ZDNet|date=22 November 2013|accessdate=27 November 2013|last=Lee|first=Cyrus}}</ref> On 5 December 2013, the ] prohibited Chinese financial institutions from using bitcoins.<ref name="ccontrols">{{cite news | url = http://www.bbc.co.uk/news/technology-25428866 | title = Bitcoin sinks after China restricts yuan exchanges | publisher = BBC | work = bbc.com | date = 18 December 2013 | accessdate = 20 December 2013 | author = Kelion, Leo}}</ref> After the announcement, the value of bitcoins dropped,<ref>{{cite news | date = 6 December 2013 | url = http://www.smh.com.au/business/markets/currencies/china-bans-banks-from-bitcoin-transactions-20131206-2yugy.html | title = China bans banks from bitcoin transactions | work = ] | publisher = Reuters | accessdate = 31 October 2014}}</ref> and Baidu no longer accepted bitcoins for certain services.<ref name="bloomberg">{{cite news |url=http://www.bloomberg.com/news/2013-12-07/baidu-stops-accepting-bitcoins-after-china-ban.html|title=Baidu Stops Accepting Bitcoins After China Ban |work=Bloomberg |location=New York|date=7 December 2013|accessdate=11 December 2013}}</ref> Buying real-world goods with any virtual currency has been illegal in China since at least 2009.<ref>{{cite web|url=http://english.mofcom.gov.cn/aarticle/newsrelease/commonnews/200906/20090606364208.html |title=China bars use of virtual money for trading in real goods |publisher=English.mofcom.gov.cn |date=29 June 2009|accessdate=10 January 2014}}</ref> | |||
| The first ] was installed in October 2013 in ], British Columbia, Canada.<ref>{{cite news | url = http://www.wired.com/wiredenterprise/2013/10/bitcoin_atm_gallery/ | title = Take a tour of Robocoin, the world’s first Bitcoin ATM | first = Robert | last = McMillan | date = 29 October 2013 | work = Wired | accessdate = 31 October 2014}}</ref> | |||
| {{as of|2013}} mining had become quite competitive and was compared to an ] as ever-more-specialized technology was being utilized. The most efficient mining hardware makes use of custom designed ]s, which outperform general purpose ] and also use less power.<ref>{{cite news|url=http://www.theregister.co.uk/2014/01/17/ten_bitcoin_miners/ |title=Manic miners: Ten Bitcoin generating machines |publisher=The Register | first=Simon | last=Rockman | date=17 January 2014|accessdate=13 February 2014}}</ref> Without access to these purpose-built machines, a bitcoin miner is unlikely to earn enough to even cover the cost of the electricity used in his or her efforts.<ref name=purdue/> | |||
| With about 12 million existing bitcoins in November 2013,<ref name="raskin">{{cite news |url= http://www.bloomberg.com/news/2013-11-18/u-s-agencies-to-say-bitcoins-offer-legitimate-benefits.html |title= U.S. Agencies to Say Bitcoins Offer Legitimate Benefits |date= 18 November 2013 |accessdate= 24 November 2013 |first= Max |last= Raskin |work= Bloomberg}}</ref> the new price increased the ] for bitcoin to at least US$7.2 billion.<ref>{{cite web|author=Todd Wasserman|url=http://mashable.com/2013/11/18/bitcoin-600/ |title=Bitcoin Tops $600, Up 60x Over the Last Year |publisher=Mashable.com |date=18 November 2013|accessdate=10 January 2014}}</ref> By 23 November 2013, the total market capitalization of bitcoin exceeded US$10 billion for the first time.<ref>{{cite web | url = http://blog.panampost.com/joel-fensch/2014/01/02/bitcoin-set-to-boom-in-latin-america/ | title = Bitcoin Set to Boom in Latin America | author = Joel Fensch | publisher = Blog.panampost.com | date = 2 January 2014 | accessdate = 7 January 2014}}</ref> | |||
| In the US two men were arrested in January 2014 on charges of money-laundering using bitcoins; one was ], the head of now defunct bitcoin exchange ] and a vice chairman of the ]. Shrem allegedly allowed the other arrested party to purchase large quantities of bitcoins for use on black-market websites.<ref name=vchair/> | |||
| In early February 2014, one of the largest bitcoin exchanges, ],<ref>{{cite web | url=http://www.bbc.com/news/technology-26420932 | title=MtGox gives bankruptcy details | publisher=BBC | work=bbc.com | date=4 March 2014 | accessdate=13 March 2014}}</ref> suspended withdrawals citing technical issues.<ref>{{cite web|url=http://techcrunch.com/2014/02/10/whats-going-on-with-bitcoin-exchange-mt-gox/ |title=What’s Going On With Bitcoin Exchange Mt. Gox? |first=John |last=Biggs |publisher=TechCrunch |date=10 February 2014|accessdate=26 February 2014}}</ref> By the end of the month, Mt. Gox had filed for bankruptcy protection in Japan amid reports that 744,000 bitcoins had been stolen.<ref name="GoxBankrupt">{{cite web | url=http://www.bbc.com/news/technology-25233230 | title=MtGox bitcoin exchange files for bankruptcy | publisher=BBC | work=bbc.com | date=28 February 2014 | accessdate=18 April 2014}}</ref> Originally a site for trading ] cards,<ref>{{cite web | url=http://blogs.wsj.com/five-things/2014/02/25/5-things-about-mt-goxs-crisis/ | title=Five Things About Mt. Gox's Crisis | publisher=Dow Jones and Company | work=The Wall Street Journal | date=25 Feb 2014 | accessdate=18 April 2014 | author=Vigna, Paul}}</ref> Mt. Gox had once been the dominant bitcoin exchange but its popularity had waned as users experienced difficulties withdrawing funds.<ref>{{cite web | url=http://www.csmonitor.com/USA/USA-Update/2014/0228/MtGox-bankruptcy-Bitcoin-insiders-saw-problems-with-the-exchange-for-months | title=MtGox bankruptcy: Bitcoin insiders saw problems with the exchange for months | publisher=The Christian Science Monitor | work=csmonitor.com | date=28 February 2014 | accessdate=18 April 2014 | author=Swan, Noelle}}</ref> | |||
| On June 18, 2014, it was announced that bitcoin ] ] would become the new sponsor of ] under a two-year deal, renamed the Bitcoin St. Petersburg Bowl. Bitcoin was to be accepted for ticket and concession sales at the game as part of the sponsorship, and the sponsorship itself was also paid for using bitcoin.<ref name=wsj-bitpay>{{cite web|title=BitPay to Sponsor St. Petersburg Bowl in First Major Bitcoin Sports Deal|url=http://online.wsj.com/articles/bitpay-to-sponsor-st-petersburg-bowl-in-first-major-bitcoin-sports-deal-1403098202|accessdate=18 June 2014}}</ref> | |||
| Less than one year after the collapse of Mt. Gox, ] announced that the exchange would be taken offline while they investigate a hack which resulted in about 19,000 bitcoins (equivalent to roughly US$5 million at that time) being stolen from their hot wallet.<ref>{{cite web | url=http://www.reuters.com/article/2015/01/06/us-bitstamp-cybersecurity-idUSKBN0KF0UH20150106 | title=Bitcoin exchange Bitstamp suspends service after security breach | publisher=Reuters | work=reuters.com | date=6 January 2015 | accessdate=24 January 2015 | author=Srivastava, Shivam}}</ref> The exchange remained offline for several days amid speculation that customers had lost their funds. Bitstamp resumed trading on January 9 after increasing security measures and ensuring customers that their account balances would not be impacted.<ref>{{cite web | url=http://www.reuters.com/article/2015/01/09/bitstamp-cybersecurity-idUSL6N0UO1DC20150109 | title=Bitcoin exchange Bitstamp says to resume trading on Friday | publisher=Reuters | work=reuters.com | date=9 January 2015 | accessdate=24 January 2015 | author=Novak, Marja}}</ref> | |||
| The bitcoin exchange service ] launched the first regulated bitcoin exchange in 25 US states on January 26th, 2015. At the time of the announcement, CEO Brian Armstrong stated that Coinbase intends to expand to thirty countries by the end of 2015.<ref>{{Cite web|url = http://techcrunch.com/2015/01/25/coinbase-us-bitcoin-exchange/|title = Coinbase Is Opening The First Regulated Bitcoin Exchange In The U.S.|date = January 25, 2015|accessdate = February 21, 2015|website = TechCrunch|publisher = TechCrunch|last = Russel|first = Jon}}</ref> A spokesperson for ], the superintendent of the state’s Department of Financial Services, stated that Coinbase is operating without a license in the state of New York. Lawsky is responsible for the development of the so-called 'BitLicense', which companies need to acquire in order to legally operate in New York.<ref>{{Cite web|url = http://dealbook.nytimes.com/2015/01/28/coinbase-a-bitcoin-exchange-is-operating-without-licenses-so-far/|title = Coinbase, a Bitcoin Exchange, Is Operating Without Licenses So Far|date = January 28, 2015|accessdate = February 21, 2015|website = New York Times|publisher = New York Times|last = Popper|first = Nathaniel}}</ref> | |||
| ==Economics== | |||
| ===Classification=== | |||
| According to the director of the Institute for Money, Technology and Financial Inclusion at the ] there is "an unsettled debate about whether bitcoin is a currency".<ref name="currencydispute">{{cite web | url=http://www.usatoday.com/story/money/business/2014/04/25/ozy-bitcoin-africa-currency/8148853/ | title=How bitcoin is moving money in Africa | publisher=USA Today | work=usatoday.com | date=25 April 2014 | accessdate=25 May 2014 | author=Joyner, April}}</ref> Bitcoin is commonly referred to with terms like: digital currency,<ref name="primer" />{{rp|1}} digital cash,<ref>{{cite web | url = http://www.nytimes.com/2013/08/01/technology/personaltech/virtual-currency-gains-ground-in-actual-world.html | title = Virtual Currency Gains Ground in Actual World | publisher = The New York Times | date = 31 July 2013 | accessdate = 6 May 2014 | author = Murphy, Kate | quote = "A type of digital cash, bitcoins were invented in 2009 and can be sent directly to anyone, anywhere in the world."}}</ref> virtual currency,<ref name="satoshi unit" /> electronic currency,<ref name="capitalization" /> or cryptocurrency.<ref name="currencydispute"/> Its inventor, Satoshi Nakamoto, used the term electronic cash.<ref name="paper" /> Bitcoins have 3 useful qualities in a currency, according to the Economist in 1/2015: they are "hard to earn, limited in supply and easy to verify".<ref name=ec815>{{cite news|title=The magic of mining|url=http://www.economist.com/news/business/21638124-minting-digital-currency-has-become-big-ruthlessly-competitive-business-magic|accessdate=13 January 2015|work=The Economist|date=8 January 2015}}</ref> | |||
| Economists define ] as a ], a ], and a ] and agree that bitcoin has some way to go to meet all these criteria.<ref name=econ315/> It does best as a medium of exchange.{{refn | group = note | About 1,000 ] businesses were willing to accept payment in bitcoins as of November 2013<ref name="bitcoin_brick_and_mortar_merchants">{{cite web |author=Joon Ian Wong |url=http://www.coindesk.com/surge-in-real-locations-accepting-bitcoin/ |title=CoinMap: Bitcoin-Accepting Merchants Increased 81% in November |publisher=CoinDesk |date=28 November 2013 |accessdate=1 December 2013}}</ref> in addition to more than 16,000 merchants who signed up with Bitcoin payment processor Coinbase<ref>{{cite web |url=http://techcrunch.com/2013/12/12/coinbase-raises-25m-from-andreessen-horowitz-to-build-its-bitcoin-wallet-and-merchant-services/ |title=Coinbase Raises $25M Led By Andreessen Horowitz To Build Its Bitcoin Wallet And Merchant Services |publisher=TechCrunch |author=Alex Williams |date=12 December 2013| accessdate=13 December 2013}}</ref> and 20,000 merchants signed to BitPay.<ref>{{cite web |url=http://www.coindesk.com/get-paid-bitcoin-bitpays-payroll-api/ |title=Get Paid in Bitcoin With BitPay’s New Payroll API |first=Jon |last=Southurst |date=14 January 2014|accessdate=17 January 2014|publisher=Coindesk}}</ref>}} The bitcoin market currently suffers from ], limiting the ability of bitcoin to act as a stable store of value, and retailers accepting bitcoin use other currencies as their principal unit of account.<ref name=econ315>{{cite news|title=Free Exchange. Money from nothing. Chronic deflation may keep Bitcoin from displacing its rivals.|url=http://www.economist.com/news/finance-and-economics/21599053-chronic-deflation-may-keep-bitcoin-displacing-its-fiat-rivals-money|accessdate=25 March 2014|newspaper=The Economist|date=15 March 2014}}</ref> | |||
| Journalists and academics also dispute what to call bitcoin. Some media outlets do make a distinction between "real" money and bitcoins,<ref>{{cite web | url=http://www.bloombergview.com/articles/2013-11-29/building-better-bitcoins | title=Building Better Bitcoins | publisher=Bloomberg LP | work=Bloomberg View | date=29 Nov 2013 | accessdate=25 May 2014 | author=Carter, Stephen L. | quote=A principal knock on bitcoins has been the claim that they are inherently insecure. The principal defense has been that they are as secure as"real" currency. }}</ref> while other call bitcoin real money.<ref>{{cite news|last1=Satran|first1=Richard|title=How Did Bitcoin Become a Real Currency?|url=http://money.usnews.com/money/personal-finance/articles/2013/05/15/how-did-bitcoin-become-a-real-currency|accessdate=22 December 2014|work=Forbes|date=15 May 2013}}</ref> The Wall Street Journal declared it a commodity in December 2013.<ref>{{cite news | url = http://blogs.wsj.com/venturecapital/2013/12/12/with-25m-coinbase-to-push-bitcoin-from-commodity-to-currency/ | title = Coinbase to Push Bitcoin From Commodity to Currency, With $25M From Investors | publisher = The Wall Street Journal | date = 12 December 2013 | accessdate = 27 January 2014 | author = Chapman, Lizette}}</ref> A Forbes journalist referred to it as digital collectible.<ref>{{cite news | url = http://www.forbes.com/sites/louiswoodhill/2013/04/11/bitcoins-are-digital-collectibles-not-real-money/ | title = Bitcoins Are Digital Collectibles, Not Real Money | publisher = Forbes | date = 4 November 2013 | accessdate = 27 January 2014 | author = Woodhill, Louis}}</ref> Two ] computer scientists proposed the term "money-like informational commodity".<ref name="mlic">{{cite web | url = http://arxiv.org/pdf/1402.4778.pdf|author=Bergstra, J. A., Weijland, P. | date = February 2014 | title = Bitcoin: a money-like informational commodity | publisher = Cornell University | journal = arXiv.org | issue = preprint arXiv:1402.4778. | pages = 26}}</ref> | |||
| The ] has stated that bitcoin "is fundamentally not a currency but an investment target".<ref name="bloomberg.com">{{cite web|url=http://www.bloomberg.com/news/2014-04-10/china-s-bitcoin-exchanges-say-banks-will-close-their-accounts.html|title=China’s Bitcoin Exchanges Say Banks Will Close Their Accounts|quote=The central bank will keep watching risks from Bitcoin, which is fundamentally not a currency but an investment target, Sheng Songcheng, head of the monetary authority’s statistics department, told reporters in Beijing on Jan. 15 2014.|newspaper= Bloomberg|date= 10 April 2014|accessdate=11 April 2014}}</ref> | |||
| ===Buying and selling=== | |||
