Bitcoin is a cryptocurrency or digital currency invented by an elusive programmer nicknamed Satoshi Nakamoto. It was revealed to a cryptography mailing list in 2008 and released to the public in 2009. The currency is decentralized, meaning there is no governing body or organization controlling its use or development.
Bitcoin transactions are done by users of the coin without an intermediary and are published on a public ledger known as the “blockchain.” These transactions are permanent and irreversible, adding trust to the digital currency among users. The U.S. Department of Treasury considers bitcoin to be a “virtual currency.”
Bitcoins are created as users with specialized mining software record and verify transactions. In exchange, these users are rewarded with newly minted bitcoins. Bitcoins can also be traded on numerous exchanges and bought and sold between individuals anywhere. One advantage to using bitcoin is in the lower transaction fees compared to traditional credit card issuers and payment processors.
Among the attractive features of bitcoin is the theoretical limit of 21 million bitcoins that can ever be produced. While fiat or paper currency unbacked by commodities such as the U.S. dollar or euro can be printed infinitely, the supply of bitcoins grows in a stable manner until reaching the theoretical limit. The stable and predictable growth of bitcoin means that each unit of the digital currency will remain scarce, thus supporting its value.
Bitcoin also allows users to remain anonymous, given that personal details are not required to create a wallet and trade the digital currency. While identities are not required to own a wallet, transactions are posted publicly on the blockchain. To enhance user privacy, some services change the wallet address of a user after each transaction.
Currently, there are over 100,000 merchants all over the world that accept bitcoin. Because of wider adoption of bitcoin, the price of one bitcoin unit temporarily surpassed the price of one troy ounce of gold in March of 2017.