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Bitcoin is a cryptocurrency and worldwide

payment system.It is the first decentralized digital


currency – the system works without a central
repository or single administrator.The network is
peer-to-peer and transactions take place between
users directly through the use of cryptography,
without an intermediary. These transactions are
verified by network nodes and recorded in a public
distributed ledger called a blockchain. Bitcoin was
invented by an unknown person or group of people
under the name Satoshi Nakamoto and released as
open-source software in 2009.

Bitcoins are created as a reward for a process known as mining. They can be
exchanged for other currencies, products, and services. As of February 2015, over
100,000 merchants and vendors accepted bitcoin as payment. Research produced by
Cambridge University estimates that in 2017, there are 2.9 to 5.8 million unique users
using a cryptocurrency wallet, most of them using bitcoin.

The use of bitcoin is recognized to be widespread in criminal activity including


terrorism, public corruption, illegal drug and weapons trading, money laundering, and
tax evasion. Its growth is considered by many to be linked to a rise in international crime.
Bitcoin transactions are illegal or restricted in a number of countries, including China,
Vietnam, Nigeria and South Korea.

Financial speculation on the value of bitcoin has for some years widely been
compared to famous economic bubbles of history, such as the tulip mania.

In February of 2014 there were over 12,000,000 bitcoons. At current prices, the
cumulative value of Bitcoin issued coins (equivalent to market capitalization) is over $
7 billion. More and more companies are beginning to accept this cryptomonas as a
means of payment in exchange for goods and services. Globally, in 2015, the number of
merchants accepting Bitcoin exceeded 100,000. Services include e-commerce, hotels
and properties, bars and restaurants, web / tech services, gambling sites and sports
betting , advertising, etc. Many of these are online sites, but a large number of physical
journals currently support this cryptomon. Among the major companies that accept
payments in Bitcoin include Microsoft, Dell , Newegg, Virgin Galactic, Overstock,
Showroomprive, TigerDirect, BTCTrip.Economia Bitcoin is still small in relation to the
established economies long ago and the program is still in beta development stage. But
real goods and services, such as used cars and independent software development
contracts, are now traded. Bitcoins are accepted for both online and tangible services .
The Free Software Foundation and the Singularity Institute , Electronic Frontier
Foundation, Greenpeace, Mozilla Foundation, Wikimedia, University of Nicosia accept
donations in Bitcoin. Traders change different currencies such as US Dollars (USD),
Russian Rubles (RUB) and Japanese Yeni (JPY), etc. Bitcoini and vice versa. These
transactions take place via exchange sites [28]. Anyone can see the block of blocks and
can see the transactions in real time. Different services facilitate such monitoring.

Compared to conventional fiat coins, Bitcoin differs in the absence of any


supervisor who can control value due to their decentralized nature, mitigating possible
instabilities caused by central banks. Inflation is limited and controlled, scheduled in the
Bitcoin program, but it is predictable and known to all parties from the start. So inflation
can not be manipulated centrally to affect the redistribution of value from ordinary users.
Instead of the incentive to create new bitchers to record block transactions, the nodes of
that period expect to depend on their ability to compete freely in collecting transaction
processing fees. Transfers are facilitated directly without the help of a payment
processor between nodes. This type of transaction makes it impossible to cancel the
transaction. Bitcoin client transmits the transaction of close nodes, which in turn
propagates the network transaction. Corrupt or invalid transactions are rejected by
honest nodes. Transactions are free of charge but a fee may be paid to other nodes to
prioritize transaction processing. The total number of bitcoins tends to 21 million over
time. Monetary mass increases as geometric series for every 21,000 blocks
(approximately 4 years); by 2013 half of the total monetary mass will be generated, and
by 2017, 3/4 will be generated. As it approaches this number, the bitcoin value will feel
a period of price deflation (increase in bitcoin value) due to the lack of new money-table
insertions. Bitcoins are however divisible at 8 decimal places (allowing 2.1 * 1015 total
units), eliminating practical downward price downs in a deflationary environment.
Instead of relying on the incentive to create new bitcoins to record block transactions,
the nodes of this period are expected to depend on their ability to compete in collecting
transaction processing fees.

