Bitcoin turns 10 — how it went from an abstract idea to a $100 billion market in a decade  CNBCBitcoin is 10 years old today — here's a look back at its crazy history  Business InsiderFactbox: Ten years of bitcoin  Reuters10 years later, we still don't know what Bitcoin is for  Telegraph.co.ukIt's Bitcoin's 10th Birthday. Here's What People Are […]
Third-party internet services called online wallets offer similar functionality but may be easier to use. In this case, credentials to access funds are stored with the online wallet provider rather than on the user's hardware.[93][94] As a result, the user must have complete trust in the wallet provider. A malicious provider or a breach in server security may cause entrusted bitcoins to be stolen. An example of such a security breach occurred with Mt. Gox in 2011.[95] This has led to the often-repeated meme "Not your keys, not your bitcoin".[96]
"Satoshi Nakamoto" is presumed to be a pseudonym for the person or people who designed the original bitcoin protocol in 2008 and launched the network in 2009. Nakamoto was responsible for creating the majority of the official bitcoin software and was active in making modifications and posting technical information on the bitcoin forum.[12] There has been much speculation as to the identity of Satoshi Nakamoto with suspects including Dai, Szabo, and Finney – and accompanying denials.[28][29] The possibility that Satoshi Nakamoto was a computer collective in the European financial sector has also been discussed.[30]
In November 2013, the University of Nicosia announced that it would be accepting bitcoin as payment for tuition fees, with the university's chief financial officer calling it the "gold of tomorrow".[85] During November 2013, the China-based bitcoin exchange BTC China overtook the Japan-based Mt. Gox and the Europe-based Bitstamp to become the largest bitcoin trading exchange by trade volume.[86]
To lower the costs, bitcoin miners have set up in places like Iceland where geothermal energy is cheap and cooling Arctic air is free.[204] Bitcoin miners are known to use hydroelectric power in Tibet, Quebec, Washington (state), and Austria to reduce electricity costs.[203][205][206][207] Miners are attracted to suppliers such as Hydro Quebec that have energy surpluses.[208] According to a University of Cambridge study, much of bitcoin mining is done in China, where electricity is subsidized by the government.[209][210]
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Bitcoin's origin story sounds like something out of science fiction: It was launched in 2008 on the heels of a white paper published by the mysterious Satoshi Nakamoto, whose real identity – and country of origin – are unknown. Nakamoto conceived of Bitcoin as a currency that was 1) encrypted; 2) decentralized, i.e. it was ungoverned and did not belong to any nation; and 3) a digital "distributed ledger," such that everyone can verify online the legitimacy of transactions.
On 6 August 2010, a major vulnerability in the bitcoin protocol was spotted. Transactions weren't properly verified before they were included in the transaction log or blockchain, which let users bypass bitcoin's economic restrictions and create an indefinite number of bitcoins.[25][26] On 15 August, the vulnerability was exploited; over 184 billion bitcoins were generated in a transaction, and sent to two addresses on the network. Within hours, the transaction was spotted and erased from the transaction log after the bug was fixed and the network forked to an updated version of the bitcoin protocol.[27] This was the only major security flaw found and exploited in bitcoin's history.[25][26]
Bitcoin (BTC) is a cryptocurrency which is regarded as the world’s first decentralized digital currency. It was created by a pseudonymous person or persons named Satoshi Nakamoto in 2009 and has since gone on to become the world’s most popular cryptocurrency by market cap. Bitcoin is a deflationary currency whose issuance is capped at a total supply of 21 million coins. Each Bitcoin can be divided into one million units, with the smallest unit of 0.00000001 known as a satoshi in homage to its creator. The distributed public ledger that Bitcoin uses to record transactions is known as a blockchain and Bitcoin can be spent at over 100,000 online merchants and can also be held as an investment. Bitcoin is traded for fiat and other cryptocurrencies on various exchanges but can also be used to facilitate p2p transactions. Each transaction incurs a small transaction fee to cover the cost of sending Bitcoin over the blockchain ledger, with the fee going to miners tasked with keeping the network secure.
Various journalists,[204][211] economists,[212][213] and the central bank of Estonia[214] have voiced concerns that bitcoin is a Ponzi scheme. In 2013, Eric Posner, a law professor at the University of Chicago, stated that "a real Ponzi scheme takes fraud; bitcoin, by contrast, seems more like a collective delusion."[215] A 2014 report by the World Bank concluded that bitcoin was not a deliberate Ponzi scheme.[216]:7 The Swiss Federal Council[217]:21 examined the concerns that bitcoin might be a pyramid scheme; it concluded that, "Since in the case of bitcoin the typical promises of profits are lacking, it cannot be assumed that bitcoin is a pyramid scheme." In July 2017, billionaire Howard Marks referred to bitcoin as a pyramid scheme.[218]
We will look at bitcoin as currency and bitcoin as a store of value.  In order to place a value on bitcoin we need to project what market penetration it will achieve in each sphere.  This article will not make a case for what the market penetration will be, but for the sake of the evaluation, we'll pick a rather arbitrary value of 15%, both for bitcoin as a currency and bitcoin as a store of value.  You are encouraged to form your own opinion for this projection and adjust the valuation accordingly.
After a certain amount of transactions have been verified by a miner, they will receive newly minted bitcoins for their work and thus new bitcoins will be added into circulation, while the number of bitcoins in circulations are now in the multi-millions range, the maximum amount of bitcoins that can ever be created is capped at 21 million. The creation rate is automatically halved every few years as more bitcoins are added into circulation, whilst this system is modeled after gold, mining difficulty is always increasing and makes finding new bitcoins more rare as the number of available bitcoins reaches the 21 million cap.