| Bitcoins can be bought and sold both on- and offline. Participants in online ] offer bitcoin ]. Using an online exchange to obtain bitcoins entails some risk, and, according to a study published in April 2013, 45% of exchanges fail and take client bitcoins with them.<ref name="wired45">{{cite web |url= http://www.wired.co.uk/news/archive/2013-04/26/large-bitcoin-exchanges-attacks |title=Study: 45 percent of Bitcoin exchanges end up closing |date=26 April 2013|work=Wired |accessdate=28 April 2013|author=Steadman, Ian |deadurl=no}}</ref> Exchanges have since implemented measures to provide proof of reserves in an effort to convey transparency to users.<ref name="proofofreserves">{{cite web | url= http://www.coindesk.com/krakens-audit-proves-holds-100-bitcoins-reserve/ | title=Kraken Bitcoin Exchange Passes 'Proof of Reserves' Cryptographic Audit | author = Nermin Hajdarbegovic | date=24 March 2014 | accessdate=13 January 2015 | deadurl=no}}</ref> Offline, bitcoins may be purchased directly from an individual<ref>{{cite web|author=Lauren Orsini |url=http://www.businessinsider.com/heres-what-happened-when-i-bought-bitcoin-in-person-2013-10 |title=Here's What Happened When I Bought Bitcoin In Person |publisher=Business Insider |date=23 October 2013|accessdate=4 February 2014}}</ref> or at a ].<ref>{{cite news | url = http://www.usatoday.com/story/money/business/2014/02/19/bitcoin-atm-austin/5623387/ | work = USA Today | date = 20 February 2014 | first = Rick | last = Jervis | title = Bitcoin ATMs come to USA | accessdate = 31 October 2014}}</ref> | |||
| ===Price and volatility=== | |||
| ]. Right vertical axis: volatility. Horizontal axis: date ranging from 2010-08-17 to 2014-12-31.]] | |||
| To improve access to price information and increase transparency, on 30 April 2014 ] announced plans to list prices from bitcoin companies Kraken and ] on its 320,000 subscription financial data terminals.<ref name=wsjprice>{{cite news|title=Bloomberg to List Bitcoin Prices, Offering Key Stamp of Approval|url=http://online.wsj.com/news/articles/SB10001424052702304893404579532471795644350?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702304893404579532471795644350.html|accessdate=1 May 2014|newspaper=WSJ|date=30 April 2014|author=Michael J. Casey}}</ref> | |||
| According to ], {{as of | 2014 | lc = y}}, bitcoin has ] seven times greater than gold, eight times greater than the ], and eighteen times greater than the U.S. dollar.<ref>{{cite web | url = http://management.bu.edu/files/2014/10/Wlliams-World-Bank-10-21-2014.pdf | title = Virtual Currencies – Bitcoin Risk | publisher = Boston University | work = World Bank Conference Washington DC | date = 21 October 2014 | accessdate = 11 November 2014 | author = Williams, Mark T.}}</ref> | |||
| Attempting to explain the high volatility, a group of Japanese scholars stated that there is no stabilization mechanism.<ref>{{cite web|author1=Mitsuru Iwamura|author2=Tsutomu Matsu moto|author3=Kenji Saito|author4=Yukinobu Kitamu ra|title=Can We Stabilize the Price of Cryptocurrency?: Understanding the Design of B itcoin and its Potential Competitiveness with the Central Bank Money|url=http://connection.mit.edu/Iwamura-Kitamura201407.pdf|website=mit.edu|accessdate=8 January 2015|date=24 July 2014|quote="First instability stems from an inflexible supply curve of Bitcoin against a change in the marginal cost of mining. This inflexibility amplifies the Bitcoin price volatility and the miners’ revenue/reward absorbs a price change effect fully. No price stabilization mechanism works."}}</ref> The Bitcoin Foundation contends that high volatility is due to insufficient ],<ref>{{cite news|last=Wilkes |first=Tommy |url=http://www.reuters.com/article/2013/04/11/us-bitcoin-currency-idUSBRE93A0P020130411 |title=Backer defends virtual currency Bitcoin after big fall |publisher=Reuters |date= 11 April 2013|accessdate=7 January 2014}}</ref> while a Forbes journalist claims that it is related to the uncertainty of its long-term ],<ref>{{cite news |last=Lee |first=Timothy B. |title=Bitcoin Doesn't Have a Deflation Problem |url=http://www.forbes.com/sites/timothylee/2013/04/11/bitcoin-doesnt-have-a-deflation-problem/ |work=Forbes |location= |date=4 November 2013 |accessdate=27 January 2014}}</ref> and the high volatility of a startup currency makes sense, "because people are still experimenting with the currency to figure out how useful it is."<ref name="VolatilityFatal" /> | |||
| There are uses where volatility does not matter, such as online gambling, tipping, and international remittances.<ref name="VolatilityFatal">{{cite news | last = Lee | first = Timothy B. | url = http://www.forbes.com/sites/timothylee/2013/04/12/bitcoins-volatility-is-a-disadvantage-but-not-a-fatal-one/ | title = Bitcoin's Volatility Is A Disadvantage, But Not A Fatal One | publisher = Forbes | date = 12 April 2013 | accessdate = 15 November 2014}}</ref> As of 2014, pro-bitcoin venture capitalists argued that the greatly increased trading volume that planned ] exchanges were hoped to bring would decrease price volatility.<ref name=wsjprice /> | |||
| The price of bitcoins has gone through various cycles of appreciation and depreciation referred to by some as ] and busts.<ref>{{cite news|url=http://www.forbes.com/sites/jessecolombo/2013/12/19/bitcoin-may-be-following-this-classic-bubble-stages-chart/|title=Bitcoin May Be Following This Classic Bubble Stages Chart |publisher=Forbes |date=19 December 2013|accessdate=7 January 2014|first=Jesse |last=Colombo}}</ref><ref>{{cite web | url=http://www.theguardian.com/commentisfree/2013/apr/03/bitcoin-currency-bubble-crash-not-rocking-financial-markets | title=Confused about Bitcoin? It's 'the Harlem Shake of currency' | publisher=The Guardian | work=theguardian.com | date=3 April 2013 | accessdate=2 May 2014 | author=Moore, Heidi}}</ref> In 2011, the value of one bitcoin rapidly rose from about US$0.30 to US$32 before returning to US$2.<ref name="Leebubble">{{cite news|url=http://www.washingtonpost.com/blogs/the-switch/wp/2013/11/05/when-will-the-people-who-called-bitcoin-a-bubble-admit-they-were-wrong|title=When will the people who called Bitcoin a bubble admit they were wrong | publisher=The Washington Post|date=5 November 2013|accessdate=10 January 2014|author=Lee, Timothy}}</ref> In the latter half of 2012 and during the ], the bitcoin price began to rise,<ref>{{cite web|last=Liu |first=Alec |url=http://motherboard.vice.com/blog/cyprus-spain-when-governments-take-your-money-bitcoin-looks-really-good |title=When Governments Take Your Money, Bitcoin Looks Really Good |publisher=Motherboard|date=19 March 2013 |accessdate=7 January 2014}}</ref> reaching a high of US$266 on 10 April 2013, before crashing to around US$50.<ref>{{cite news|url=http://www.forbes.com/sites/timothylee/2013/04/11/an-illustrated-history-of-bitcoin-crashes/ |title=An Illustrated History Of Bitcoin Crashes |publisher=Forbes |date= 11 April 2013|accessdate=7 January 2014|first=Timothy B. |last=Lee}}</ref> On November 29, 2013, the cost of one bitcoin rose to the all-time peak of US$1,242.<ref>{{cite web | url = http://money.cnn.com/2013/11/29/investing/bitcoin-gold/index.html | title = Bitcoin worth almost as much as gold | author = Ben Rooney | date = 29 November 2013 | publisher = CNN | accessdate = 31 October 2014}}</ref> In 2014 the price fell sharply, and as of April remained depressed at little more than half 2013 prices. {{As of|2014|August}} it was under US$600.<ref>{{cite web | url = http://www.nasdaq.com/article/bitcoin-prices-remain-below-600-amid-bearish-chart-signals-cm376685 | title = Bitcoin prices remain below $600 amid bearish chart signals | publisher = nasdaq.com | date = August 2014 | accessdate = 31 October 2014}}</ref> In January 2015, noting that the bitcoin price had dropped to its lowest level since spring 2013 - around US$224 - the ] suggested that "ith no signs of a rally in the offing, the industry is bracing for the effects of a prolonged decline in prices. In particular, bitcoin mining companies, which are essential to the currency’s underlying technology, are flashing warning signs."<ref>{{cite news|last1=Ember|first1=Sydney|title=As Bitcoin’s Price Slides, Signs of a Squeeze|url=http://dealbook.nytimes.com/2015/01/13/as-bitcoins-price-slides-signs-of-a-squeeze/?_r=0|accessdate=16 January 2015|publisher=]|date=13 January 2015}}</ref> Also in January 2015, ] reported that ] drug dealers were "freaking out" as they lost profits through being unable to convert bitcoin revenue to cash quickly enough as the price declined - and that there was a danger that dealers selling reserves to stay in business might force the bitcoin price down further.<ref>{{cite news|last1=Price|first1=Rob|title=Deep Web Drug Dealers Are Freaking Out About The Bitcoin Crash|url=http://uk.businessinsider.com/bitcoin-crash-drug-dealers-2015-1?r=US|accessdate=18 January 2015|publisher=Business Insider|date=16 January 2015}}</ref> | |||
| ===Speculative bubble dispute=== | |||
| Bitcoin has been labelled a '']'' by many including former ] ]<ref name=Kearns>{{cite news|url=http://www.bloomberg.com/news/2013-12-04/greenspan-says-bitcoin-a-bubble-without-intrinsic-currency-value.html|title=Greenspan Says Bitcoin a Bubble Without Intrinsic Currency Value|publisher=Bloomberg LP|work=bloomberg.com|date=4 December 2013|accessdate=23 December 2013|author=Kearns, Jeff}}</ref> and economist ].<ref name="BMH">{{cite news | url = http://nationalinterest.org/commentary/the-bitcoin-bubble-bad-hypothesis-8353 | title = The Bitcoin Bubble and a Bad Hypothesis | last = Quiggin | first = John | work = The National Interest | date = 16 April 2013 | deadurl = no | accessdate = 31 October 2014}}</ref> Nobel Laureate ] said that bitcoin "exhibited many of the characteristics of a speculative bubble".<ref>{{cite news | last = Shiller | first = Robert | title = In Search of a Stable Electronic Currency | url = http://www.nytimes.com/2014/03/02/business/in-search-of-a-stable-electronic-currency.html?_r=0 | publisher = New York Times | date = 1 March 2014 | accessdate = 31 October 2014 | deadurl = no}}</ref> Two lead software developers of bitcoin, ]<ref>{{cite web | title = Bitcoin's History of Crushing Speculators | author = Dan Caplinger | publisher = ] | date = 4 April 2013 | accessdate = 7 January 2014 | url = http://www.fool.com/retirement/general/2013/04/04/bitcoins-history-of-crushing-speculators.aspx}}</ref> and Mike Hearn,<ref>{{cite news|url=http://www.bbc.co.uk/news/magazine-25332746|title=Bitcoin: Price v hype|publisher=BBC|work=bbc.com| date=13 December 2013|accessdate=23 December 2013 | author=Barford, Vanessa}}</ref> have warned that bubbles may occur. David Andolfatto, a Vice President at the ], stated, "Is bitcoin a bubble? Yes, if bubble is defined as a liquidity premium." According to Andolfatto, the price of bitcoin "consists purely of a bubble," but he concedes that many assets have prices that are greater than their intrinsic value.<ref name="Andolfatto2014-03" />{{rp|21}} Journalist Matthew Boesler rejects the speculative bubble label and sees bitcoin's quick rise in price as nothing more than normal economic forces at work.<ref>{{cite web | last = Boesler | first = Matthew | title = ANALYST: The Rise Of Bitcoin Teaches A Tremendous Lesson About Global Economics | url = http://www.businessinsider.com/global-economics-lesson-from-bitcoin-2013-3 | publisher = Business Insider | date = 7 March 2013 | accessdate = 31 October 2014 | deadurl = no}}</ref> The Washington Post pointed out that the observed cycles of appreciation and depreciation don't correspond to the definition of speculative bubble.<ref name="Leebubble" /> | |||
| ===Ponzi scheme dispute=== | |||
| Various journalists,<ref name="Posner, Eric">{{cite web | url = http://www.slate.com/articles/news_and_politics/view_from_chicago/2013/04/bitcoin_is_a_ponzi_scheme_the_internet_currency_will_collapse.html | title = Bitcoin is a Ponzi scheme—the Internet’s favorite currency will collapse. | work = Slate | date = 11 April 2013 | accessdate = 1 April 2014 | author = Posner, Eric | authorlink = Eric Posner}}</ref> U.S. economist ],<ref>{{cite web | url = http://www.cnbc.com/id/101479123 | title = Roubini launches stinging attack on bitcoin | publisher = ] | date = 10 March 2014 | accessdate = 2 July 2014 | author = Clinch, Matt}}</ref> and the head of the Estonian central bank<ref name="Ott Ummelas and Milda Seputyte">{{cite news | url = http://www.bloomberg.com/news/2014-01-30/bitcoin-ponzi-scheme-worry-sparks-estonia-central-bank-caution.html | title = Bitcoin ‘Ponzi’ Concern Sparks Warning From Estonia Bank | publisher = Bloomberg | work = bloomberg.com | date = 31 Jan 2014 | accessdate = 1 April 2014 | author = Ott Ummelas and Milda Seputyte}}</ref> have voiced concerns that bitcoin may be a ]. A 2012 report by the ] had stated, "it easy to assess whether or not the bitcoin system actually works like a ] or ]."<ref name="ECB" />{{rp|27}} A 2014 report by the ] concluded that "contrary to a widely-held opinion, bitcoin is not a deliberate Ponzi".<ref>{{cite web | title = Ponzis: The Science and Mystique of a Class of Financial Frauds | url = http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2014/07/16/000112742_20140716115536/Rendered/PDF/WPS6967.pdf | author = Kaushik Basu | publisher = ] | date = July 2014 | accessdate = 30 October 2014}}</ref>{{rp|7}} In the opinion of ], a law professor at the University of Chicago "A real Ponzi scheme takes fraud; bitcoin, by contrast, seems more like a collective delusion."<ref name="Posner, Eric"/> | |||
| U.S. economist ], former senior adviser to the U.S. Treasury and the International Monetary Fund, has stated that bitcoin is "a Ponzi game".<ref name="Lubin, Gus">{{cite web | url = http://www.businessinsider.com/roubini-bitcoin-is-a-ponzi-scheme-and-a-conduit-for-criminal-activities-2014-3 | title = ROUBINI: 'Bitcoin Is A Ponzi Game And A Conduit For Criminal Activities' | date = 9 March 2014 | accessdate = 1 April 2014 | author = Lubin, Gus | publisher = Business Insider}}</ref> In February 2014 an asset-manager and columnist for The New York Post called bitcoin a Ponzi scheme opining, "Welcome to 21st-century Ponzi scheme: Bitcoin".<ref>{{cite news | author = Jonathon M. Trugman | url = http://nypost.com/2014/02/15/welcome-to-21st-century-ponzi-scheme-bitcoin/ | title = Welcome to 21st-century Ponzi scheme: Bitcoin | date = 15 February 2014 | accessdate = 13 December 2014 | publisher = NYP Holdings, inc. | work = The New York Post}}</ref> The head of the ], Mihkel Nommela, stated, "virtual currency schemes are an innovation that deserves some caution, given the lack of ... evidence that this isn’t just a Ponzi scheme."<ref name="Ott Ummelas and Milda Seputyte"/> | |||
| Others have expressed the opinion that bitcoin is not a Ponzi scheme. The Huffington Post asked, "is bitcoin a Ponzi scheme, yes or no?" answering the question with a definitive "no!".<ref>{{cite news | publisher = TheHuffingtonPost.com, Inc. | work = Huffington Post | title = Is Bitcoin a Ponzi Scheme | url = http://www.huffingtonpost.com/jim-gibson/is-bitcoin-a-ponzi-scheme_b_5177769.html | author = Jim Gibson | date = 21 April 2014 | accessdate = 21 November 2014}}</ref> ] magazine stated, "bitcoin is clearly not a Ponzi scheme".<ref>{{cite news | publisher = ] | work = PC World | title = Bitcoin: The virtual currency built on math, hope and hype | author = Jeremy Kirk | date = 18 December 2013 | accessdate = 21 November 2014 | url = http://www.pcworld.com/article/2081560/bitcoin-the-virtual-currency-built-on-math-hope-and-hype.html}}</ref> Economist ] claims that "there are several key differences between a Ponzi scheme and bitcoin."<ref name=LSP>{{cite news | url = http://libertarianstandard.com/2013/12/01/ponzi-logic-debunking-gary-north/ | title = Ponzi Logic: Debunking Gary North | last = Tucker | first = Jeffrey | date = 1 December 2013 | work = The Libertarian Standard | accessdate = 12 Feb 2014}}</ref> A 2014 report by ] states, "the question is repeatedly raised whether bitcoin can be deemed an impermissible pyramid scheme... since in the case of bitcoin the typical promises of profits are lacking, it cannot be assumed that bitcoin is a pyramid scheme."<ref>{{cite web | publisher = ] | title = Federal Council report on virtual currencies in response to the Schwaab (13.3687) and Weibel (13.4070) postulates | work = ] | date = 25 June 2014 | accessdate = 28 November 2014 | url = http://www.news.admin.ch/NSBSubscriber/message/attachments/35355.pdf}}</ref>{{rp|21}} | |||