Scenarios predicted by the failure of the bitcoin include a currency devaluation,


a diminishing number of users, or a global government crackdown on the program.
Succession to another cryptographic currency system is also possible if a new currency
is created and will be considered more legitimate (for example, be supported by a large
technology or institution). It may not be possible for all cryptological coins like bitcoin
to be banned. Decentralization and anonymity embodied by bitcoin appear to be a
reaction to the persecution of the US government. of coins such as e-gold and Liberty
Dollar. [31] In an Irish Times Investigation article, Danny O'Brien reports, "When I
show people this bitter economy, they ask," Is it legal? Is this a scam? "I imagine there
are lawyers and economists who struggle to answer these questions. I think you will
soon be able to add politicians to this list too. "

Since the first transactions in 2009, Bitcoin has had a relatively stable
evolution by 2011, the exchange rate against the US dollar rising from $ 0.30 for a
Bitcoin (BTC) to about $ 17. At the beginning of 2011, a number of issues of entities
doing dollar-denominated transactions led to a rapid drop in the $ 5 / BTC rate. The
years 2011 and 2012 were consolidation periods, the course varying slightly and
reaching about $ 14 / BTC.
In 2013, a Bitcoin price exploded from $ 14 / BTC in January to a historic
high of over $ 1,000 between November and December 2013. An important role in this
rise has been the economic crisis in Cyprus that has led to the blocking of depositors'
from several banks. [32] Another factor of growth was the massive investment in
infrastructure and the involvement of Wall Street investors among the most famous find
Winklevoss twins. Until 2013, the Bitcoin network was dominated by small "currency
producers", the involvement of companies and investors led the "mining" process into
the professional area, with increasingly strong equipment connected to the grid.
The spectacular increase in the exchange rate against the dollar has attracted
the attention of the authorities, and in many countries Bitcoin is not recognized as a legal
means of payment. In December, the announcement by China's Central Bank on the ban
on Bitcoin transactions marked the start of the Bitcoin decline. The exchange rate
declined steadily and reached within a few months between $ 550 and $ 650 / BTC. At
the end of March 2014, the Chinese government banned banks and payment processors
from further trading Bitcoin, the US dollar price dropping to about $ 400 / BTC.
There are arguments to support the idea that Bitcoin is a huge "pump and
dump" or worse, a pyramidal game. Numerous scandals have taken place over the years,
from the collapse of the largest exchange house (Mt. Gox) to the theft of 120,000
Bitcoins destroying the myth of safety and transparency. Due to the cost and necessity
of exponentially growing "hardware" capabilities, a small number of "miners" control
most of the Bitcoin network.
Since it was created by 2017, the result has been a growing centralization,
with the largest "miners" managing 75% of the network and the top two over 50%,
destroying the myth of sustainability / decentralization.

Advantages of Bitcoin

Freedom of payment
 With Bitcoin you can send and receive money anywhere in the world at any time.
 You do not have to worry about crossing the border, rescheduling for linked
holidays, or other limitations that might occur during the money transfer.With
Bitcoin, you have TOTAL control over your money. There is no form of central
authority in the Bitcoin network.
Security and control
 Allowing users to control their transactions, helps keep Bitcoin safe for the
network.
Traders can not charge additional charges without being notified. They need
to talk to the consumer before adding any kind of toll.
 Bitcoin payments can be made and completed without personal information
being linked to the transaction.
 Due to the fact that personal information is hidden from indiscreet eyes, Bitcoin
protects you against identity theft.
 The bitcoin wallet can be encrypted and backed up to ensure money safety.

The information is transparent


 With the blockchain, all completed transactions are visible to everyone, but
personal information is hidden.
 Your public address is visible; but your personal information is not related to this.
Anyone can check transactions at any time in the Bitcoin block chain.
 The Bitcoin protocol can not be manipulated by any person, organization or
government.
 That's because Bitcoin is cryptographically safe.
 Very low fees
 Currently,Bitocin payments are either not charged or very small.
 Users may include fees to process transactions faster. The higher the charge, the
more priority it gets in the network and it will process faster.
 Digital currency exchanges help the trader to process operations by converting
bitcoins into fictitious coins. These services generally have lower fees than credit
cards and PayPal.