By 2017, Bitcoin dominance had plummeted from 95% to as low as 40% as a direct result of the usability problems. Fortunately, a large portion of the Bitcoin community, including developers, investors, users, and businesses, still believed in the original vision of Bitcoin -- a low fee, peer to peer electronic cash system that could be used by all the people of the world.


Volatility. This very reason many speculators are attracted to Bitcoin is the same reason many potential users are hesitant to get involved. Users that look at Bitcoin as a speculative investment option are essentially gambling on the process, and the future price of Bitcoin is largely unknown. There are estimates that Bitcoin will both be worth pennies in a few years, while some predict that a single bitcoin will be worth $500k in three years. As new investors continue to invest and the market cap grows, Bitcoin’s price could become more stable.
In September 2015, the establishment of the peer-reviewed academic journal Ledger (ISSN 2379-5980) was announced. It covers studies of cryptocurrencies and related technologies, and is published by the University of Pittsburgh.[239] The journal encourages authors to digitally sign a file hash of submitted papers, which will then be timestamped into the bitcoin blockchain. Authors are also asked to include a personal bitcoin address in the first page of their papers.[240][241]
Bitcoin is in the very early stages of acceptance, and although it is already accepted as a means of payment by numerous merchants, it has yet to become more widely accepted and “mainstream.” This could change, however, as more and more users are attracted to cryptocurrencies for the various potential benefits they may provide. In fact, investors have been flocking to the currency in significant numbers, and some even feel that eventually Bitcoin and other cryptocurrencies could replace other traditional payment methods.
Jump up ^ Paul Vigna (18 February 2014). "BitBeat: Mt. Gox's Pyrrhic Victory". Money Beat. The Wall Street Journal. Archived from the original on 6 October 2014. Retrieved 30 September 2014. '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.
Full clients verify transactions directly by downloading a full copy of the blockchain (over 150 GB As of January 2018).[90] They are the most secure and reliable way of using the network, as trust in external parties is not required. Full clients check the validity of mined blocks, preventing them from transacting on a chain that breaks or alters network rules.[91] Because of its size and complexity, downloading and verifying the entire blockchain is not suitable for all computing devices.
After Bitcoin nearly reached $20,000, it was not able to maintain those figures. January did see a high of over $17,500 around the 7th, but this was short-lived and followed by a steady drop. By the end of January 2018, Bitcoin was at just over $10,000. By Feb. 5, it was under $7,000. It rallied again, getting over $11,000 in early March, but this was followed by a drop back below $7,000. The largest recent high for Bitcoin was in early May, when it was above $9,500. By late June, it was under $6,000. Following a rise to more than $8,000 in late July, Bitcoin has remained around $6,000 to $6,500, other than a brief spike up over $7,300 in September.
In 2013 and 2014, the European Banking Authority[144] and the Financial Industry Regulatory Authority (FINRA), a United States self-regulatory organization,[145] warned that investing in bitcoins carries significant risks. Forbes named bitcoin the best investment of 2013.[146] In 2014, Bloomberg named bitcoin one of its worst investments of the year.[147] In 2015, bitcoin topped Bloomberg's currency tables.[148]
Bitcoin may react differently to inflation/deflation: Bitcoin differs significantly from fiat currencies, due to the fact that there is a limited number of bitcoins to be mined. Paper money, on the other hand, can be created at will out of thin air by central banks. Due to its limited supply, Bitcoin may potentially hold its value better than paper money, which can technically have an unlimited supply.
Additionally, FinCEN claimed regulation over American entities that manage bitcoins in a payment processor setting or as an exchanger: "In addition, a person is an exchanger and a money transmitter if the person accepts such de-centralized convertible virtual currency from one person and transmits it to another person as part of the acceptance and transfer of currency, funds, or other value that substitutes for currency."[60][61]
Bitcoin is a type of cryptocurrency: Balances are kept using public and private "keys," which are long strings of numbers and letters linked through the mathematical encryption algorithm that was used to create them. The public key (comparable to a bank account number) serves as the address which is published to the world and to which others may send bitcoins. The private key (comparable to an ATM PIN) is meant to be a guarded secret, and only used to authorize Bitcoin transmissions.
After Bitcoin nearly reached $20,000, it was not able to maintain those figures. January did see a high of over $17,500 around the 7th, but this was short-lived and followed by a steady drop. By the end of January 2018, Bitcoin was at just over $10,000. By Feb. 5, it was under $7,000. It rallied again, getting over $11,000 in early March, but this was followed by a drop back below $7,000. The largest recent high for Bitcoin was in early May, when it was above $9,500. By late June, it was under $6,000. Following a rise to more than $8,000 in late July, Bitcoin has remained around $6,000 to $6,500, other than a brief spike up over $7,300 in September.
The price of bitcoins has gone through cycles of appreciation and depreciation referred to by some as bubbles and busts.[155] In 2011, the value of one bitcoin rapidly rose from about US$0.30 to US$32 before returning to US$2.[156] In the latter half of 2012 and during the 2012–13 Cypriot financial crisis, the bitcoin price began to rise,[157] reaching a high of US$266 on 10 April 2013, before crashing to around US$50.[158] On 29 November 2013, the cost of one bitcoin rose to a peak of US$1,242.[159] In 2014, the price fell sharply, and as of April remained depressed at little more than half 2013 prices. As of August 2014 it was under US$600.[160] During their time as bitcoin developers, Gavin Andresen[161] and Mike Hearn[162] warned that bubbles may occur.
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