| ===Value forecasts=== | |||
| Financial journalists and analysts, economists, and investors have attempted to predict the possible future value of bitcoin. In April 2013, economist ] stated, "bitcoins will attain their true value of zero sooner or later, but it is impossible to say when".<ref name="BMH" /> A similar forecast was made in November 2014 by economist ].<ref>{{cite news | author = Kevin Dowd | title = Bitcoin is bust: Why investors should abandon the doomed cryptocurrency | url = http://www.cityam.com/1415215686/bitcoin-bust-why-investors-should-abandon-doomed-cryptocurrency | date = 5 November 2014 | accessdate = 6 November 2014 | work = Opinion | publisher = ]}}</ref> In November 2014, David Yermack, Professor of finance at NYU Stern School of Business forecast that in November 2015 bitcoin may be all but worthless.<ref>{{cite web | url = http://www.cnn.com/2014/11/13/tech/bitcoin-peak-price-future | title = Bitcoin: One year on from peak price, what does the future hold? | accessdate = 15 November 2014 | publisher = CNN | work = Future Finance | date = 14 November 2014 | author = Eoghan Macguire}}</ref> In December 2013, finance professor ] forecast a bitcoin would be worth less than ten U.S. dollars by July 2014.<ref>{{cite web | url=http://www.businessinsider.com/williams-bitcoin-meltdown-10-2013-12 | title=FINANCE PROFESSOR: Bitcoin Will Crash To $10 By Mid-2014 | publisher=Business Insider | work=businessinsider.com | date=17 December 2013|accessdate=26 February 2014|author=Williams, Mark T.}}</ref> In the indicated period bitcoin has exchanged as low as $344 (April 2014) and during July 2014 the bitcoin low has been $609.<ref group="note" name="blockchain" /><ref>{{cite news | work = Huffington Post | publisher = TheHuffingtonPost.com, Inc. | author = Steve H. Hanke | title = Bitcoin Charts, Finally | date = 18 September 2014 | accessdate = 21 November 2014 | url = http://www.huffingtonpost.com/steve-h-hanke/bitcoin-charts_b_5838132.html}}</ref> In December 2014 professor Williams said: "The probability of success is low, but if it does hit, the reward will be very large."<ref>{{cite news | title = How Mt. Gox Debacle Won Over a Bitcoin Convert | url = http://online.wsj.com/articles/how-mt-gox-debacle-won-over-a-bitcoin-convert-1417471759 | author = Robin Sidel | date = 1 December 2014 | accessdate = 4 December 2014 | publisher = The Wall Street Journal | work = Markets}}</ref> In May 2013, ] FX and Rate Strategist David Woo forecast a maximum fair value per bitcoin of $1,300.<ref name="BoAFA">{{cite news | last = Sharf | first = Samantha | title = Bitcoin Gets Valued: Bank Of America Puts A Price Target On The Virtual Tender | url = http://www.forbes.com/sites/samanthasharf/2013/12/05/bitcoin-gets-valued-bank-of-america-puts-a-price-on-the-virtual-tender/ | work = Forbes | location = New York | date = 12 May 2013 | accessdate = 31 October 2014}}</ref> Bitcoin investor ] stated in December 2013 that the "mall bull case scenario for bitcoin is... 40,000 USD a coin".<ref>{{cite news | last = Schroeder | first = Stan | title = Cameron Winklevoss: Bitcoin Might Hit $40,000 Per Coin | url = http://mashable.com/2013/12/16/cameron-winklevoss-bitcoin/ | work = Mashable | location = New York | date = 1 December 2013 | accessdate = 31 October 2014}}</ref> | |||
| ===Obituaries=== | |||
| The "death" of bitcoin has been proclaimed numerous times.<ref name="cnbcworries" /> Forbes declared bitcoin dead in June 2011,<ref>{{cite news|last1=Worstall|first1=Tim|title=So, That's the End of Bitcoin Then|url=http://www.forbes.com/sites/timworstall/2011/06/20/so-thats-the-end-of-bitcoin-then/|accessdate=18 January 2015|work=Forbes|date=20 June 2011}}</ref> followed by Gizmodo Australia in August 2011.<ref>{{cite news|last1=Covert|first1=Adrian|title=The Bitcoin Is Dying. Whatever.|url=http://www.gizmodo.com.au/2011/08/the-bitcoin-is-dying-whatever/|accessdate=18 January 2015|work=Gizmodo Australia|publisher=Allure Media|date=9 August 2011}}</ref> Wired wrote it had expired in December 2012,<ref>{{cite news|last1=Calore|first1=Michael|title=Wired, Tired, Expired for 2012: From Stellar to Suck|url=http://www.wired.com/2012/12/wired-tired-expired/#slideid-331231|accessdate=18 January 2015|work=Wired|publisher=Condé Nast|date=24 December 2012}}</ref> Ouishare Magazine declared, "game over, bitcoin" in May 2013,<ref>{{cite news|last1=Jourdan|first1=Stanislas|title=Game over, bitcoin. Where is the next human-based digital currency?|url=http://magazine.ouishare.net/2013/05/bitcoin-human-based-digital-currency/|accessdate=18 January 2015|work=Ouishare Magazine|date=21 May 2013}}</ref> and New York Magazine stated bitcoin was on its path to grave in June 2013.<ref>{{cite news|last1=Roose|first1=Kevin|title=Bitcoin Sees the Grim Reaper|url=http://nymag.com/daily/intelligencer/2013/06/bitcoin-sees-the-grim-reaper.html|accessdate=18 January 2015|work=New York Magazine|publisher=New York Media LLC|date=20 June 2013}}</ref> Reuters published an "obituary" for bitcoin in January 2014<ref>{{cite news|last1=Hadas|first1=Edward|title=An early obituary for bitcoin|url=http://blogs.reuters.com/edward-hadas/2014/01/08/an-early-obituary-for-bitcoin/|accessdate=18 January 2015|publisher=Reuters|date=8 January 2014}}</ref> Street Insider declared bitcoin dead in February 2014,<ref>{{cite news|title=Bitcoin is Dead|url=http://www.streetinsider.com/Analyst+Comments/Bitcoin+is+Dead/9219338.html|accessdate=18 January 2015|publisher=Streetinsider.com|date=26 February 2014}}</ref> as did the Weekly Standard in March 2014,<ref>{{cite news|last1=Last|first1=Jonathan V.|title=Bitcoin Is Dead|url=http://www.weeklystandard.com/blogs/bitcoin-dead_784187.html|accessdate=18 January 2015|work=The Weekly Standard|publisher=The Weekly Standard LLC|date=5 March 2014}}</ref> followed by Salon in March 2014,<ref>{{cite news|last1=Leonard|first1=Andrew|title=Sorry, libertarians: Your dream of a Bitcoin paradise is officially dead and gone|url=http://www.salon.com/2014/03/07/sorry_libertarians_your_dream_of_a_bitcoin_paradise_is_officially_dead_and_gone/|accessdate=18 January 2015|work=Salon|publisher=Salon Media Group Inc.|date=7 March 2014}}</ref> and Vice News in March 2014,<ref>{{cite news|last1=Owen|first1=Taylor|title=Bitcoin Is Dead — Long Live Bitcoin|url=https://news.vice.com/article/bitcoin-is-dead-long-live-bitcoin|accessdate=18 January 2015|work=Vice News|date=24 March 2014}}</ref> then the Financial Times in September 2014, and 9 others.<ref>{{cite news|last1=Kaminska|first1=Izabella|title=Cult Markets: When the bubble bursts|url=http://ftalphaville.ft.com/2014/09/19/1976132/cult-markets-when-the-bubble-bursts|work=Financial Times|date=19 September 2014}}</ref> In January 2015, USA Today termed bitcoin "to be headed to the ash heap",<ref>{{cite news|last1=Krantz|first1=Matt|title=Bitcoin is headed to the 'ash heap'|url=http://americasmarkets.usatoday.com/2015/01/16/bitcoin-is-headed-to-the-ash-heap/|accessdate=18 January 2015|work=USA Today|date=16 January 2015}}</ref> and The Telegraph declared it was "the end of bitcoin experiment".<ref>{{cite news|last1=Sparkes|first1=Matthew|title=Bitcoin might be dead. It doesn't matter.|url=http://www.telegraph.co.uk/technology/news/11347205/Bitcoin-might-be-dead.-It-doesnt-matter..html|accessdate=18 January 2015|work=The Telegraph|date=15 January 2015}}</ref> One journalist has recorded 29 such "obituaries" as of early 2015.<ref name="cnbcworries">{{cite news|author1=Everett Rosenfeld|title=Bitcoin keeps falling, and worries keep rising|url=http://www.cnbc.com/id/102337172#.|accessdate=24 January 2015|publisher=CNBC|date=14 Jan 2015}}</ref> | |||
| ===Reception=== | |||
| Some economists have responded positively to bitcoin, but many have not. François R. Velde, Senior Economist at the ] described it as "an elegant solution to the problem of creating a digital currency".<ref>{{cite web | url = https://www.chicagofed.org/digital_assets/publications/chicago_fed_letter/2013/cfldecember2013_317.pdf | title = Bitcoin: A primer | date = December 2013 | accessdate = December 2013 | first = François | last = Velde | work = Chicago Fed letter | issue = 317 | pages = 4 | publisher = ]}}</ref> According to ] "in the estimation of many leading economists, bitcoin is a fatally flawed idea shaped by people who don’t really understand how money works".<ref>{{Cite web|url = http://www.wired.com/2014/02/rise-fall-rise-patrick-byrne/|title = Meet Patrick Byrne: Bitcoin Messiah, CEO of Overstock, Scourge of Wall Street|date = 10 February 2014|accessdate = 16 July 2014|website = Wired|publisher = Wired|last = Metz|first = Cade}}</ref> ] and ] have found fault with bitcoin questioning why it should act as a reasonably stable ] or whether there is a floor on its value.<ref>{{cite news |author= Paul Krugman |date= 28 December 2013 |title= Bitcoin Is Evil |url= http://krugman.blogs.nytimes.com/2013/12/28/bitcoin-is-evil/ |publisher= ] |accessdate= 28 December 2013 }}</ref> Economist ] has criticized bitcoin as "the final refutation of the ]".<ref name="BMH"/> | |||
| David Andolfatto, Vice President at the ], 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.<ref name="Andolfatto2014-03">{{cite web | url=http://www.stlouisfed.org/dialogue-with-the-fed/assets/Bitcoin-3-31-14.pdf | title=Bitcoin and Beyond: The Possibilities and Pitfalls of Virtual Currencies | publisher=Federal Reserve Bank of St. Louis | work=Dialogue with the Fed | date=31 March 2014 | accessdate=16 April 2014 | author=Andolfatto, David}}</ref>{{rp|33}}<ref>{{cite web | url=http://www.businessinsider.com/interview-with-david-andolfatto-2014-4 | title=St. Louis Fed Economist: Bitcoin Could Be A Good Threat To Central Banks | publisher=Business Insider | work=businessinsider.com | date=6 April 2014 | accessdate=16 April 2014 | author=Wile, Rob}}</ref><ref>{{cite web | url=http://andolfatto.blogspot.com/2013/12/in-gold-we-trust.html | title=In gold we trust? | publisher=David Andolfatto | work=MacroMania | date=24 December 2013 | accessdate=17 April 2014 | quote=Also, note that I am not against gold or bitcoin (or whatever) as a currency. In fact, I think that the threat that they pose as alternate currency can serve as a useful check on a central bank. |author=Andolfatto, David}}</ref> | |||
| ] activist ] has criticized the lack of anonymity and called for reformed development.<ref>{{cite news|url=http://www.telegraph.co.uk/technology/news/10488201/Software-activist-calls-for-truly-anonymous-Bitcoins-to-protect-democracy.html |title=Software activist calls for 'truly anonymous' Bitcoins to 'protect democracy' |publisher=Telegraph |date= 2 December 2013|accessdate=27 December 2013|location=London |first=Matthew |last=Sparkes}}</ref> ] President ] calls bitcoin a "great place to put assets" but claims it will not be a currency until price volatility is reduced.<ref>{{cite web |url= http://news.cnet.com/8301-1023_3-57615080-93/paypal-president-david-marcus-bitcoin-is-good-nfc-is-bad/ |title= PayPal president David Marcus: Bitcoin is good, NFC is bad |date= 10 December 2013 |accessdate= 10 December 2013 |first= Stephen |last= Shankland |work= CNET}}</ref> ], in relation to the cost of moving money from place to place in an interview for Bloomberg L.P. stated: "Bitcoin is exciting because it shows how cheap it can be."<ref>{{cite web | date = 2 October 2014 | accessdate = 12 November 2014 | title = Bill Gates: Bitcoin Is Exciting Because It's Cheap | url = http://www.bloomberg.com/video/bill-gates-bitcoin-is-exciting-because-it-s-cheap-dQ4qHV4~TLSnUIuIRfZBVA.html | publisher = Bloomberg L.P.}}</ref> | |||
| Similarly, ], a bitcoin sceptic understands "the value of the technology as a payment platform" and his Euro Pacific Precious Metals fund partnered with ] in May 2014, because "a wire transfer of fiat funds can be slow and expensive for the customer".<ref name=CCN514>{{cite news|author1=Kyle Torpey|title=Peter Schiff Embraces Bitcoin at Euro Pacific Precious Metals|url=https://www.cryptocoinsnews.com/peter-schiff-embraces-bitcoin-euro-pacific-precious-metals/|accessdate=12 December 2014|work=CryptoCoinsNews|date=21 May 2014}}</ref> | |||
| ], Professor of Finance and economics at Durham University has a bearish outlook on bitcoin as a currency. At the ]’s 2014 Annual Conference with the topic 'Alternatives to Central Banking: Toward Free-Market Money'<ref name=cato>{{cite web|title=Alternatives to Central Banking: Toward Free-Market Money|url=http://www.cato.org/events/32nd-annual-monetary-conference|publisher=Cato Institute|accessdate=13 December 2014|date=6 November 2014}}</ref> he said "bitcoin’s current incentive structure leading to an inevitable collapse, mostly due to the centralization of mining".<ref name=inside>{{cite news|author1=Kyle Torpey|title=CATO Monetary Conference: Economist Tells World to Sell Their Bitcoins|url=http://insidebitcoins.com/news/cato-monetary-conference-economist-tells-world-to-sell-their-bitcoins/26638|accessdate=13 December 2014|work=Inside Bitcoins|publisher=MecklerMedia Corporation|date=21 November 2014}}</ref> | |||
| ===Acceptance by merchants=== | |||
| ] in the ] as of 2013]] | |||