Fewer risks for traders


 Due to the fact that Bitcoin transactions can not be reversed, they do not contain
personal information, and they are safe, and traders are protected against possible
losses that could occur due to fraud.
 With Bitcoin, traders can do business where crime and fraud rates are high. That's
because it's very hard to mislead someone in Bitocin thanks to the public register,
also known as blockchain.

Disadvantages of Bitcoin
Lack of notice and understanding
 Many people still do not know the existence of digital coins and Bitcoin.
 People need to be informed about what Bitcoin means in order to apply it to their
lives.
 Networking is the best way to promote Bitcoin.
 Companies accept Bitcoins because of their advantages, but the list is relatively
short compared to physical coins.
 Companies like TigerDirect, Dell, NewEgg and Overstock accept Bitcoin as a
form of payment, which is great. But if they do not have informed staff
understanding digital coins, how will they help customers understand and use
Bitcoin for transactions?
 Employees should be trained on Bitcoin to help their customers. This will
certainly require some time and effort. Otherwise, what is the advantage of such
big companies that accept Bitcoin if their staff does not know what the digital
coins are?

Risk and Volatility


 Bitcoin is volatile, especially because there is a limited amount of coins and the
demand for them increases with every passing day.
 However, volatility is expected to decrease as time passes.
 Given that many companies, media and shopping centers have begun to accept
Bitcoin, its price will eventually stabilize.
 Currently, the Bitcoin price jumps from day to day, especially due to the events
associated with digital coins.

Still under development


 Bitcoin is still in its infancy, with incomplete functions but developing.
To make the digital currency safer and more accessible, new features, tools
and services are currently under development.
 Bitcoin has yet to grow until it reaches its full potential.
 This is because Bitcoin is just starting out and has to manage its problems just
like any other coin in the beginning.

In conclusion, Bitcoin is not perfect, it has many advantages that physical money
does not offer to its users; however, it also has drawbacks. That's because Bitcoin is still
a relatively young coin. People are beginning to perceive their existence more and more.
For Bitcoin to be successful, more people should understand what this is and not leave
the preconceived notions to distort the concept of digital coin.
Vocabulary
1. 51% Attack

A 51% attack is a situation where more than half of the computing power on a network
is operated by a single individual or concentrated group, which gives them complete and
total control over a network. Things that an entity with 51% of the computing power can
do include, but are not limited to:

 Halting all mining.


 Halting and manipulating all interpersonal transactions.
 Use singular coins over and over.

2. Address

A bitcoin address is essentially the same thing as your home address. It’s the location
from which you would receive, send or hold your currency. These addresses generally
manifest in a long string of alphanumeric characters and will look something like:

1MhN5qfH1vgx9CLL17i3DK9D2gzrHR7dZF

A wallet address is the public portion of the two encrypted keys necessary for a holder
to accept or verify a transaction.
3. Altcoin

An altcoin is the community accepted name for any coin that isn’t Bitcoin. Altcoins that
we’ve previously discussed include Dash and Monero.

4. ASIC/ASIC Miner

ASIC mining is a crafty method of mining various coins at a much faster rate than any
normal desktop or laptop might allow. Essentially what an ASIC, or Application
Specific Integrated Circuit is, is a chip specifically created to execute one task. Enter
ASIC mining. An example of one such model is an ASIC miner created to ONLY
process SHA-256, which is the problem offered by the Bitcoin blockchain to mine new
coins. There are also ASIC’s for scrypt which specifically solves the mathematical code
in relation to altcoins such as Litecoin. Though, in recent years there has been a good
amount of dialogue surrounding the longevity of mining this way and we’ve even seen
coins making it so that it’s impossible to mine with an ASIC.

5. Blockchain

A blockchain is a data system that allows for the creation of a digital ledger of
transactions on a non-centralized network. Cryptography is the main operator that
allows for users to engage with the ledger without the need for any central figurehead.
In layman’s terms, this means that people and computers all over work together to create
a network instead of a network being made by one single person or company. This
network is enabled and protected through cryptography! We have seen this used in
currency, data transfer and on. The blockchain is comprised of “blocks” and is
constantly growing as each new record, datum, or block is added onto the chain for
everyone to see.

