Bitcoin (₿) is a decentralized digital currency, without a central bank or single administrator, that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries.^[7] Transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain. The cryptocurrency was invented in 2008 by an unknown person or group of people using the name Satoshi Nakamoto.^[9] The currency began use in 2009^[10] when its implementation was released as open-source software.^{[6]: ch. 1}

Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services. Bitcoin has been criticized for its use in illegal transactions, the large amount of electricity (and thus carbon footprint) used by mining, price volatility, and thefts from exchanges. Some investors and economists have characterized it as a speculative bubble at various times. Others have used it as an investment, although several regulatory agencies have issued investor alerts about bitcoin.^[11][12][13] In September 2021, El Salvador officially adopted Bitcoin as legal tender, becoming the first nation to do so.^[14]

The word bitcoin was defined in a white paper published on 31 October 2008.^[4][15] It is a compound of the words bit and coin.^[16] No uniform convention for bitcoin capitalization exists; some sources use Bitcoin, capitalized, to refer to the technology and network and bitcoin, lowercase, for the unit of account.^[17] The Wall Street Journal,^[18] The Chronicle of Higher Education,^[19] and the Oxford English Dictionary^[16] advocate the use of lowercase bitcoin in all cases.

Bitcoin
Denominations
Plural	bitcoins
Symbol	₿ (Unicode: U+20BF ₿ BITCOIN SIGN (HTML ₿))[a]
Code	BTC,[b] XBT[c]
Precision	10−8
Subunits
1⁄1000	millibitcoin
1⁄1000000	microbitcoin
1⁄100000000	satoshi[2]
Development
Original author(s)	Satoshi Nakamoto
White paper	“Bitcoin: A Peer-to-Peer Electronic Cash System”[4]
Implementation(s)	Bitcoin Core
Initial release	0.1.0 / 9 January 2009 (13 years ago)
Latest release	22.0 / 13 September 2021 (3 months ago)[3]
Code repository	github.com/bitcoin/bitcoin
Development status	Active
Website	bitcoin.org
Ledger
Ledger start	3 January 2009 (13 years ago)
Timestamping scheme	Proof-of-work (partial hash inversion)
Hash function	SHA-256 (two rounds)
Issuance schedule	Decentralized (block reward) Initially ₿50 per block, halved every 210,000 blocks[7]
Block reward	₿6.25[d]
Block time	10 minutes
Supply limit	₿21,000,000[5][e]
Valuation
Market cap	US$1.149 trillion[f]
Demographics
Official user(s)	El Salvador[8]

Design

Units and divisibility

The unit of account of the bitcoin system is the bitcoin. Currency codes for representing bitcoin are BTC^[a] and XBT.^[b][23]: 2 Its Unicode character is ₿.^[1] One bitcoin is divisible to eight decimal places.^{[6]: ch. 5} Units for smaller amounts of bitcoin are the millibitcoin (mBTC), equal to 1⁄1000 bitcoin, and the satoshi (sat), which is the smallest possible division, and named in homage to bitcoin’s creator, representing 1⁄100000000 (one hundred millionth) bitcoin.^[2] 100,000 satoshis are one mBTC.^[24]

Blockchain

Data structure of blocks in the ledger.

Number of bitcoin transactions per month, semilogarithmic plot^[25]

Number of unspent transaction outputs^[26]

The bitcoin blockchain is a public ledger that records bitcoin transactions.^[27] It is implemented as a chain of blocks, each block containing a hash of the previous block up to the genesis block^[c] in the chain. A network of communicating nodes running bitcoin software maintains the blockchain.^{[28]: 215–219} 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. To achieve independent verification of the chain of ownership each network node stores its own copy of the blockchain.^[29] At varying intervals of time averaging to every 10 minutes, a new group of accepted transactions, called a block, is created, added to the blockchain, and quickly published to all nodes, without requiring central oversight. This allows bitcoin software to determine when a particular bitcoin was spent, which is needed to prevent double-spending. A conventional ledger records the transfers of actual bills or promissory notes that exist apart from it, but the blockchain is the only place that bitcoins can be said to exist in the form of unspent outputs of transactions.^{[6]: ch. 5}