| In 2015, the number of merchants accepting bitcoin exceeded 100,000.<ref name=100tmerchants>{{cite web|last1=Cuthbertson|first1=Anthony|title=Bitcoin now accepted by 100,000 merchants worldwide|url=http://www.ibtimes.co.uk/bitcoin-now-accepted-by-100000-merchants-worldwide-1486613|website=International Business Times|publisher=IBTimes Co., Ltd.}}</ref> {{as of|2014|December}} established firms that accept payments in bitcoin include ],<ref name="powersellersunite.com"/> ],<ref>{{cite web|url=http://finance.yahoo.com/news/clearly-canadian-joins-bitcoin-community-110000013.html|title=Clearly Canadian Joins Bitcoin Community|work=finance.yahoo.com|date=23 December 2013|accessdate=10 February 2014|publisher=]}}</ref> ],<ref name=Dell>{{cite web | url = http://dealbook.nytimes.com/2014/07/18/dell-begins-accepting-bitcoin/ | title = Dell Begins Accepting Bitcoin | author = Sydney Ember | work = New York Times | date = 18 July 2014 | accessdate = 18 July 2014}}</ref> ],<ref>{{cite web | url=http://www.wsj.com/articles/dish-network-to-accept-bitcoin-payments-1401363621 | title=Dish Network to Accept Bitcoin Payments | publisher=Dow Jones & Company | work=The Wall Street Journal | date=May 29, 2014 | accessdate=15 February 2015 | author=CASEY, MICHAEL}}</ref> ],<ref>{{cite news|author1=Mat 'Inferiorego' Elfring|title=Dynamite Digital Adds Bitcoin Payment Option and Offers Discount Bundle|url=http://www.comicvine.com/articles/dynamite-digital-adds-bitcoin-payment-option-and-o/1100-149863/|accessdate=27 December 2014|publisher=CBS Interactive|date=17 September 2014}}</ref> ],<ref>{{cite web | url=http://blogs.wsj.com/moneybeat/2014/06/11/expedia-starts-accepting-bitcoin-for-hotel-bookings/ | title = Expedia Starts Accepting Bitcoin for Hotel Bookings | author = Paul Vigna | work = Money Beat | publisher = The Wall Street Journal | date = 11 June 2014 | accessdate = 27 July 2014}}</ref> ],<ref name="msftaccepts">{{cite news | author = Tom Warren | url = http://www.theverge.com/2014/12/11/7375771/microsoft-supports-bitcoin-payments | title = Microsoft now accepts Bitcoin to buy Xbox games and Windows apps | accessdate = 11 December 2014 | date = 11 December 2014 | publisher = Vox Media | work = The Verge}}</ref> ],<ref>{{cite web|url=http://www.newegg.com/bitcoin|title=Newegg accepts bitcoins|work=newegg.com|date=1 July 2014|accessdate=3 July 2014}}</ref> ],<ref>{{cite web |url= http://www.telegraph.co.uk/technology/news/10558191/Ten-places-where-you-can-spend-your-bitcoins-in-the-UK.html |title= Ten places where you can spend your bitcoins in the UK |date= 10 January 2014|accessdate= 10 September 2013|first= Matthew|last= Sparkes|work= The Telegraph}}</ref> ],<ref name=overstock>{{cite web | url=http://blogs.marketwatch.com/thetell/2014/01/09/bitcoin-now-accepted-on-overstock-com-through-vc-backed-coinbase/ | title=Bitcoin now accepted on Overstock.com through VC-backed Coinbase|publisher=Wall Street Journal | work=marketwatch.com | date =9 January 2014|accessdate=10 February 2014|author=Vaishampayan, Saumya}}</ref> the ],<ref>{{cite news|url=http://www.bloomberg.com/news/2014-01-16/how-many-bitcoins-for-a-courtside-seat-.html|title=How Many Bitcoins for a Courtside Seat?|publisher=Bloomberg LP|work=bloomberg.com|date=16 Jan 2014|accessdate=20 January 2014|author=Davidson, Kavitha}}</ref> ],<ref name=tigger>{{cite web|url=http://www.tomshardware.com/news/tigerdirect-bitcoin-bitpay-payments,25859.html|title=TigerDirect is Now Accepting Bitcoin As Payment|publisher=Tom's hardware|date=26 January 2014| accessdate=28 August 2014|author=Jane McEntegart}}</ref> ],<ref>{{cite web | url=http://dealbook.nytimes.com/2014/12/16/time-inc-begins-accepting-bitcoin-payments/?_r=1 | title=Time Inc. begins accepting bitcoin payments | publisher=The New York Times |work=Dealbook | date=16 December 2014 | accessdate=9 January 2015 | author=Ember, Sydney}}</ref> ],<ref>{{cite web |url= http://www.theguardian.com/technology/2013/nov/22/virgin-galactic-bitcoin-space-flights-payment |title= Virgin Galactic to accept Bitcoin for space flights |date= 22 November 2013|accessdate= 24 November 2013|first= Amanda|last= Holpuch |work= The Guardian}}</ref> and ].<ref>{{cite news|url=http://www.bloomberg.com/news/2014-01-05/bitcoin-tops-1-000-again-on-adoption-by-zynga-amid-wider-usage.html|title=Bitcoin Tops $1,000 Again as Zynga Accepts Virtual Money | publisher=Bloomberg LP | work=bloomberg.com | date=6 Jan 2014|accessdate=20 January 2014|author=Kharif, Olga}}</ref><ref group="note" name="processors" /> Due to the fact that ]s are impossible, retailers usually offer in-store credit as the only option when returning items purchased with bitcoins.<ref>{{cite journal | url=http://www.bostonfed.org/economic/current-policy-perspectives/2014/cpp1404.pdf | title=Bitcoin as Money? | author=Stephanie Lo and J. Christina Wang | journal=Current Policy Perspectives (Federal Reserve Bank of Boston) |date=September 2014 | volume=14 | issue=1 | pages=6}}</ref> | |||
| As of September 2014 ] allows North American merchants using its system the ability to receive payment in bitcoins.<ref>{{cite web | url = https://www.paypal-community.com/t5/PayPal-Forward/PayPal-and-Virtual-Currency/ba-p/828230 | author = Scott Ellison | title = PayPal and Virtual Currency | date = 23 September 2014 | accessdate = 31 October 2014 | publisher = PayPal}}</ref> | |||
| Organizations accepting donations in bitcoin include: ],<ref>{{cite web | url = http://greenpeaceblogs.org/2014/09/22/greenpeace-now-accepting-bitcoin-donations/ | title = Greenpeace now accepting bitcoin donations | author = Cassady Sharp | date = 22 September 2014 | accessdate = 31 October 2014 | publisher = Greenpeace}}</ref> ],<ref>{{cite news|author1=Emil Protalinski|title=Mozilla’s 2013 annual report: Revenue up just 1% to $314M, and again 90% came from Google|url=http://venturebeat.com/2014/11/21/mozilla-releases-annual-report-for-2013-revenue-up-just-1-to-314m-and-again-90-came-from-google/|accessdate=8 January 2015|date=21 November 2014}}</ref> and ].<ref>{{cite web | url = http://blog.wikimedia.org/2014/07/30/wikimedia-foundation-now-accepts-bitcoin/ | title = Wikimedia Foundation Now Accepts Bitcoin | publisher = Wikimedia | author = Lisa Gruwell | date = 30 July 2014 | accessdate = 30 October 2014}}</ref> Some U.S. political candidates, including New York City Democratic Congressional candidate ] have said they would accept campaign donations in bitcoin.<ref>{{cite news|author1=Jaime Fuller|title=Bring the popcorn — here’s our guide to the hottest primaries of the summer|url=http://www.washingtonpost.com/blogs/the-fix/wp/2014/06/16/bring-the-popcorn-heres-our-guide-to-the-hottest-primaries-of-the-summer/|accessdate=8 January 2015|publisher=Washington Post|date=16 June 2014}}</ref> In late 2013 the ] became the first university in the world to accept bitcoins.<ref>{{cite news|url= http://blogs.wsj.com/moneybeat/2013/11/22/the-university-of-bitcoin-rises-in-cyprus/ |title= The University of Bitcoin Rises in Cyprus|date= 22 November 2013|accessdate= 22 November 2013|first= Paul|last= Vigna|work= The Wall Street Journal}}</ref> | |||
| ====Mainstream use of bitcoin==== | |||
| Fewer than 5,000 bitcoins per day (worth roughly $1.2 million on 18 February 2015) are being used for retail transactions, according to estimates by Tim Swanson, head of business development at Melotic, a Hong Kong-based cryptocurrency technology company. After a fourfold growth in 2013, retail volume in 2014 has seen only a little, if any, increase.<ref name=MIT Technology Review>{{cite news|last=Orcutt|first=Mike|title=Is Bitcoin Stalling?|url=http://www.technologyreview.com/news/535221/is-bitcoin-stalling/|accessdate=20 Feb 2015|newspaper=MIT Technology Review|date=18 February 2015}}</ref> | |||
| ===Financial institutions=== | |||
| Bitcoin companies have had difficulty opening traditional bank accounts because lenders have been leery of bitcoin's links to illicit activity.<ref>{{cite news|author1=Robin Sidel|title=Banks Mostly Avoid Providing Bitcoin Services|url=http://www.wsj.com/articles/SB10001424052702304202204579252850121034702|accessdate=27 December 2014|publisher=Wallstreet Journal|date=22 December 2013}}</ref> According to ], a co-founder of ], "banks are scared to deal with bitcoin companies, even if they really want to".<ref name=scaredbankers>{{cite web | url=http://www.bloomberg.com/news/2013-12-05/bitcoin-skepticism-by-bankers-from-china-to-u-s-hinders-growth.html | title=Bankers Balking at Bitcoin in U.S. as Real-World Obstacles Mount | publisher=Bloomberg | work=bloomberg.com | date=5 December 2013 | accessdate=16 April 2014 | author=Dougherty, Carter}}</ref> In 2014, the ] closed accounts of businesses with ties to bitcoin, and ] refused to serve a hedge fund with links to bitcoin.<ref>For , see National Australia Bank, see {{cite web | url=http://www.theguardian.com/world/2014/apr/10/bitcoin-dumped-by-national-australia-bank-as-too-risky | title=Bitcoin firms dumped by National Australia Bank as 'too risky' | publisher=The Guardian | work=Australian Associated Press | date=10 April 2014 | accessdate=23 February 2015}} | |||
| For HSBC, see {{cite web | url=http://www.bbc.com/news/world-europe-jersey-30261976 | title=HSBC severs links with firm behind Bitcoin fund | publisher=BBC | work=bbc.com | date=1 December 2014 | accessdate=9 January 2015 | author=Weir, Mike}}</ref> | |||
| One financial institution has been bullish on bitcoin. In a 2013 report, Bank of America Merrill Lynch stated that "we believe bitcoin can become a major means of payment for e-commerce and may emerge as a serious competitor to traditional money-transfer providers."<ref name=ForbesDec>{{cite news|last=Hill|first=Kashmir|title=Bitcoin Valued At $1300 By Bank of America Analysts|url=http://www.forbes.com/sites/kashmirhill/2013/12/05/bank-of-america-analysts-say-bitcoins-value-is-1300/|accessdate=23 March 2014|newspaper=Forbes.com|date=5 December 2013}}</ref> In June 2014, the first bank that converts deposits in currencies instantly to bitcoin without any fees was opened in Boston.<ref>{{cite news|title=Bitcoin: is Circle the world's first crypto-currency bank?|url=http://www.theweek.co.uk/world-news/bitcoin/56138/bitcoin-passes-1000-mark-will-it-take-over-world|accessdate=13 June 2014|work=The week.co.uk|date=16 May 2014}}</ref> | |||
| ===As investment=== | |||
| Some Argentinians have bought bitcoins to protect their savings against high inflation or the possibility that governments could confiscate savings accounts.<ref name="5facts" /> During the ], bitcoin purchases in ] rose due to fears that savings accounts would be confiscated or taxed.<ref name="BloombergCyprus">{{cite news | last = Salyer | first = Kirsten | title = Fleeing the Euro for Bitcoins | url = http://www.bloomberg.com/news/2013-03-20/fleeing-the-euro-for-bitcoins-.html | publisher = Bloomberg L.P.| date = 20 March 2013 | accessdate = 31 October 2014 | deadurl = no}}</ref> | |||
| Other methods of investment are bitcoin funds. The first regulated bitcoin fund was established in Jersey in July 2014 and approved by the Jersey Financial Services Commission.<ref name="BitcoinJersey">{{cite news|title=Jersey approve Bitcoin fund launch on island|url=http://www.bbc.com/news/world-europe-jersey-28247796|date=10 July 2014|accessdate=10 July 2014|publisher=BBC news}}</ref> Also, c. 2012 an attempt was made by the ] (who in April 2013 claimed they owned nearly 1% of all bitcoins in existence<ref>{{cite web | title = Never Mind Facebook; Winklevoss Twins Rule in Digital Money | author = Nathaniel Popper and Peter Lattman | url = http://dealbook.nytimes.com/2013/04/11/as-big-investors-emerge-bitcoin-gets-ready-for-its-close-up/ | publisher = ] | date = 11 April 2013 | accessdate = 31 October 2014}}</ref>) to establish a bitcoin ].<ref name=winkles>{{cite news | url=http://blogs.wsj.com/moneybeat/2013/07/02/beware-the-risks-of-the-bitcoin-winklevii-outline-the-downside/ | title=Beware the Risks of the Bitcoin: Winklevii Outline the Downside | publisher=] | work=Moneybeat | date=2 July 2013 | accessdate=21 October 2013 | author=Grocer, Stephen}}</ref> As of early 2015, they have announced plans to launch a New York based bitcoin exchange named Gemini. <ref>{{cite web | url=http://dealbook.nytimes.com/2015/01/22/winklevoss-twins-aim-to-take-bitcoin-mainstream-with-a-regulated-exchange/?_r=0 | title=Winklevoss Twins aim to take Bitcoin Mainstream | publisher=The New York Times | work=Dealbook blog | date=23 Jan 2015 | accessdate=15 February 2015 | author=Popper, N. and Ember, S.}}</ref> | |||
| In 2013 and 2014, the ]<ref name="ebawarn">{{cite web|url=http://www.eba.europa.eu/documents/10180/16136/EBA+Warning+on+Virtual+Currencies.pdf|archiveurl=http://www.webcitation.org/6MCBOsSXG|archivedate=28 December 2013|title=Warning to consumers on virtual currencies|publisher=European Banking Authority |date=12 December 2013| accessdate=23 December 2013}}</ref> and the ] (FINRA), a United States ],<ref name="finrawarn">{{cite news|url=http://www.reuters.com/article/2014/03/11/us-bitcoin-finra-idUSBREA2A1OJ20140311 |title= Beware Bitcoin: U.S. brokerage regulator.|author=Jonathan Stempel|date=11 March 2014|accessdate=14 March 2014|publisher=reuters.com}}</ref> warned that investing in bitcoins carries significant risks. Such risks were highlighted in 2014 when Bloomberg named bitcoin as one of its worst investments of the year,<ref name=worst/> although Forbes named bitcoin the best investment of 2013.<ref>{{Cite news|url = http://www.forbes.com/sites/kashmirhill/2013/12/26/how-you-should-have-spent-100-in-2013-hint-bitcoin/|title = How You Should Have Spent $100 In 2013 (Hint: Bitcoin)|last = Hill|first = Kashmir|date = |work = |access-date = 16 Feb 2015}}</ref> Bloomberg selected the Russian ruble as the worst currency investment of 2014 but also mentioned bitcoin as the "one currency that did worse in 2014, depending on whether you think virtual currencies are real money."<ref name=worst>{{cite web | url=http://www.bloomberg.com/news/2014-12-22/the-best-and-worst-investments-of-2014.html | title=The Best and Worst Investments of 2014 | publisher=Bloomberg LP | work=bloomberg.com | date=Dec 23, 2014 | accessdate=9 January 2015 | author=Steverman, Ben}}</ref> | |||
| ===Venture capital=== | |||
| ]ists, such as ]'s ], which invested {{currency|3|USD}} million in ], do not purchase bitcoins themselves, instead funding bitcoin infrastructure like companies that provide payment systems to merchants, exchanges, wallet services, etc.<ref name="mtr20130612">{{cite news | url = http://www.technologyreview.com/news/515391/bitcoin-millionaires-become-investing-angels/ | title = Bitcoin Millionaires Become Investing Angels | work = Computing News | publisher = ] | date = 12 June 2013 | accessdate = 13 June 2013 | author = Simonite, Tom}}</ref> In 2012, an incubator for bitcoin-focused start-ups was founded by Adam Draper, with financing help from his father, venture capitalist ], one of the largest bitcoin holders after winning an auction of 30,000 bitcoins,<ref name=wsj1214>{{cite news|author1=Robin Sidel|title=Ten-hut! Bitcoin Recruits Snap To|url=http://www.wsj.com/news/articles/SB21659981523255993497704580305120918936264?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB21659981523255993497704580305120918936264.html|accessdate=9 December 2014|work=Wall Street Journal|publisher=Dow Jones & Company|date=1 December 2014}}</ref> at the time called 'mystery buyer'.<ref name=guard714/> The company's goal is to fund 100 bitcoin businesses within 2–3 years with $10,000 to $20,000 for a 6% stake.<ref name=wsj1214>{{cite news|author1=Robin Sidel|title=Ten-hut! Bitcoin Recruits Snap To|url=http://www.wsj.com/news/articles/SB21659981523255993497704580305120918936264?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB21659981523255993497704580305120918936264.html|accessdate=9 December 2014|work=Wall Street Journal|publisher=Dow Jones & Company|date=1 December 2014}}</ref> Investors also invest in bitcoin mining.<ref>{{cite news| url=http://www.redherring.com/finance/coinseed-raises-7-5m-invests-5m-in-bitcoin-mining-hardware-investment-round-up/| title=CoinSeed raises $7.5m, invests $5m in Bitcoin mining hardware – Investment Round Up|work=Red Herring|date=24 January 2014| accessdate=9 March 2014}}</ref> | |||
| ===Political economy=== | |||
| Bitcoin appeals to tech-savvy ]s, because it so far exists outside the institutional banking system and the control of governments.<ref name=nation>{{cite news|url=http://www.thenation.com/article/179620/bitcoin-future-money?page=full| title=Bitcoin the Future of Money?|author=Doug Henwood|date=19 May 2014|publisher=The Nation.com|accessdate=12 September 2014}}</ref> However, researchers looking to uncover the reasons for interest in bitcoin did not find evidence that this was linked to libertarianism.<ref name=uok>{{cite journal | url=http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2518603 | title=Characteristics of Bitcoin Users: An Analysis of Google Search Data | author=Matthew Graham Wilson and Aaron Yelowitz | journal=Social Science Research Network |date=November 2014 | volume=Working Papers Series}}</ref> | |||