6. Block

Blocks are essentially pages in a ledger or record keeping book. Blocks are the files
where unalterable data related to the network is permanently stored. Forever. Like
eternity.

7. Block Height

Block height is the number of blocks preceding the genesis block (first block) on the
chain. A genesis block will always have a height of zero because nothing precedes it.
It’s a metric used to create a bearing on time in the programming world as well as a few
other functions such as maintaining counter-party and betting in the crypto world.
Considering that a new Bitcoin block is made every 10 minutes, you can work out certain
time related pieces of information if you have the total length of the chain.
8. Block Reward

Block reward is the reward allotted for hashing, or solving the mathematical equation
related to a block. The reward for mining a Bitcoin block is 25 bitcoins per block mined,
which will halve every 210,000 blocks!

9. Distributed & Central Ledger

A distributed ledger is an agreement of shared, replicable and synchronized data, in this


case spread across multiple networks, across many CPU’s. A central ledger is the
opposite in that all of the data, while being synchronized and replicable is controlled by
a singular network or individual.

10. Fork

A fork is the permanent divergence of an alternative operating version of the current


blockchain. Forks come into existence when a 51% attack occurs, a bug in the program,
or more commonly a new set of consensus rules come into existence. These happen
when a development team creates and inserts notably substantial changes into the
system. The successful fork is decided by the height of their blocks.

11. Halving

Halving is the reduction of minable reward every so many blocks. For Bitcoin the reward
is halved after the first 210,000 blocks are mined and then every 210,000 thereafter.

12. Hashrate

Hashrate is the speed at which a block is discovered and the rate at which the related
math problem is solved. Certain tools have been created to allow for higher hashrates.
See ASIC.

13. Mining

Mining is the term used for discovering and solving blocks along the blockchain. A
reward is given for solving the algorithm and lengthening the chain, called a mining
reward. The mining reward for the Bitcoin blockchain is Bitcoin.

14. Multisig

Multisig, or multisignature refers to having more than one signature to approve a


transaction. This form of security is beneficial for a company receiving money into their
BTC wallet. If a company wants to keep it so that one employee doesn’t have sole access
to a transaction, multisig allows for a transaction to be verified by two separate
employees before it’s complete.

15. Node
A node is essentially a computer connected to the Bitcoin network. A node supports the
network through validation and relaying of transactions while receiving a copy of the
full blockchain itself.

16. P2P

P2P is another way of saying Peer-to-Peer. Peer-to-peer has become a very large focus
of blockchain as one of the biggest selling points is decentralization. Nearly every
interaction on the blockchain can be fulfilled P2P, or without a centralized variable like
a store, bank or notary.

17. PoW

Proof of work was a concept originally designed to sieve spam emails and prevent
DDOS attacks. A Proof of Work is essentially a datum that is very costly to produce in
terms of time and resources, but can be very simply verified by another party. The proof
of work for Bitcoin is referred to as a “nonce,” or number used only once. This has been
considered an energy intensive alternative to proof of stake as the computers
unfortunately have to be on and running, which also drives the market towards
centralization of hashing power… which is what the blockchain aims to defeat!

18. PoS

Proof of stake has been considered the greener alternative to PoW. Where PoW requires
the prover to perform a certain amount of computational work, a proof of stake system
requires the prover to show ownership of a certain amount of money, or stake.

19. Public/Private Key

In cryptography, a public key is a cryptographic key that can be utilized by any party to
encrypt a message. Another party can then receive the message and using a key that is
only known to that individual or group, decode the message.

20. Signature

A signature is the mathematical operation that lets someone prove their sole ownership
over their wallet, coin, data or on. An example is how a Bitcoin wallet may have a public
address, but only a private key can verify with the whole network that a signature
matches and a transaction is valid. These are only known to the owner and are basically
mathematically impossible to uncover.

21. Smart Contract


A two way smart contract is an unalterable agreement stored on the blockchain that has
specific logic operations akin to a real world contract. Once signed, it can never be
altered. A smart contract can be used to define certain computational benchmarks or
barriers that have to be met in turn for money or data to be deposited or even be used to
verify things such as land rights.

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