Individual blocks, public addresses and transactions within blocks can be examined using a blockchain explorer.^{[citation needed]}

Transactions

See also: Bitcoin network

Transactions are defined using a Forth-like scripting language.^{[6]: ch. 5} Transactions consist of one or more inputs and one or more outputs. When a user sends bitcoins, the user designates each address and the amount of bitcoin being sent to that address in an output. To prevent double spending, each input must refer to a previous unspent output in the blockchain.^[30] The use of multiple inputs corresponds to the use of multiple coins in a cash transaction. Since transactions can have multiple outputs, users can send bitcoins to multiple recipients in one transaction. As in a cash transaction, the sum of inputs (coins used to pay) can exceed the intended sum of payments. In such a case, an additional output is used, returning the change back to the payer.^[30] Any input satoshis not accounted for in the transaction outputs become the transaction fee.^[30]

Though transaction fees are optional, miners can choose which transactions to process and prioritize those that pay higher fees.^[30] Miners may choose transactions based on the fee paid relative to their storage size, not the absolute amount of money paid as a fee. These fees are generally measured in satoshis per byte (sat/b). The size of transactions is dependent on the number of inputs used to create the transaction, and the number of outputs.^{[6]: ch. 8}

The blocks in the blockchain were originally limited to 32 megabytes in size. The block size limit of one megabyte was introduced by Satoshi Nakamoto in 2010. Eventually the block size limit of one megabyte created problems for transaction processing, such as increasing transaction fees and delayed processing of transactions.^[31] Andreas Antonopoulos has stated Lightning Network is a potential scaling solution and referred to lightning as a second layer routing network.^{[6]: ch. 8}

Ownership

Simplified chain of ownership as illustrated in the bitcoin whitepaper.^[4] In practice, a transaction can have more than one input and more than one output.^[30]

In the blockchain, bitcoins are registered to bitcoin addresses. Creating a bitcoin address requires nothing more than picking a random valid private key and computing the corresponding bitcoin address. This computation can be done in a split second. But the reverse, computing the private key of a given bitcoin address, is practically unfeasible.^{[6]: ch. 4} Users can tell others or make public a bitcoin address without compromising its corresponding private key. Moreover, the number of valid private keys is so vast that it is extremely unlikely someone will compute a key-pair that is already in use and has funds. The vast number of valid private keys makes it unfeasible that brute force could be used to compromise a private key. To be able to spend their bitcoins, the owner must know the corresponding private key and digitally sign the transaction.^[d] The network verifies the signature using the public key; the private key is never revealed.^{[6]: ch. 5}

If the private key is lost, the bitcoin network will not recognize any other evidence of ownership;^[28] the coins are then unusable, and effectively lost. For example, in 2013 one user claimed to have lost 7,500 bitcoins, worth $7.5 million at the time, when he accidentally discarded a hard drive containing his private key.^[34] About 20% of all bitcoins are believed to be lost -they would have had a market value of about $20 billion at July 2018 prices.^[35]

To ensure the security of bitcoins, the private key must be kept secret.^{[6]: ch. 10} If the private key is revealed to a third party, e.g. through a data breach, the third party can use it to steal any associated bitcoins.^[36] As of December 2017, around 980,000 bitcoins have been stolen from cryptocurrency exchanges.^[37]

Regarding ownership distribution, as of 16 March 2018, 0.5% of bitcoin wallets own 87% of all bitcoins ever mined.^[38]

Mining

Mining is a record-keeping service done through the use of computer processing power.^[f] Miners keep the blockchain consistent, complete, and unalterable by repeatedly grouping newly broadcast transactions into a block, which is then broadcast to the network and verified by recipient nodes.^[27] Each block contains a SHA-256 cryptographic hash of the previous block,^[27] thus linking it to the previous block and giving the blockchain its name.^{[6]: ch. 7 [27]}