| Bitcoin's appeal reaches from ], "who perceive the state and banking sector as representing the same elite interests, recognising in it the potential for collective ] governance of currency"<ref>{{cite web | url = http://www.e-ir.info/2014/06/01/visions-of-a-techno-leviathan-the-politics-of-the-bitcoin-blockchain/ | title = Visions of a Techno-Leviathan: The Politics of the Bitcoin Blockchain | author = Brett Scott | date = 1 June 2014 | publisher = E-International Relations | accessdate = 31 October 2014}}</ref> and socialists proposing their "own states, complete with currencies",<ref>{{cite web | url = http://internationalsocialistnetwork.org/index.php/ideas-and-arguments/301-mistress-magpie-a-left-defence-of-bitcoin | title = A left defence of Bitcoin | publisher = International Socialist Network | date = December 2013 | author = Margaret Corvid | accessdate = 31 October 2014}}</ref> to right wing critics suspicious of ], at a time when activities within the regulated banking system were responsible for the severity of the ],<ref>{{cite web | url = http://ssrn.com/abstract=2218812 | author = Melanie L. Fein | title = The Shadow Banking Charade | date = 15 February 2013 | accessdate = 31 October 2014}}</ref> "because governments are not fully living up to the responsibility that comes with state-sponsored money".<ref>{{cite news | url = http://www.breakingviews.com/edward-hadas-bitcoin-is-a-step-back-not-forward/21121998.article | title = Right-wing dreams | author = Edward Hadas | date = 27 November 2013 | publisher = Thomson Reuters | accessdate = 31 October 2014}}</ref> | |||
| Bitcoin has been described as "remov the imbalance between the big boys of finance and the disenfranchised little man, potentially allowing early adopters to negotiate favourable rates on exchanges and transfers – something that only the very biggest firms have traditionally enjoyed".<ref>{{cite news|last1=Hamill|first1=Jasper|title=Native American Activist Wants To Swap The Dollar For Bitcoin|url=http://www.forbes.com/sites/jasperhamill/2013/12/19/native-american-activist-wants-to-swap-the-dollar-for-bitcoin/|accessdate=1 October 2014|work=Forbes| date=19 December 2013}}</ref> Two WSJ journalists describe bitcoin in their book as "about freeing people from the tyranny of centralised trust".<ref>{{cite news|author1=Staff|title=Much more than digital cash|url=http://www.economist.com/news/business-books-quarterly/21638093-rise-and-fall-crypto-currency-good-news-authors-least-much|accessdate=13 January 2015|work=The Economist|publisher=The Economist Newspapaer Ltd|date=10 January 2015}}</ref> | |||
| ==Legal status and regulation== | |||
| {{main|Legality of Bitcoin by country|l1=Legality of bitcoin by country}} | |||
| Various government agencies, departments, and courts have treated bitcoin differently. A few governments have moved to regulate bitcoin and similar payment systems. According to the ], traditional financial sector regulation is not applicable because bitcoin does not involve traditional financial actors.<ref name=ECB>{{cite book|title=Virtual Currency Schemes|date=October 2012|publisher=European Central Bank|location=Frankfurt am Main|isbn=978-92-899-0862-7|url=http://www.ecb.europa.eu/pub/pdf/other/virtualcurrencyschemes201210en.pdf|format=PDF|author=European Central Bank|accessdate=5 March 2014}}</ref>{{rp|5}} Others in the EU have stated, however, that existing rules can be extended to include bitcoin and bitcoin companies.<ref>{{cite conference | url=http://www.europarl.europa.eu/RegData/bibliotheque/briefing/2014/140793/LDM_BRI(2014)140793_REV1_EN.pdf | title=Bitcoin: Market, economics and regulation | publisher=Members' Research Service | accessdate=18 February 2015 | author=Szczepański, Marcin | booktitle=European Parliamentary Research Service |date=November 2014 | conference = | pages=7}}</ref> | |||
| In April 2013, Steven Strauss, a Harvard public policy professor, suggested that governments could outlaw bitcoin,<ref>{{cite news|url=http://www.huffingtonpost.com/steven-strauss/bitcoin_b_3081812.html|title=Nine Trust-Based Problems With Bitcoin | work=The Huffington Post|date=14 April 2013|accessdate=20 October 2013 | last=Strauss | first=Steven}}</ref> and this possibility was mentioned again by a prospective bitcoin investment vehicle in a July, 2013, report to a regulator.<ref name=winkles/> However, the vast majority of nations have not done so as of 2014. It is illegal in: Bangladesh,<ref name=bangla>{{cite web | url=http://www.telegraph.co.uk/finance/currency/11097208/Why-Bangladesh-will-jail-Bitcoin-traders.html | title=Why Bangladesh will jail Bitcoin traders | publisher=The Telegraph | work=telegraph.co.uk | date=15 Sep 2014 | accessdate=23 February 2015 | author=AFP}}</ref> Bolivia,<ref name=bol>{{cite web | url=http://www.ibtimes.co.uk/cryptocurrency-round-bolivian-bitcoin-ban-ios-apps-dogecoin-mcdonalds-1453453 | title=Cryptocurrency Round-Up: Bolivian Bitcoin Ban, iOS Apps & Dogecoin at McDonald's | publisher=International Business Times | work=ibtimes.co.uk | date=20 June 2014 | accessdate=23 February 2015 | author=Cuthbertson, Anthony}}</ref> Ecuador,<ref name="ecuador">{{cite web | url=http://www.ibtimes.co.uk/ecuador-reveals-national-digital-currency-plans-following-bitcoin-ban-1463397 | title=Ecuador Reveals National Digital Currency Plans Following Bitcoin Ban | publisher=International Business Times | work=ibtimes.co.uk | date=1 September 2014 | accessdate=23 February 2015 | author=Cuthbertson, Anthony}}</ref> Iceland,<ref name=EUPARANNEX/>{{failed verification|date=February 2015}} Indonesia,<ref>{{cite web | url=https://sg.news.yahoo.com/bank-indonesia-declares-bitcoin-illegal-currency-143458870.html | title=Bank Indonesia declares Bitcoin as illegal currency | publisher=Yahoo! News Singapore | work=e27 | date=10 February 2014 | accessdate=25 February 2015 | author=Chandra, Meisia}}</ref>{{failed verification|date=February 2015}} Kyrgyzstan,<ref name=kyr>{{cite web | url=http://www.nbkr.kg/searchout.jsp?item=31&material=50718&lang=ENG | title=Warning of the National Bank of the Kyrgyz Republic on the spread and use of the “virtual currency”, in particular, bitcoins (bitcoin) | publisher=National Bank of the Kyrgyz Republic | work=nbkr.kg | date=18 July 2014 | accessdate=23 February 2015}}</ref>{{failed verification|date=February 2015}} Russia,<ref name=EUPARANNEX/> Thailand,<ref>{{cite web | url=http://www.loc.gov/law/help/bitcoin-survey/#thailand| title=Regulation of Bitcoin in Selected Jurisdictions: Thailand| publisher=The Law Library of Congress, Global Legal Research Center | work=loc.gov | date=2014 | accessdate=25 February 2015}}</ref>{{failed verification|date=February 2015}} and Vietnam.<ref name=viet>{{cite web | url=http://news.yahoo.com/vietnam-says-bitcoin-transactions-illegal-043314375.html | title=Vietnam says bitcoin transactions are illegal | publisher=Yahoo! News | work=AP | date=28 February 2014 | accessdate=23 February 2015}}</ref> | |||
| ===Australia=== | |||
| Australia classifies bitcoin as property and an asset for capital gains purposes, however capital gains or losses arising from personal use of bitcoins is disregarded providing the cost of the bitcoins was less than $10,000.<ref>{{cite news|last1=Han|first1=Esher|title=Australian Tax Office decides bitcoins are assets, not currency|url=http://www.smh.com.au/technology/technology-news/australian-tax-office-decides-bitcoins-are-assets-not-currency-20140820-1063gq.html}}</ref> | |||
| ===China=== | |||
| While private parties can hold and trade bitcoins in China, regulation prohibits financial firms like banks from doing the same.<ref name=EUPARANNEX>{{cite conference | url=http://www.europarl.europa.eu/RegData/bibliotheque/briefing/2014/140793/LDM_BRI(2014)140793_REV1_EN.pdf | title=Bitcoin: Market, economics and regulation | publisher=Members' Research Service | accessdate=18 February 2015 | author=Szczepański, Marcin | booktitle=European Parliamentary Research Service |date=November 2014 | conference=Annex B: Bitcoin regulation or plans therefor in selected countries | pages=9}}</ref> On 5 December 2013, ] made its first step in regulating bitcoin by prohibiting financial institutions from handling bitcoin transactions.<ref name="Bloomberd">{{cite web|url=http://www.bloomberg.com/news/2013-12-05/china-s-pboc-bans-financial-companies-from-bitcoin-transactions.html |title=China Bans Financial Companies From Bitcoin Transactions |publisher=Bloomberg |date=5 December 2013 |accessdate=16 December 2013}}</ref> In a statement on the central bank’s website the ] said financial institutions and payment companies cannot give pricing in, buy and sell bitcoin or insure bitcoin-linked products. A December 2013 statement from BTC China suggested payment processors had voluntarily withdrawn their services.<ref>{{cite web|url=http://allthingsd.com/20131219/china-bitcoin-exchange-ceo-were-not-giving-up-yet/|title=China Bitcoin Exchange CEO: We’re Not Giving Up Yet |date=19 December 2013 |work=allthingsd.com|accessdate=19 December 2013}}</ref> On 1 April 2014 China Central Bank ordered commercial banks and payment companies to close bitcoin trading accounts in two weeks.<ref name=wsj4-2014>{{cite news|author1=Chao Deng|author2=Lingling Wei|title=China Cracks Down on Bitcoin|url=http://online.wsj.com/articles/SB10001424052702304157204579475233879506454|accessdate=8 November 2014|work=WSJ.com|publisher=Dow Jones & Company|date=1 April 2014}}</ref> Trading bitcoins by individuals is legal in China.<ref name="Bloomberd"/> | |||
| ===European Union=== | |||
| The European Central Bank classifies bitcoin as a convertible decentralized virtual currency.<ref name="ECB" />{{rp|6}} A German court found bitcoin to be a ].<ref name=btcregs>{{cite web | url=http://www.loc.gov/law/help/bitcoin-survey/regulation-of-bitcoin.pdf| title=Regulation of Bitcoin in Selected Jurisdictions | publisher=The Law Library of Congress, Global Legal Research Center | date=January 2014 | accessdate=26 August 2014}}</ref>{{rp|10}} The Finnish government judged it to be a ] not a currency.<ref>{{cite news | url = http://www.bloomberg.com/news/2014-01-19/bitcoin-becomes-commodity-in-finland-after-failing-currency-test.html | title = Bitcoin Judged Commodity in Finland After Failing Money Test | author = Kati Pohjanpalo | work = Bloomberg | location = New York | date = 20 January 2014 | accessdate = 27 January 2014}}</ref> In July 2014 the ] advised European banks not to deal in virtual currencies such as bitcoin until a regulatory regime was in place.<ref name=EBA>{{cite web|title=EBA Opinion on ‘virtual currencies|url=http://www.eba.europa.eu/documents/10180/657547/EBA-Op-2014-08+Opinion+on+Virtual+Currencies.pdf|publisher=European Banking Authority|accessdate=8 July 2014|pages=46|format=pdf|date=4 July 2014}}</ref> | |||
| ===G7=== | |||
| In 2013 the ]'s ] issued the following statement in guidelines which may be applicable to companies involved in transmitting bitcoin and other currencies, "Internet-based payment services that allow third party funding from anonymous sources may face an increased risk of ." They concluded that this may "pose challenges to countries in regulation and supervision".<ref name=fatf>{{cite web|url=http://www.fatf-gafi.org/media/fatf/documents/recommendations/Guidance-RBA-NPPS.pdf|title=Guidance for a Risk-Based Approach: Prepaid Cards, Mobile Payments and Internet-based Payment Services|work=Guidance for a risk-based approach|publisher=Financial Action Task Force (FATF)|accessdate=6 March 2014|location=Paris|page=47|format=PDF|date=June 2013}}</ref> | |||
| ===Iceland=== | |||
| As of 2014, foreign exchange activities with bitcoin is illegal in Iceland.<ref name=EUPARANNEX/> | |||
| ===Russia=== | |||
| As of 2014, bitcoin is illegal in this country.<ref name=EUPARANNEX/> | |||
| ===Taiwan=== | |||
| While bitcoin itself is not illegal here, approvals for bitcoin ATMs have been refused.<ref name=EUPARANNEX/> | |||
| ===United States=== | |||
| The U.S. Treasury classifies bitcoin as a convertible decentralized virtual currency.<ref name="JSC" /> Magistrate Judge Amos L. Mazzant of ] classified bitcoin as a currency.<ref name="Ponzicase">{{cite court|litigants = SEC v. Trendon T. Shavers and Bitcoin Savings and Trust|vol = 416|court = E.D. Tex.|date = 2013|url= https://ia800904.us.archive.org/35/items/gov.uscourts.txed.146063/gov.uscourts.txed.146063.23.0.pdf}}</ref> A June 2014 U.S. government auction of almost 30,000 bitcoins, which the ] seized in October 2013 from Silk Road, was said to increase legitimacy of the currency.<ref name=guard714>{{cite news | title = Silk Road's legacy 30,000 bitcoin sold at auction to mystery buyers | author = Alex Hern | url = http://www.theguardian.com/technology/2014/jul/01/silk-road-bitcoin-auction | publisher = The Guardian | date = 1 July 2014 | accessdate = 31 October 2014}}</ref> | |||
| The ] (GAO) reviewed virtual currencies upon the request of the ] and in May 2013 recommended, that the ] (IRS) formulate tax guidance for bitcoin businesses.<ref>{{cite web | url = http://www.gao.gov/products/gao-13-516 | title = Virtual Economies and currencies: Additional IRS guidance could reduce tax compliance risks | work = GAO Report GAO-13-516 | publisher = Report to the Committee on Finance, U.S. Senate | accessdate = 6 March 2014 | author = US Government Accountability Office | authorlink = Government Accountability Office | date = May 2013}}</ref> On 25 March 2014, in time for 2013 tax filing, the IRS issued a guidance that virtual currency is treated as property for U.S. federal tax purposes and that "an individual who 'mines' virtual currency as a trade or business subject to self-employment tax".<ref name=IRS>{{cite web|title= IRS Virtual Currency Guidance|url=http://www.irs.gov/pub/irs-drop/n-14-21.pdf|work=Notice 2014-21|publisher=IRS|accessdate=30 March 2014|author=IRS|date=25 March 2014}}</ref> | |||
| On 18 November 2013, the ] held a committee hearing titled "Beyond Silk Road: Potential Risks, Threats and Promises of Virtual Currencies" to discuss virtual currencies.<ref name="theguardian">{{cite web |url= http://www.theguardian.com/technology/2013/nov/18/bitcoin-risks-rewards-senate-hearing-virtual-currency |title= Bitcoin hits $700 high as Senate stages hearing on virtual currency |date= 18 November 2013 |accessdate= 24 November 2013 |first= Dominic |last= Rushe |work= The Guardian}}</ref> At this hearing, held by senator ], bitcoin and other currencies were received generally positively, with statements that bitcoin was a "legal means of exchange" and that "online payment systems, both centralized and decentralized, offer legitimate financial services" by US officials Peter Kadzik and ].<ref name="raskin">{{cite web |url= http://www.bloomberg.com/news/2013-11-18/u-s-agencies-to-say-bitcoins-offer-legitimate-benefits.html |title= U.S. Agencies to Say Bitcoins Offer Legitimate Benefits |date= 18 November 2013 |accessdate= 24 November 2013 |first= Max |last= Raskin |work= Bloomberg}}</ref><ref>{{cite web |url= http://www.washingtonpost.com/business/economy/for-bitcoin-a-successful-charm-offensive-on-the-hill/2013/11/22/000ed4b0-53b1-11e3-a7f0-b790929232e1_story.html |title= For Bitcoin, a successful charm offensive on the Hill |date= 23 November 2013 |accessdate= 24 November 2013 |first= Timothy |last= Lee |work= Washington Post}}</ref> | |||