To be accepted by the rest of the network, a new block must contain a proof-of-work (PoW).^[27][g] The PoW requires miners to find a number called a nonce (number used once), such that when the block content is hashed along with the nonce, the result is numerically smaller than the network’s difficulty target.^{[6]: ch. 8} This proof is easy for any node in the network to verify, but extremely time-consuming to generate, as for a secure cryptographic hash, miners must try many different nonce values (usually the sequence of tested values is the ascending natural numbers: 0, 1, 2, 3, …) before a result happens to be less than the difficulty target. Because the difficulty target is extremely small compared to a typical SHA-256 hash, block hashes have many leading zeros^{[6]: ch. 8} as can be seen in this example block hash: 0000000000000000000590fc0f3eba193a278534220b2b37e9849e1a770ca959

By adjusting this difficulty target, the amount of work needed to generate a block can be changed. Every 2,016 blocks (approximately 14 days given roughly 10 minutes per block), nodes deterministically adjust the difficulty target based on the recent rate of block generation, with the aim of keeping the average time between new blocks at ten minutes. In this way the system automatically adapts to the total amount of mining power on the network.^{[6]: ch. 8} As of September 2021, it takes on average 79 sextillion (79 thousand billion billion) attempts to generate a block hash smaller than the difficulty target.^[43] Computations of this magnitude are extremely expensive and utilize specialized hardware.^[44]

The proof-of-work system, alongside the chaining of blocks, makes modifications of the blockchain extremely hard, as an attacker must modify all subsequent blocks in order for the modifications of one block to be accepted.^[45] As new blocks are mined all the time, the difficulty of modifying a block increases as time passes and the number of subsequent blocks (also called confirmations of the given block) increases.^[27]

Computing power is often bundled together by a Mining pool to reduce variance in miner income. Individual mining rigs often have to wait for long periods to confirm a block of transactions and receive payment. In a pool, all participating miners get paid every time a participating server solves a block. This payment depends on the amount of work an individual miner contributed to help find that block.^[46]

Supply

Total bitcoins in circulation.^[26]

The successful miner finding the new block is allowed by the rest of the network to collect for themselves all transaction fees from transactions they included in the block, as well as a pre-determined reward of newly created bitcoins.^[47] As of 11 May 2020, this reward is currently 6.25 newly created bitcoins per block.^[48] To claim this reward, a special transaction called a coinbase is included in the block, with the miner as the payee.^{[6]: ch. 8} All bitcoins in existence have been created through this type of transaction. The bitcoin protocol specifies that the reward for adding a block will be reduced by half every 210,000 blocks (approximately every four years). Eventually, the reward will round down to zero, and the limit of 21 million bitcoins^[h] will be reached c. 2140; the record keeping will then be rewarded by transaction fees only.^[49]

Decentralization

Bitcoin is decentralized thus:^[7]

• Bitcoin does not have a central authority.^[7]
• The bitcoin network is peer-to-peer,^[10] without central servers.
• The network also has no central storage; the bitcoin ledger is distributed.^[50]
• The ledger is public; anybody can store it on a computer.^{[6]: ch. 1}
• There is no single administrator;^[7] the ledger is maintained by a network of equally privileged miners.^{[6]: ch. 1}
• Anyone can become a miner.^{[6]: ch. 1}
• The additions to the ledger are maintained through competition. Until a new block is added to the ledger, it is not known which miner will create the block.^{[6]: ch. 1}
• The issuance of bitcoins is decentralized. They are issued as a reward for the creation of a new block.^[47]
• Anybody can create a new bitcoin address (a bitcoin counterpart of a bank account) without needing any approval.^{[6]: ch. 1}
• Anybody can send a transaction to the network without needing any approval; the network merely confirms that the transaction is legitimate.^[51]: 32

Conversely, researchers have pointed out at a “trend towards centralization”. Although bitcoin can be sent directly from user to user, in practice intermediaries are widely used.^{[28]: 220–222} Bitcoin miners join large mining pools to minimize the variance of their income.^{[28]: 215, 219–222 [52]: 3 [53]} Because transactions on the network are confirmed by miners, decentralization of the network requires that no single miner or mining pool obtains 51% of the hashing power, which would allow them to double-spend coins, prevent certain transactions from being verified and prevent other miners from earning income.^[54] As of 2013 just six mining pools controlled 75% of overall bitcoin hashing power.^[54] In 2014 mining pool Ghash.io obtained 51% hashing power which raised significant controversies about the safety of the network. The pool has voluntarily capped their hashing power at 39.99% and requested other pools to act responsibly for the benefit of the whole network.^[55] Around the year 2017, over 70% of the hashing power and 90% of transactions were operating from China.^[56]

According to researchers, other parts of the ecosystem are also “controlled by a small set of entities”, notably the maintenance of the client software, online wallets and simplified payment verification (SPV) clients.^[54]

Privacy and fungibility

Bitcoin is pseudonymous, meaning that funds are not tied to real-world entities but rather bitcoin addresses. Owners of bitcoin addresses are not explicitly identified, but all transactions on the blockchain are public. In addition, transactions can be linked to individuals and companies through “idioms of use” (e.g., transactions that spend coins from multiple inputs indicate that the inputs may have a common owner) and corroborating public transaction data with known information on owners of certain addresses.^[57] Additionally, bitcoin exchanges, where bitcoins are traded for traditional currencies, may be required by law to collect personal information.^[58] To heighten financial privacy, a new bitcoin address can be generated for each transaction.^[59]

Wallets and similar software technically handle all bitcoins as equivalent, establishing the basic level of fungibility. Researchers have pointed out that the history of each bitcoin is registered and publicly available in the blockchain ledger, and that some users may refuse to accept bitcoins coming from controversial transactions, which would harm bitcoin’s fungibility.^[60] For example, in 2012, Mt. Gox froze accounts of users who deposited bitcoins that were known to have just been stolen.^[61]

Wallets

For broader coverage of this topic, see Cryptocurrency wallet.

A wallet stores the information necessary to transact bitcoins. While wallets are often described as a place to hold^[62] or store bitcoins, due to the nature of the system, bitcoins are inseparable from the blockchain transaction ledger. A wallet is more correctly defined as something that “stores the digital credentials for your bitcoin holdings” and allows one to access (and spend) them.^{[6]: ch. 1, glossary} Bitcoin uses public-key cryptography, in which two cryptographic keys, one public and one private, are generated.^[63] At its most basic, a wallet is a collection of these keys.

Software wallets

The first wallet program, simply named Bitcoin, and sometimes referred to as the Satoshi client, was released in 2009 by Satoshi Nakamoto as open-source software.^[10] In version 0.5 the client moved from the wxWidgets user interface toolkit to Qt, and the whole bundle was referred to as Bitcoin-Qt.^[64] After the release of version 0.9, the software bundle was renamed Bitcoin Core to distinguish itself from the underlying network.^[65][66] Bitcoin Core is, perhaps, the best known implementation or client. Alternative clients (forks of Bitcoin Core) exist, such as Bitcoin XT, Bitcoin Unlimited,^[67] and Parity Bitcoin.^[68]

There are several modes which wallets can operate in. They have an inverse relationship with regards to trustlessness and computational requirements.

• Full clients verify transactions directly by downloading a full copy of the blockchain (over 150 GB as of January 2018).^[69] 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.^{[6]: ch. 1} Because of its size and complexity, downloading and verifying the entire blockchain is not suitable for all computing devices.
• Lightweight clients consult full nodes to send and receive transactions without requiring a local copy of the entire blockchain (see simplified payment verification – SPV). This makes lightweight clients much faster to set up and allows them to be used on low-power, low-bandwidth devices such as smartphones. When using a lightweight wallet, however, the user must trust full nodes, as it can report faulty values back to the user. Lightweight clients follow the longest blockchain and do not ensure it is valid, requiring trust in full nodes.^[70]

Third-party internet services called online wallets or webwallets 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.^[71] As a result, the user must have complete trust in the online 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.^[72]