| The ] (FEC) deadlocked on 21 November 2013 on whether to allow bitcoin in political campaigns. Their decision was split across party lines (three members Democrat voting nay, three Republicans voting yea).<ref name="fecbitcoin">{{cite web|last=Gillum |first=Jack |url=http://bigstory.ap.org/article/fec-donors-cant-use-bitcoins-contributions |title=FEC: Donors can't use bitcoins for contributions |publisher=Bigstory.ap.org |date=2013-04-03 |accessdate=2013-12-27}}</ref> Political bitcoin pioneers New Hampshire House member Mark Warden<ref name="wardenbtc">{{cite web | url = http://www.markwarden.com/page/contribute-campaign | title = Donate to the campaign | Mark Warden — State Rep | publisher = Markwarden.com | accessdate = 9 November 2014}}</ref> and Southern California politician Michael B. Glenn<ref name="latimesbitcoin">{{cite web | last = Foxhall | first = Emily | url = http://www.latimes.com/local/lanow/la-me-ln-bitcoin-accepted-newport-city-council-race-20131220,0,7500678.story | title = Bitcoin donations welcome, Newport Beach City Council candidate says | publisher = latimes.com | date = 20 December 2013 | accessdate = 27 December 2013}}</ref> independently from each other accepted bitcoin in their campaigns, and paved the way for others to follow suit. On 8 May 2014, the U.S. Federal Election Commission issued draft guidance to U.S. politicians who want to receive bitcoin donations.<ref name="ADVISORY OPINION 2014-02">{{cite web | url=http://saos.fec.gov/aodocs/2014-02.pdf | title=FEC Advisory Opinion 2014-02 | publisher=Federal Election Commission | date=8 May 2014 | accessdate=8 May 2014 | author=Goodman, Lee E. }}</ref> The Commission declined to declare bitcoins currency, stating they fit into its "anything of value" definition.<ref>{{cite news |url=https://www.publicintegrity.org/2014/05/08/14739/what-fecs-bitcoin-ruling-means | title=What the FEC's Bitcoin ruling means |date=8 May 2014 |accessdate=8 May 2014 |first=Dave |last=Levinthal |work=Center for Public Integrity}}</ref> | |||
| In May 2014, Brett Stapper, co-founder of Falcon Global Capital, registered to lobby members of Congress and federal agencies on issues related to bitcoin.<ref name="Bitcoin gets a lobbyist">{{cite web | url=http://thehill.com/policy/technology/207085-bitcoin-investors-register-lobbyist?nr_email_referer=1%29 | title=Bitcoin gets a lobbyist | publisher=The Hill | date=23 May 2014 | accessdate=27 May 2014 | author=Hattem, Julian}}</ref> | |||
| In January 2014, the U.S. ] (SEC) was focused on whether bitcoin-denominated stock exchanges were illegal, per its enforcement administrator, and inquired into unregistered securities offerings of the gambling site SatoshiDICE and FeedZeBirds.<ref>{{cite news|last1=Dougherty|first1=Carter|title=Gambling Website’s Bitcoin-Denominated Stock Draws SEC Inquiry|url=http://www.businessweek.com/news/2014-03-19/gambling-website-s-bitcoin-denominated-stock-draws-sec-inquiry|accessdate=13 June 2014|work=Bloomberg BusinessWeek.com|publisher=Bloomberg LP|date=20 March 2014}}</ref> In May it warned investors that "both fraudsters and promoters of high-risk investment schemes may target bitcoin users".<ref>{{cite web|title=Investor Alert: Bitcoin and Other Virtual Currency-Related Investments|url=http://investor.gov/news-alerts/investor-alerts/investor-alert-bitcoin-other-virtual-currency-related-investments#.U3GCQ61dVD4|work=Investor.gov|publisher=U.S. Securities and Exchange Commission|accessdate=13 May 2014}}</ref> The SEC charged and settled with the former owner of SatoshiDice and FeedZeBirds in June 2014 for selling unregistered securities.<ref>{{cite web|title=Press Release SEC Charges Bitcoin Entrepreneur With Offering Unregistered Securities|url=http://www.sec.gov/News/PressRelease/Detail/PressRelease/1370541972520#.U5qaD3bb73C|publisher=SEC.gov|accessdate=13 June 2014|date=3 June 2014}}</ref> | |||
| In October 2014, former SEC Chair ] joined ], a bitcoin payment processor, and Vaurum, a bitcoin exchange for institutional investors in advisory roles.<ref name=wsj1014>{{cite news|author1=Michael J. Casey|title=Ex-SEC Chairman Levitt to Advise Two Bitcoin Companies|url=http://www.wsj.com/articles/ex-sec-chairman-levitt-to-advise-two-bitcoin-companies-1414468861|accessdate=27 December 2014|work=WSJ|date=28 October 2014}}</ref> | |||
| The U.S. ] stated in March 2014 it considered regulation of digital currencies<ref>{{cite news|title=U.S. swaps watchdog says considering bitcoin regulation|url=http://www.reuters.com/article/2014/03/11/us-bitcoin-regulation-idUSBREA2A1W020140311|accessdate=11 March 2014|newspaper=Reuters.com|date=11 March 2014|first=Douwe|last=Miedema}}</ref> after TeraExchange announced to launch a ]. TeraExchange constructed an index for the value of bitcoin from six different exchanges. The dollar value of a given bitcoin amount is locked in the swap. The CFTC approved the financial product in September 2014, satisfied it "could not easily be manipulated".<ref name=chicago>{{cite news|author1=Douwe Miedema|title=Bitcoin gets boost as U.S. watchdog approves first swap|url=http://www.chicagotribune.com/bluesky/technology/sns-rt-us-usa-bitcoin-cftc-20140912-story.html|accessdate=19 January 2015|work=Chicago Tribune|publisher=Reuters|date=12 September 2014}}</ref> | |||
| In June 2014 California Assemblyman ] (D–Sacramento) submitted draft legislation to legalize bitcoin and all other forms of alternative and digital currency.<ref name="BitcoinCalifornia">{{cite web | url=http://www.businessinsider.com/bitcoin-llegal-in-california-2014-6?utm_source=alerts&nr_email_referer=1 | title=Bitcoin Is Actually Illegal In California, But That Could Change Soon | publisher=Business Insider | date=25 June 2014 | accessdate=26 June 2014 | author=Cosco, Joey}}</ref> After the GAO had called for increased oversight of bitcoin, the ] warned consumers of bitcoin being risky.<ref name=CFPB>{{cite news|author1=Peter Schroeder|title=CFPB warns consumers about bitcoin 'Wild West'|url=http://thehill.com/policy/finance/214831-cfpb-warns-consumers-about-bitcoin-wild-west|accessdate=27 August 2014|work=The Hill|publisher=News Communications, Inc.|date=11 August 2014}}</ref> | |||
| {{as of|November 2014}}, there are no final rules at the U.S. state level yet. In March 2014, the ] led by superintendent ] had officially invited bitcoin exchanges to apply with them,<ref>{{cite web|title=In the Matter of Virtual Currency Exchanges|work=Public Order|url=http://www.dfs.ny.gov/about/po_vc_03112014.pdf|publisher=New York State Department of Financial Services|accessdate=30 March 2014|date=11 March 2014}}</ref> and on 17 July it published draft regulations for virtual currency businesses.<ref name=wsj72014>{{cite news|last1=Vigna|first1=Paul|title=NY Financial Regulator Releases Draft of ‘Bitlicense’ for Bitcoin Businesses|accessdate=19 July 2014|work=WSJ|publisher=Dow Jones & Company|date=17 July 2014}}</ref> Businesses would have to provide transaction receipts, disclosures about risks, policies to handle customer complaints, maintain a cybersecurity program, hire a compliance officer and verify details about their customers to follow anti-money-laundering rules, per FinCEN.<ref name=wsj72014 /> | |||
| ===Vietnam=== | |||
| As of 2014, bitcoin is illegal in this country.<ref name=EUPARANNEX/> | |||
| ==Criminal activity== | |||
| The use of bitcoin by criminals has attracted the attention of financial regulators, legislative bodies, law enforcement, and the media.<ref name="Lavin, Tim">{{cite news | url=http://www.bloombergview.com/articles/2013-08-08/did-the-sec-just-validate-bitcoin-no- | title=The SEC Shows Why Bitcoin Is Doomed | publisher=Bloomberg LP | work=bloomberg.com | date=8 August 2013 | accessdate=20 October 2013 | author=Lavin, Tim}}</ref> The FBI prepared an intelligence assessment,<ref name="fbi_report">{{cite web | url = http://www.wired.com/images_blogs/threatlevel/2012/05/Bitcoin-FBI.pdf | title = Bitcoins Virtual Currency: Unique Features Present Challenges for Deterring Illicit Activity | publisher = FBI | work = Cyber Intelligence Section and Criminal Intelligence Section | date = 24 April 2012 | accessdate = 2 November 2014}}</ref> the SEC has issued a pointed warning about investment schemes using virtual currencies,<ref name="Lavin, Tim"/> the U.S. Senate held a hearing on virtual currencies in November 2013, ] has referred to bitcoin as a "shady online currency starting to gain legitimacy in certain parts of the world",<ref name="cnn">{{cite news|url=http://finance.fortune.cnn.com/2012/12/18/bitcoin-money-laundering/|title=Bitcoin looks primed for money laundering|publisher=CNN | work=money.cnn.com | date=18 December 2012|accessdate=18 October 2013 | author=Sanati, Cyrus}}</ref> and ] called it "the currency of choice for seedy online activities".<ref name="washp">{{cite news | url=http://articles.washingtonpost.com/2013-10-02/business/42613812_1_digital-currency-federal-authorities-reputation | title=Authorities shut down Silk Road, the world's largest Bitcoin-based drug market|work=The Washington Post|date=2 October 2013|accessdate=21 October 2013 | author=Timothy B. Lee and Hayley Tsukayama}}</ref> Criminal activity involving bitcoin has centered around theft and the use of bitcoins in exchange for illegal items or services.{{cn|date=February 2015}} | |||
| Several news outlets have asserted that the popularity of bitcoins hinges on the ability to use them to purchase illegal goods.<ref name=Monetarists>{{cite news |url=http://www.economist.com/node/21563752|title=Monetarists Anonymous | publisher=The Economist Newspaper Limited|work=The Economist|date=29 September 2012| accessdate=21 October 2013}}</ref><ref>{{cite web|url=http://www.theguardian.com/world/2013/mar/22/silk-road-online-drug-marketplace|title=Silk Road: the online drug marketplace that officials seem powerless to stop|publisher=Guardian News and Media Limited|work=theguardian.com|date=22 March 2013|accessdate=20 October 2013|author=Ball, James}}</ref> In 2014 researchers at the University of Kentucky found "robust evidence that computer programming enthusiasts and illegal activity drive interest in bitcoin, and find limited or no support for political and investment motives."<ref name=uok/> | |||
| ===Theft=== | |||
| There have been many cases of bitcoin theft.<ref name="Economist113013Pressure" /> One way this is accomplished involves a third party accessing the private key to a victim's bitcoin address,<ref>{{cite news|last=Jeffries|first=Adrianne|title=How to steal Bitcoin in three easy steps|date=19 December 2013|url=http://www.theverge.com/2013/12/19/5183356/how-to-steal-bitcoin-in-three-easy-steps|work=The Verge|accessdate=17 January 2014}}</ref> or of an online wallet.<ref>{{cite news|last=Everett|first=David|title=So how can you steal Bitcoins|url=http://www.smartcard.co.uk/articles/so_how_can_you_steal_bitcoins.php|work=Smartcard & Identity News | accessdate=17 January 2014 | date=April 2012}}</ref> If the private key is stolen, all the bitcoins from the compromised address can be transferred. In that case, the network does not have any provisions to identify the thief, block further transactions of those stolen bitcoins, or return them to the legitimate owner.<ref name="winkles" /> | |||
| Theft also occurs at sites bitcoins are used to purchase illicit goods. In late November 2013, an estimated $100 million in bitcoins were stolen from the online illicit goods marketplace ], which immediately closed.<ref name="hern2013" /> Users tracked the coins as they were processed and converted to cash, but no funds were recovered and no culprits identified.<ref name="hern2013">{{cite news | url=http://www.theguardian.com/technology/2013/dec/09/recovering-stolen-bitcoin-sheep-marketplace-trading-digital-currency-money | title=Recovering stolen bitcoin: a digital wild goose chase | work=The Guardian | date=9 December 2013 | first=Alex | last=Hern | accessdate=6 March 2014}}</ref> A different black market, Silk Road 2, stated that during a February 2014 hack, bitcoins valued at $2.7 million were taken from escrow accounts.<ref name="silk2">{{cite news|url=http://www.bbc.co.uk/news/technology-26187725 |title=Silk Road 2 loses $2.7m in bitcoins in alleged hack |work=BBC News |date=14 February 2014 |accessdate=15 February 2014}}</ref> Inputs.io, an Australian bitcoin wallet service was hacked twice in October 2013 and lost more than $1 million in bitcoins.<ref>{{Cite news|url = http://www.theguardian.com/technology/2013/nov/08/hackers-steal-1m-from-bitcoin-tradefortress-site|title = Bitcoin site Inputs.io loses £1m after hackers strike twice|last = |first = |work = |access-date = }}</ref> | |||
| Sites where users exchange bitcoins for cash are another target for theft. In late February 2014 ], one of the largest virtual currency exchanges, filed for bankruptcy in ] amid reports that 744,000 bitcoins had been stolen.<ref name="GoxBankrupt" /> Flexcoin, a bitcoin storage specialist based in ], shut down on March 2014 after saying it discovered a theft of about $650,000 in bitcoins.<ref name="ligaya2014">{{cite news | work=Financial Post | url=http://business.financialpost.com/2014/03/05/after-albertas-flexcoin-mt-gox-hacked-bitcoin-businesses-face-sting-of-free-wheeling-ways/ |title=After Alberta’s Flexcoin, Mt. Gox hacked, Bitcoin businesses face sting of free-wheeling ways | date=5 March 2014 | first=Armina | last=Ligaya | accessdate=7 March 2014}}</ref> Poloniex, a digital currency exchange, reported on March 2014 that it lost bitcoins valued at around $50,000.<ref name="truong2014">{{cite news | url=http://www.fastcompany.com/3027373/fast-feed/another-bitcoin-exchange-another-heist | title=Another Bitcoin exchange, another heist | first=Alice | last=Truong | work=Fast Company | date=6 March 2014 | accessdate=7 March 2014 }}</ref> | |||
| In January, 2015, UK based ], the third busiest bitcoin exchange globally, was hacked and 19,000 bitcoins ($5 million) were stolen.<ref>{{cite web|author1=Zack Whittaker|title=Bitstamp exchange hacked, $5M worth of bitcoin stolen|url=http://www.zdnet.com/article/bitstamp-bitcoin-exchange-suspended-amid-hack-concerns-heres-what-we-know/|website=Zdnet|publisher=CBS Interactive.|accessdate=6 January 2015|date=5 January 2015}}</ref> February, 2015, saw a Chinese exchange named BTER lose more than 7,000 bitcoins to hackers.<ref>{{cite web | url=https://www.techinasia.com/bitcoins-lost-after-china-cryptocurrency-exchange-hack-bter/ | title=Nearly $2M in bitcoins feared lost after Chinese cryptocurrency exchange hack | publisher=Tech In Asia | work=techinasia.com | date=Feb 16, 2015 | accessdate=18 February 2015 | author=Millward, Steven}}</ref> | |||
| ===Black markets=== | |||