Cold storage

Wallet software is targeted by hackers because of the lucrative potential for stealing bitcoins.^[36] A technique called “cold storage” keeps private keys out of reach of hackers; this is accomplished by keeping private keys offline at all times^{[73][6]: ch. 4} by generating them on a device that is not connected to the internet.^[74]: 39 The credentials necessary to spend bitcoins can be stored offline in a number of different ways, from specialized hardware wallets to simple paper printouts of the private key.^{[6]: ch. 10}

Hardware wallets

A hardware wallet is a computer peripheral that signs transactions as requested by the user. These devices store private keys and carry out signing and encryption internally,^[73] and do not share any sensitive information with the host computer except already signed (and thus unalterable) transactions.^[75] Because hardware wallets never expose their private keys, even computers that may be compromised by malware do not have a vector to access or steal them.^{[74]: 42–45}

The user sets a passcode when setting up a hardware wallet.^[73] As hardware wallets are tamper-resistant,^{[75][6]: ch. 10} the passcode will be needed to extract any money.^[75]

Paper wallets

A paper wallet is created with a keypair generated on a computer with no internet connection; the private key is written or printed onto the paper^[i] and then erased from the computer.^{[6]: ch. 4} The paper wallet can then be stored in a safe physical location for later retrieval.^[74]: 39

Physical wallets can also take the form of metal token coins^[76] with a private key accessible under a security hologram in a recess struck on the reverse side.^[77]: 38 The security hologram self-destructs when removed from the token, showing that the private key has been accessed.^[78] Originally, these tokens were struck in brass and other base metals, but later used precious metals as bitcoin grew in value and popularity.^[77]: 80 Coins with stored face value as high as ₿1000 have been struck in gold.^{[77]: 102–104} The British Museum‘s coin collection includes four specimens from the earliest series^[77]: 83 of funded bitcoin tokens; one is currently on display in the museum’s money gallery.^[79] In 2013, a Utahn manufacturer of these tokens was ordered by the Financial Crimes Enforcement Network (FinCEN) to register as a money services business before producing any more funded bitcoin tokens.^{[76][77]: 80}

History

Main article: History of bitcoin

Creation

The domain name bitcoin.org was registered on 18 August 2008.^[80] On 31 October 2008, a link to a paper authored by Satoshi Nakamoto titled Bitcoin: A Peer-to-Peer Electronic Cash System^[4] was posted to a cryptography mailing list.^[81] Nakamoto implemented the bitcoin software as open-source code and released it in January 2009.^[82][83][10] Nakamoto’s identity remains unknown.^[9]

On 3 January 2009, the bitcoin network was created when Nakamoto mined the starting block of the chain, known as the genesis block.^[84][85] Embedded in the coinbase of this block was the text “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”.^[10] This note references a headline published by The Times and has been interpreted as both a timestamp and a comment on the instability caused by fractional-reserve banking.^[86]: 18

The receiver of the first bitcoin transaction was Hal Finney, who had created the first reusable proof-of-work system (RPoW) in 2004.^[87] Finney downloaded the bitcoin software on its release date, and on 12 January 2009 received ten bitcoins from Nakamoto.^[88][89] Other early cypherpunk supporters were creators of bitcoin predecessors: Wei Dai, creator of b-money, and Nick Szabo, creator of bit gold.^[84] In 2010, the first known commercial transaction using bitcoin occurred when programmer Laszlo Hanyecz bought two Papa John’s pizzas for ₿10,000 from Jeremy Sturdivant.^{[90][91][92][93][94]}

Blockchain analysts estimate that Nakamoto had mined about one million bitcoins^[95] before disappearing in 2010 when he handed the network alert key and control of the code repository over to Gavin Andresen. Andresen later became lead developer at the Bitcoin Foundation.^[96][97] Andresen then sought to decentralize control. This left opportunity for controversy to develop over the future development path of bitcoin, in contrast to the perceived authority of Nakamoto’s contributions.^[67][97]

2011–2012

After early “proof-of-concept” transactions, the first major users of bitcoin were black markets, such as Silk Road. During its 30 months of existence, beginning in February 2011, Silk Road exclusively accepted bitcoins as payment, transacting 9.9 million in bitcoins, worth about $214 million.^[28]: 222

In 2011, the price started at $0.30 per bitcoin, growing to $5.27 for the year. The price rose to $31.50 on 8 June. Within a month, the price fell to $11.00. The next month it fell to $7.80, and in another month to $4.77.^[98]

In 2012, bitcoin prices started at $5.27, growing to $13.30 for the year.^[98] By 9 January the price had risen to $7.38, but then crashed by 49% to $3.80 over the next 16 days. The price then rose to $16.41 on 17 August, but fell by 57% to $7.10 over the next three days.^[99]

The Bitcoin Foundation was founded in September 2012 to promote bitcoin’s development and uptake.^[100]

On 1 November 2011, the reference implementation Bitcoin-Qt version 0.5.0 was released. It introduced a front end that used the Qt user interface toolkit.^[101] The software previously used Berkeley DB for database management. Developers switched to LevelDB in release 0.8 in order to reduce blockchain synchronization time.^{[citation needed]} The update to this release resulted in a minor blockchain fork on 11 March 2013. The fork was resolved shortly afterwards.^{[citation needed]} Seeding nodes through IRC was discontinued in version 0.8.2. From version 0.9.0 the software was renamed to Bitcoin Core. Transaction fees were reduced again by a factor of ten as a means to encourage microtransactions.^{[citation needed]} Although Bitcoin Core does not use OpenSSL for the operation of the network, the software did use OpenSSL for remote procedure calls. Version 0.9.1 was released to remove the network’s vulnerability to the Heartbleed bug.^{[citation needed]}

2013–2016

In 2013, prices started at $13.30 rising to $770 by 1 January 2014.^[98]

In March 2013 the blockchain temporarily split into two independent chains with different rules due to a bug in version 0.8 of the bitcoin software. The two blockchains operated simultaneously for six hours, each with its own version of the transaction history from the moment of the split. Normal operation was restored when the majority of the network downgraded to version 0.7 of the bitcoin software, selecting the backwards-compatible version of the blockchain. As a result, this blockchain became the longest chain and could be accepted by all participants, regardless of their bitcoin software version.^[102] During the split, the Mt. Gox exchange briefly halted bitcoin deposits and the price dropped by 23% to $37^[102][103] before recovering to the previous level of approximately $48 in the following hours.^[104]

The US Financial Crimes Enforcement Network (FinCEN) established regulatory guidelines for “decentralized virtual currencies” such as bitcoin, classifying American bitcoin miners who sell their generated bitcoins as Money Service Businesses (MSBs), that are subject to registration or other legal obligations.^{[105][106][107]}

In April, exchanges BitInstant and Mt. Gox experienced processing delays due to insufficient capacity^[108] resulting in the bitcoin price dropping from $266 to $76 before returning to $160 within six hours.^[109] The bitcoin price rose to $259 on 10 April, but then crashed by 83% to $45 over the next three days.^[99]

On 15 May 2013, US authorities seized accounts associated with Mt. Gox after discovering it had not registered as a money transmitter with FinCEN in the US.^[110][111] On 23 June 2013, the US Drug Enforcement Administration listed ₿11.02 as a seized asset in a United States Department of Justice seizure notice pursuant to 21 U.S.C. § 881. This marked the first time a government agency had seized bitcoin.^[112] The FBI seized about ₿30,000^[113] in October 2013 from the dark web website Silk Road, following the arrest of Ross William Ulbricht.^{[114][115][116]} These bitcoins were sold at blind auction by the United States Marshals Service to venture capital investor Tim Draper.^[113] Bitcoin’s price rose to $755 on 19 November and crashed by 50% to $378 the same day. On 30 November 2013, the price reached $1,163 before starting a long-term crash, declining by 87% to $152 in January 2015.^[99]

On 5 December 2013, the People’s Bank of China prohibited Chinese financial institutions from using bitcoins.^[117] After the announcement, the value of bitcoins dropped,^[118] and Baidu no longer accepted bitcoins for certain services.^[119] Buying real-world goods with any virtual currency had been illegal in China since at least 2009.^[120]