| Because of its presumed capacity to obfuscate the source of payments in online transactions, bitcoin has come to be used in the ] black markets.{{cn|date=February 2015}} It was estimated that in 2012, 4.5% to 9% of all transactions on all exchanges in the world were for drug trades on a single ] drugs market, ].<ref name="cmacademic">{{cite conference | url = http://www.andrew.cmu.edu/user/nicolasc/publications/Christin-WWW13.pdf | title = Traveling the Silk Road: A Measurement Analysis of a Large Anonymous Online Marketplace | publisher = Carnegie Mellon INI/CyLab | accessdate = 22 October 2013 | author = Christin, Nicolas | year = 2013 | pages = 8 | quote = we suggest to compare the estimated total volume of Silk Road transactions with the estimated total volume of transactions at all Bitcoin exchanges (including Mt.Gox, but not limited to it). The latter corresponds to the amount of money entering and leaving the Bitcoin network, and statistics for it are readily available... approximately 1,335,580 BTC were exchanged on Silk Road... approximately 29,553,384 BTC were traded in Bitcoin exchanges over the same period... The only conclusion we can draw from this comparison is that Silk Road-related trades could plausibly correspond to 4.5% to 9% of all exchange trades}}</ref> Child pornography, murder-for-hire services, and weapons are also available on black market sites that sell in bitcoin.<ref>For child porn, see {{cite web | url=http://www.bloomberg.com/news/articles/2014-10-09/bitcoin-payments-by-pedophiles-frustrate-child-porn-fight | title=Bitcoin Payments by Pedophiles Frustrate Child Porn Fight | publisher=Bloomberg LP | work=BloombergBusiness | date=10 October 2014 | accessdate=16 February 2015 | author=Schweizer, Kristen}} | |||
| *For murder-for-hire services, see {{cite web | url=http://www.thedailybeast.com/articles/2013/10/17/hitman-network-says-it-accepts-bitcoins-to-murder-for-hire.html | title=Hitman Network Says It Accepts Bitcoins to Murder for Hire | publisher=The Daily Beast Company LLC | work=The Daily Beast | date=17 October 2013 | accessdate=17 February 2015 | author=Lake, Eli}} | |||
| *For weapons, see {{cite news|url=http://www.huffingtonpost.com/2013/04/15/bitcoin-guns_n_3070828.html | title=How Bitcoin Sales Of Guns Could Undermine New Rules|publisher=TheHuffingtonPost.com, Inc. | work=huffingtonpost.com | date=15 April 2013 | accessdate=20 October 2013|author=Smith, Gerry}}</ref> | |||
| Several deep web black markets have been shut by authorities. In October 2013 Silk Road was shut down by U.S. law enforcement<ref name=Greenberg>{{cite news|url= http://www.forbes.com/sites/andygreenberg/2013/10/25/fbi-says-its-seized-20-million-in-bitcoins-from-ross-ulbricht-alleged-owner-of-silk-road/ |title= FBI Says It's Seized $28.5 Million In Bitcoins From Ross Ulbricht, Alleged Owner Of Silk Road |author= Andy Greenberg |publisher= Forbes.com |format= blog |date= 23 October 2013 |accessdate= 24 November 2013}}</ref><ref name="Kelion, Leo">{{cite news | url=http://www.bbc.co.uk/news/technology-26158012 | title=Five arrested in Utopia dark net marketplace crackdown | publisher=BBC | work=bbc.co.uk | date=12 February 2014 | accessdate=13 February 2014 | author=Kelion, Leo}}</ref><ref>{{cite news | publisher = The Guardian | title = Bitcoin price plummets after Silk Road closure | author = Alex Hern | quote = Digital currency loses quarter of value after arrest of Ross Ulbricht, who is accused of running online drugs marketplace | date = 3 October 2013 | url = http://www.theguardian.com/technology/2013/oct/03/bitcoin-price-silk-road-ulbricht-value | accessdate = 31 October 2014}}</ref> leading to a short-term decrease in the value of bitcoin.<ref>{{cite web | url = http://www.wired.com/2013/10/bitcoin-market-drops-600-million-on-silk-road-bust/ | title = Bitcoin Values Plummet $500M, Then Recover, After Silk Road Bust | author = Robert McMillan | date = 2 October 2013 | publisher = Wired | accessdate = 31 October 2014}}</ref> Alternative sites were soon available, and in early 2014 the ] reported that the closure of Silk Road had little impact on the number of Australians selling drugs online, which had actually increased.<ref>{{cite news | url = http://www.abc.net.au/news/2014-03-31/online-drug-trade-soaring-experts-say/5354930 | publisher = ABC News | title = Silk Road closure fails to dampen illegal drug sales online, experts say | author = Katie Silver | date = 31 March 2014 | accessdate = 31 October 2014}}</ref> In early 2014, Dutch authorities closed Utopia, an online illegal goods market, and seized 900 bitcoins.<ref>{{cite web | url = http://www.independent.co.uk/life-style/gadgets-and-tech/utopia-no-more-drug-marketplace-seen-as-the-next-silk-road-shut-down-by-dutch-police-9126063.html | title = Utopia no more: Drug marketplace seen as the next Silk Road shut down by Dutch police | publisher = independent.co.uk | work = The Independent | date = 13 February 2014 | accessdate = 8 November 2014 | author = Sophie Murray-Morris}}</ref> In late 2014, a joint police operation saw European and American authorities seize bitcoins and close 400 ] sites including the illicit goods market Silk Road 2.0.<ref>{{cite web | url=http://www.bbc.com/news/technology-29950946 | title=Huge raid to shut down 400-plus dark net sites | publisher=BBC | work=bbc.com | date=7 November 2014 | accessdate=8 November 2014 | author=Wakefield, Jane}}</ref> Law enforcement activity has resulted in several convictions. In December, 2014, ] was sentenced to two years in prison for indirectly helping to send $1 million to the Silk Road drugs site,<ref>{{cite news|author1=Nate Raymond|title=Bitcoin backer gets two years prison for illicit transfers|url=http://www.reuters.com/article/2014/12/19/us-usa-crime-bitcoin-idUSKBN0JX2CW20141219|accessdate=20 December 2014|work=Reuters|publisher=Thompson Reuters|date=19 December 2014}}</ref> and in February, 2015, its founder, ], was convicted on drugs charges and faces a life sentence.<ref>{{cite web | url=http://www.bbc.com/news/world-us-canada-31134938 | title=Ross Ulbricht: Silk Road creator convicted on drugs charges | publisher=BBC | date=5 February 2015 | accessdate=17 February 2015}}</ref> | |||
| Some black market sites may seek to steal bitcoins from customers. The bitcoin community branded one site, Sheep Marketplace, as a scam when it prevented withdrawals and shut down after an alleged bitcoins theft.<ref name="techienews">{{cite web | url = http://www.techienews.co.uk/973470/silk-road-like-sheep-marketplace-scams-users-39k-bitcoins-worth-40-million-stolen/ | title = Silk Road-like Sheep Marketplace scams users; over 39k Bitcoins worth $40 million stolen | author = Ravi Mandalia | publisher = Techie News | date = 1 December 2013 | accessdate = 2 December 2013}}</ref> In a separate case, escrow accounts with bitcoins belonging to patrons of a different black market were hacked in early 2014.<ref name=silk2/> | |||
| According to the ], a U.K. based charity, bitcoin is used to purchase child pornography, and almost 200 such websites accept it as payment. Bitcoin isn't the sole way to purchase child pornography online, as Troels Oertling, head of the cybercrime unit at ], states, "Ukash and Paysafecard... have been used to pay for such material." However, the Internet Watch Foundation lists around 30 sites that exclusively accept bitcoins.<ref name=notonly>{{cite web | url=http://www.bloomberg.com/news/articles/2014-10-09/bitcoin-payments-by-pedophiles-frustrate-child-porn-fight | title=Bitcoin Payments by Pedophiles Frustrate Child Porn Fight | publisher=Bloomberg LP | work=BloombergBusiness | date=10 October 2014 | accessdate=16 February 2015 | author=Schweizer, Kristen}}</ref> Some of these sites have shut down, such as a ] ] website that aimed to fund the creation of new child porn.<ref>{{Cite news|url = http://www.deepdotweb.com/2014/11/09/as-drug-markets-are-seized-pedophiles-launch-a-crowdfunding-site/|title = While Markets Get Seized: Pedophiles Launch a Crowdfunding Site|last = |first = |date = |work = |access-date = 19 Feb 2015}}</ref> Furthermore, ] to child porn websites have been added to the blockchain as arbitrary data can be included when a transaction is made.<ref>{{cite web | url=http://www.dailydot.com/business/bitcoin-child-porn-transaction-code/ | title=If you own Bitcoin, you also own links to child porn | work=The Daily Dot | date=7 May 2013 | accessdate=16 February 2015 | author=Hopkins, Curt}}</ref><ref>{{Cite web|url = http://eandt.theiet.org/magazine/2015/02/in-blocks-we-trust.cfm|title = As Bitcoin slides, the Blockchain grows|date = |accessdate = |website = |publisher = IET Engineering and Technology Magazine|last = Bradbury|first = Danny}}</ref> | |||
| ===Money laundering=== | |||
| Bitcoins may not be ideal for money laundering because all transactions are public.<ref name="FistfulPaper201308">{{cite news | url = http://www.pcworld.com/article/2047608/bitcoin-offers-privacy-as-long-as-you-dont-cash-out-or-spend-it.html | title = Bitcoin offers privacy-as long as you don't cash out or spend it | last = Kirk | first = Jeremy | date = 28 August 2013 | work = PC World | accessdate = 31 October 2014}}</ref> Authorities, including the ]<ref name="ebawarn" /> and the FBI<ref name="fbi_report" /> have expressed concerns that bitcoin may be used for money laundering. In early 2014, an operator of a U.S. bitcoin exchange was arrested for money laundering.<ref name=vchair>{{cite news | url=http://www.bbc.co.uk/news/technology-25919482 | title=US makes Bitcoin exchange arrests after Silk Road closure | publisher=BBC | work=bbc.co.uk | date=27 January 2014 | accessdate=28 January 2014 | author=Lee, Dave}}</ref> | |||
| ===Ponzi scheme=== | |||
| In a ] that utilized bitcoins, The Bitcoin Savings and Trust promised investors up to 7 percent weekly interest, and raised at least 700,000 bitcoins from 2011 to 2012.<ref name=secponzi/> In July 2013 the U.S. Securities and Exchange Commission charged the company and its founder in 2013 "with defrauding investors in a Ponzi scheme involving bitcoin".<ref name=secponzi>{{cite press release | url = https://www.sec.gov/News/PressRelease/Detail/PressRelease/1370539730583 | date = 23 July 2013 | issue = 2013-132 | title = SEC charges Texas man with running Bitcoin-denominated Ponzi scheme | publisher = US Securities and Exchange Commission | accessdate = 7 March 2014}}</ref> In September 2014 the judge fined Bitcoin Savings & Trust and its owner $40 million for operating a bitcoin Ponzi scheme.<ref>{{cite news | title = Bitcoin Savings & Trust Comes Up $40 Million Short On The Trust Part | url = http://www.forbes.com/sites/jayadkisson/2014/09/25/bitcoin-savings-trust-comes-up-40-million-short-on-the-trust-part/ | author = Jay Adkisson | date = 25 September 2014 | accessdate = 13 December 2014 | work = Personal Finance | publisher = Forbes}}</ref> | |||
| ===Malware=== | |||
| Bitcoin-related ] includes software that steals bitcoins from users using a variety of techniques, software that uses infected computers to mine bitcoins, and different types of ], which disable computers or prevent files from being accessed until some payment is made. Security company ] said in February 2014 that it had identified almost 150 types of bitcoin malware.<ref>{{cite web | url=http://www.forbes.com/sites/andygreenberg/2014/02/26/nearly-150-breeds-of-bitcoin-stealing-malware-in-the-wild-researchers-say/ | title=Nearly 150 Breeds Of Bitcoin-Stealing Malware In The Wild, Researchers Say | publisher=Forbes | work=forbes.com | date=26 April 2014 | accessdate=9 January 2015 | author=Greenburg, Andy}}</ref> | |||
| ====Unauthorized mining==== | |||
| In June 2011, ] warned about the possibility that ]s could mine covertly for bitcoins.<ref>{{cite web|author=Peter Coogan |url=http://www.symantec.com/connect/blogs/bitcoin-botnet-mining |title=Bitcoin Botnet Mining|work=Symantec.com|date=17 June 2011 |accessdate = 24 January 2012|deadurl=no}}</ref> Malware used the ] capabilities of ]s built into many modern ]s.<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 | work = The Register | date = 16 August 2011 | accessdate = 31 October 2014 | author = Goodin, Dan}}</ref> Although the average PC with an integrated graphics processor is virtually useless for bitcoin mining, tens of thousands of PCs laden with mining malware could produce some results.<ref name=hajb2014/> | |||
| In mid-August 2011, bitcoin mining botnets were detected,<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=19 August 2011|accessdate = 24 January 2012 }}</ref> and less than three months later, bitcoin mining ] had infected ].<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: Security researchers warn that DevilRobber malware could slow down infected Mac computers | author = Lucian Constantin | publisher = IDG communications | work = TechWorld | date = 1 November 2011 | accessdate = 24 January 2012}}</ref> | |||
| In April 2013, ] organization E-Sports Entertainment was accused of hijacking 14,000 computers to mine bitcoins; the company later settled the case with the State of New Jersey.<ref>{{cite news |url= http://www.bbc.co.uk/news/technology-25014477 |title= E-Sports Entertainment settles Bitcoin botnet allegations |date= 20 November 2013 |accessdate= 24 November 2013 |work= ]}}</ref> | |||
| German police arrested two people in December 2013 who customized existing botnet software to perform bitcoin mining, which police said had been used to mine at least $950,000 worth of bitcoins.<ref>{{cite news|author1=Mohit Kumar|title=The Hacker News The Hacker News +1,440,833 ThAlleged Skynet Botnet creator arrested in Germany|url=http://thehackernews.com/2013/12/alleged-skynet-botnet-creator-arrested.html|accessdate=8 January 2015|date=9 December 2013}}</ref> | |||
| For four days in December 2013 and January 2014, Yahoo! Europe hosted an ad containing bitcoin mining malware that infected an estimated two million computers.<ref name=hajb2014>{{cite news|title=Yahoo malware turned Euro PCs into bitcoin miners|url=http://www.slashgear.com/yahoo-malware-turned-euro-pcs-into-bitcoin-miners-09312529/|accessdate=8 January 2015|date=9 January 2014}}</ref> The software, called ], was first detected in mid-2013 and has been bundled with many software packages. Microsoft has been removing the malware through its ] and other security software.<ref>{{cite news|author1=Liat Clark|title=Microsoft stopped Tor running automatically on botnet-infected systems|url=http://www.wired.co.uk/news/archive/2014-01/20/microsoft-removes-tor|accessdate=8 January 2015|date=20 January 2014}}</ref> | |||
| Several reports of employees or students using university or research computers to mine bitcoins have been published.<ref>{{cite news|last1=Hornyack|first1=Tim|title=US researcher banned for mining Bitcoin using university supercomputers|url=http://www.pcworld.com/article/2360840/us-researcher-banned-for-mining-bitcoin-using-university-supercomputers.html|accessdate=13 June 2014|work=PC world.com|publisher=IDG Consumer & SMB|date=6 June 2014}}</ref> | |||
| ====Malware stealing==== | |||
| Some malware can steal private keys for bitcoin wallets allowing the bitcoins themselves to be stolen. The most common type searches computers for cryptocurrency wallets to upload to a remote server where they can be cracked and their coins stolen.<ref name=haj2014>{{cite news | url=http://www.coindesk.com/nearly-150-strains-malware-bitcoins/ | title=Nearly 150 strains of malware are after your bitcoins | first=Nermin | last=Hajdarbegovic | date=27 February 2014 | work=CoinDesk | accessdate=7 March 2014 }}</ref> Many of these also ] to record passwords, often avoiding the need to crack the keys.<ref name=haj2014/> A different approach detects when a bitcoin address is copied to a ] and quickly replaces it with a different address, tricking people into sending bitcoins to the wrong address.<ref>{{cite web|author1=Gregg Keizer|title=Bitcoin malware count soars as cryptocurrency value climbs|url=http://www.computerworld.com/article/2488144/malware-vulnerabilities/bitcoin-malware-count-soars-as-cryptocurrency-value-climbs.html|website=Computerworld|accessdate=8 January 2015|date=28 February 2014}}</ref> This method is effective because bitcoin transactions are irreversible. | |||
| One ], spread through the Pony ], was reported in February 2014 to have stolen up to $220,000 in cryptocurrencies including bitcoins from 85 wallets.<ref>{{cite news|author1=Zach Miners|title=Bitcoins, other digital currencies stolen in massive 'Pony' botnet attack|url=http://www.pcworld.com/article/2101260/bitcoins-other-digital-currencies-stolen-in-massive-pony-botnet-attack.html|accessdate=8 January 2015|date=24 Feb 2014}}</ref> Security company ], which tracked the malware, reports that its latest version was able to steal 30 types of digital currency.<ref>{{cite news | url=http://www.reuters.com/article/2014/02/24/us-bitcoin-security-idUSBREA1N1JO20140224 | title='Pony' botnet steals bitcoins, digital currencies: Trustwave | first=Jim |last=Finkle | date=24 February 2014 | work=Reuters | accessdate=7 March 2014 }}</ref> | |||
| A type of Mac malware active in August 2013, Bitvanity posed as a vanity wallet address generator and stole addresses and private keys from other bitcoin client software.<ref name=southurst2014>{{cite news|title=Malware being spread via cracked apps|url=http://colombogazette.com/2014/02/26/malware-being-spread-via-cracked-apps/|accessdate=8 January 2015|date=26 February 2014}}</ref> A different trojan for Mac OS X, called CoinThief was reported in February 2014 to be responsible for multiple bitcoin thefts.<ref name=southurst2014/> The software was hidden in versions of some cryptocurrency apps on ] and ].<ref name=southurst2014/> | |||
| ====Ransomware==== | |||
| Another type of bitcoin-related malware is ]. One program called ], typically spread through legitimate-looking email attachments, encrypts the hard drive of an infected computer, then displays a countdown timer and demands a ransom, usually two bitcoins, to decrypt it.<ref name=guardian-ransomware>{{cite news | url=http://www.theguardian.com/technology/2014/feb/10/how-ransomware-turns-your-computer-bitcoin-miner-linkup | work=The Guardian | title=How Ransomware turns your computer into a bitcoin miner | date=10 February 2014 | accessdate=7 March 2014 }}</ref> Massachusetts police said they paid a 2 bitcoin ransom in November 2013, worth more than $1,300 at the time, to decrypt one of their hard drives.<ref>{{cite news | url=http://www.theguardian.com/technology/2013/nov/21/us-police-force-pay-bitcoin-ransom-in-cryptolocker-malware-scam | title=US police force pay bitcoin ransom in Cryptolocker malware scam | work=The Guardian | first=Samuel | last=Gibbs | date=21 November 2013 | accessdate=7 March 2014 }}</ref> Linkup, a combination ransomware and bitcoin mining program that surfaced in February 2014, disables internet access and demands credit card information to restore it, while secretly mining bitcoins.<ref name=guardian-ransomware/> | |||
| ==Security== | |||
| Various potential attacks on the ] and its use as a payment system, real or theoretical, have been considered. The bitcoin protocol includes several features that protect it against some of those attacks, such as unauthorized spending, double spending, forging bitcoins, and tampering with the block chain.<ref name="khanbitcoin" /> Other attacks, such as theft of private keys, require due care by users. | |||
| ===Unauthorized spending=== | |||
| Unauthorized spending is mitigated by bitcoin's implementation of public-private key cryptography. When Alice sends a bitcoin to Bob, Bob becomes the new owner of the bitcoin. Eve observing the transaction might want to spend the bitcoin Bob just received, but she cannot sign the transaction without the knowledge of Bob's private key.<ref name="primer"/> | |||
| ===Double spending=== | |||
| A specific problem that an internet payment system must solve is ], whereby a user pays the same coin to two or more different recipients. An example of such a problem would be if Eve sent a bitcoin to Alice and later sent the same bitcoin to Bob. The bitcoin network guards against double-spending by recording all bitcoin transfers in a ledger (the block chain) that is visible to all users, and ensuring for all transferred bitcoins that they haven't been previously spent.<ref name="primer"/>{{rp|4}} | |||
| ===Race attack=== | |||
| If Eve offers to pay Alice a bitcoin in exchange for goods and signs a corresponding transaction, it is still possible that she also creates a different transaction at the same time sending the same bitcoin to Bob. By the rules, the network accepts only one of the transactions. This is called race attack, since there is a race which transaction will be accepted first. Alice can reduce the risk of race attack stipulating that she will not deliver the goods until Eve's payment to Alice appears in the block chain.<ref>{{cite web | url = http://blogs.cornell.edu/info4220/2013/03/29/bitcoin-and-the-double-spending-problem/ | title = Bitcoin and the Double-spending Problem | publisher = Cornell University | date = 29 March 2013 | accessdate = 22 October 2014 | author = Erik Bonadonna}}</ref> | |||
| A variant race attack (which has been called a Finney attack by reference to Hal Finney) requires the participation of a miner. Instead of sending both payment requests (to pay Bob and Alice with the same coins) to the network, Eve issues only Alice's payment request to the network, while the accomplice tries to mine a block that includes the payment to Bob instead of Alice. There is a positive probability that the rogue miner will succeed before the network, in which case the payment to Alice will be rejected. As with the plain double-spending attack, Alice can reduce the risk of a Finney attack by waiting for the payment to be included in the block chain.<ref>{{cite paper | title = Two Bitcoins at the Price of One? Double-Spending Attacks on Fast Payments in Bitcoin | url = http://eprint.iacr.org/2012/248.pdf | last1 = Karame | first1 = Ghassan O. | last2 = Androulaki | first2 = Elli | last3 = Capkun | first3 = Srdjan | publisher = International Association for Cryptologic Research | year = 2012 | accessdate = 22 October 2014}}</ref> | |||
| ===History modification=== | |||
| The other principal way to steal bitcoins would be to modify block chain ledger entries. | |||
| For example, Eve could buy something from Alice, like a sofa, by adding a signed entry to the block chain ledger equivalent to ''Eve pays Alice 100 bitcoins''. Later, after receiving the sofa, Eve could modify that block chain ledger entry to read instead: ''Eve pays Alice 1 bitcoin'', or replace Alice's address by another of Eve's addresses. Digital signatures cannot prevent this attack: Eve can simply sign her entry again after modifying it. | |||
| To prevent modification attacks, each block of transactions that is added to the block chain includes a ] that is computed from the hash of the previous block as well as all the information in the block itself. When the bitcoin software notices two competing block chains, it will automatically assume that the chain with the greatest amount of work to produce it is the valid one. Therefore, in order to modify an already recorded transaction (as in the above example), the attacker would have to recalculate not just the modified block, but all the blocks after the modified one, until the modified chain contains more work than the legitimate chain that the rest of the network has been building in the meantime. Consequently, for this attack to succeed, the attacker must outperform the honest part of the network.<ref name="khanbitcoin" /> | |||
| Each block that is added to the block chain, starting with the block containing a given transaction, is called a confirmation of that transaction. Ideally, merchants and services that receive payment in bitcoin should wait for at least one confirmation to be distributed over the network, before assuming that the payment was done. The more confirmations that the merchant waits for, the more difficult it is for an attacker to successfully reverse the transaction in a block chain—unless the attacker controls more than half the total network power, in which case it is called a 51% attack.<ref name="51%">{{cite news | author1 = Michael J. Casey | author2 = Paul Vigna | title = Short-Term Fixes To Avert "51% Attack" | url = http://blogs.wsj.com/moneybeat/2014/06/16/bitbeat-a-51-attack-what-is-it-and-could-it-happen/ | accessdate = 30 June 2014 | work = Money Beat | publisher = Wall Street Journal | date = 16 June 2014}}</ref> For example, if the attacker possesses 10% of the calculation power of the bitcoin network and the shop requires 6 confirmations for a successful transaction, the probability of success of such an attack will be 0.02428%.<ref name="paper" /> | |||
| <!--CLARIFY: ===== Vector76 attack ===== | |||
| Also called an attack with confirmation, this is a combination of the 2 aforementioned attacks which gives the perpetrator the ability to spend funds twice simply with a confirmation.{{citation needed|date=April 2014}} --> | |||
| === Selfish mining === | |||
| This attack was first introduced by Ittay Eyal and Emin Gun Sirer at the beginning of November 2013.<ref>{{cite web | last1 = Eyal | first1 = Ittay | last2 = Gun Sirer | first2 = Emin | title = Majority is not Enough: Bitcoin Mining is Vulnerable | url = http://arxiv.org/abs/1311.0243 | date = 15 November 2013 | accessdate = 7 October 2014}}</ref> The attacker does not normally broadcast the blocks upon finding them. He mines his private chain and eventually (when somebody finds his own block) publishes several blocks at row. This makes the "honest" network abandon their last work and switch to the attacker's branch. As a result, honest miners lose a significant part of their revenue, whilst the attacker increases profits due to changes in relative hashpowers. | |||
| According to the authors it changes the incentives for rational miners and makes them want to join the attacker's pool, increasing attacker's hashpower (which could potentially lead to ]). | |||
| However, other researchers disagree with the conclusion and point out the flaws in the article.<ref>{{cite news | last = Hill | first = Kashmir | title = Bitcoin Is Not Broken | url = http://www.forbes.com/sites/kashmirhill/2013/11/06/bitcoin-is-not-broken/ | accessdate = 19 October 2014 | newspaper = Forbes | date = 6 November 2013}}</ref> | |||
| === Deanonymisation of clients === | |||
| Along with transaction graph analysis, which may reveal connections between bitcoin addresses (pseudonyms),<ref name=quantitative /><ref name=reid>{{cite journal|last1=Reid|first1=Fergal|last2=Harrigan|first2=Martin|title=An Analysis of Anonymity in the Bitcoin System|journal=Security and Privacy in Social Networks|date=2013|pages=197–223}}</ref> there is a possible attack<ref name=dep2p>{{cite journal|last1=Biryukov|first1=Alex|last2=Khovratovich|first2=Dmitry|last3=Pustogarov|first3=Ivan|title=Deanonymisation of clients in Bitcoin P2P network|journal=ACM Conference on Computer and Communications Security|date=2014|url=http://orbilu.uni.lu/handle/10993/18679}}</ref> which links user pseudonym to its ], even if the peer is using ]. The attack makes use of bitcoin mechanisms of relaying peer addresses and anti-] protection. The cost of the attack on the full bitcoin network is under €1500 per month.<ref name="dep2p" /> | |||
| ==In the media== | |||
| A bitcoin documentary film called ''The Rise and Rise of Bitcoin'' made its debut at the ] in New York on 23 April 2014, chronicling its origins to its explosive growth in 2013.<ref>{{cite news | url = http://newsbtc.com/2014/03/17/bitcoin-documentary-film-rise-rise-bitcoin-debut-tribeca-film-festival/ | title = Bitcoin Documentary Film ‘The Rise and Rise of Bitcoin’ To Debut at Tribeca Film Festival | date = 17 March 2014 | author = Eric Calouro | accessdate = 31 October 2014}}</ref> | |||
| Several lighthearted songs celebrating bitcoin have been released.<ref>{{cite web | url=http://blogs.wsj.com/moneybeat/2014/02/18/bitbeat-mt-goxs-pyrrhic-victory/ | title = BitBeat: Mt. Gox’s Pyrrhic Victory | publisher = The Wall Street Journal | work = Money Beat | quote='Ode to Satoshi' is a bluegrass-style song with an old-timey feel that mixes references to Satoshi Nakamoto and blockchains (and, ahem, 'the fall of old Mt. Gox') with mandolin-picking and harmonicas. | date = 18 February 2014 | accessdate = 30 September 2014 | author = Paul Vigna}}</ref> Numerous U.S. comedians have made fun of "bitcoin confusion".<ref>{{cite news | title = Bitcoin confusion is comedy gold | author = Patrick Seitz | url = http://news.investors.com/technology-click/032114-694251-comedians-cannot-explain-bitcoin-but-think-it-is-funny.htm | accessdate = 5 September 2014 | work = Investors Business Daily, Tech News & Commentary | publisher = William O'Neil + Co. Incorporated | date = 21 March 2014}}</ref> | |||
| In Fall 2014, undergraduate students at the ] (MIT) each received bitcoins worth $100 "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.<ref name=MIT>{{cite news|last=Hern|first=Alex|title=MIT students to get $100 worth of bitcoin from Wall Street donor|url=http://www.theguardian.com/technology/2014/apr/29/mit-student-bitcoin-wall-street-donor|accessdate=1 May 2014|newspaper=The Guardian|date=30 April 2014}}</ref> | |||
| 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.<ref>http://www.imdb.com/title/tt2148561/?ref_=ttep_ep13</ref> | |||
| On February 19th, 2015, ] 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.<ref>{{cite web|author1=Jason Kurtz|title=Buying bitcoin: Morgan Spurlock looks to live off online currency|url=http://www.cnn.com/2015/02/18/us/bitcoin-morgan-spurlock-inside-man/|publisher=CNN|accessdate=25 February 2015|date=February 20, 2015}}</ref> | |||
| ==Bibliography== | |||
| * {{cite book|title=The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic Order|author= | |||
| Paul Vigna, Michael Casey|publisher=St. Martin's Press|date=January 27, 2015|isbn= 1250065631}} | |||
| ==See also== | |||
| {{Div col}} | |||
| * ] | |||
| * ] | |||
| * ] | |||
| *] | |||
| * ] | |||
| * ] | |||
| * ] | |||
| * ] | |||
| * ] | |||
| {{Div col end}} | |||
| {{Portal bar|Cryptography|Economics|Free software|Internet|Numismatics}} | |||
| ==Notes== | |||
| {{Reflist|group=note|30em}} | |||
| ==References== | |||
| {{Reflist|30em}} | |||
| ==External links== | |||
| {{Commons category|Bitcoin}} | |||
| {{Wiktionary}} | |||
| {{Wikibooks|Professionalism|BitTorrent and BitCoin}} | |||
| {{Wikibooks|Strategy for Information Markets|Micropayments}} | |||
| * {{Dmoz|Science/Social_Sciences/Economics/Financial_Economics/Currency_and_Money/Alternative_Monetary_Systems/Bitcoin}} | |||
| * at ] | |||
| * Bitcoin, Instituto Nacional de Tecnologías de la Communicación (INTECO), Spain, or National Institute of Communication Technologies (undated, 47pp, in English). | |||
| * | |||
| * ] - - historical statistics in time series downloadable format. | |||
| {{Bitcoin}} | |||
| {{Cryptocurrencies}} | |||
| ] | |||
| ] | |||
| ] | |||
| ] | |||
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