In 2014, prices started at $770 and fell to $314 for the year.^[98] On 30 July 2014, the Wikimedia Foundation started accepting donations of bitcoin.^[121]

In 2015, prices started at $314 and rose to $434 for the year. In 2016, prices rose and climbed up to $998 by 1 January 2017.^[98]

Release 0.10 of the software was made public on 16 February 2015. It introduced a consensus library which gave programmers easy access to the rules governing consensus on the network. In version 0.11.2 developers added a new feature which allowed transactions to be made unspendable until a specific time in the future.^[122] Bitcoin Core 0.12.1 was released on 15 April 2016, and enabled multiple soft forks to occur concurrently.^[123] Around 100 contributors worked on Bitcoin Core 0.13.0 which was released on 23 August 2016.

In July 2016, the CheckSequenceVerify soft fork activated.^[124]

In October 2016, Bitcoin Core’s 0.13.1 release featured the “Segwit” soft fork that included a scaling improvement aiming to optimize the bitcoin blocksize.^{[citation needed]} The patch which was originally finalised in April, and 35 developers were engaged to deploy it.^{[citation needed]} This release featured Segregated Witness (SegWit) which aimed to place downward pressure on transaction fees as well as increase the maximum transaction capacity of the network.^{[125][non-primary source needed]} The 0.13.1 release endured extensive testing and research leading to some delays in its release date.^{[citation needed]} SegWit prevents various forms of transaction malleability.^{[126][non-primary source needed]}

2017–2019

Research produced by the University of Cambridge estimated that in 2017, there were 2.9 to 5.8 million unique users using a cryptocurrency wallet, most of them using bitcoin.^[127] On 15 July 2017, the controversial Segregated Witness [SegWit] software upgrade was approved (“locked-in”). Segwit was intended to support the Lightning Network as well as improve scalability.^[128] SegWit was subsequently activated on the network on 24 August 2017. The bitcoin price rose almost 50% in the week following SegWit’s approval.^[128] On 21 July 2017, bitcoin was trading at $2,748, up 52% from 14 July 2017’s $1,835.^[128] Supporters of large blocks who were dissatisfied with the activation of SegWit forked the software on 1 August 2017 to create Bitcoin Cash, becoming one of many forks of bitcoin such as Bitcoin Gold.^[129]

Prices started at $998 in 2017 and rose to $13,412.44 on 1 January 2018,^[98] after reaching its all-time high of $19,783.06 on 17 December 2017.^[130]

China banned trading in bitcoin, with first steps taken in September 2017, and a complete ban that started on 1 February 2018. Bitcoin prices then fell from $9,052 to $6,914 on 5 February 2018.^[99] The percentage of bitcoin trading in the Chinese renminbi fell from over 90% in September 2017 to less than 1% in June 2018.^[131]

Throughout the rest of the first half of 2018, bitcoin’s price fluctuated between $11,480 and $5,848. On 1 July 2018, bitcoin’s price was $6,343.^[132][133] The price on 1 January 2019 was $3,747, down 72% for 2018 and down 81% since the all-time high.^[132][134]

In September 2018, an anonymous party discovered and reported an invalid-block denial-of-server vulnerability to developers of Bitcoin Core, Bitcoin ABC and Bitcoin Unlimited. Further analysis by bitcoin developers showed the issue could also allow the creation of blocks violating the 21 million coin limit and CVE–2018-17144 was assigned and the issue resolved.^{[135][non-primary source needed]}

Bitcoin prices were negatively affected by several hacks or thefts from cryptocurrency exchanges, including thefts from Coincheck in January 2018, Bithumb in June, and Bancor in July. For the first six months of 2018, $761 million worth of cryptocurrencies was reported stolen from exchanges.^[136] Bitcoin’s price was affected even though other cryptocurrencies were stolen at Coinrail and Bancor as investors worried about the security of cryptocurrency exchanges.^{[137][138][139]} In September 2019 the Intercontinental Exchange (the owner of the NYSE) began trading of bitcoin futures on its exchange called Bakkt.^[140] Bakkt also announced that it would launch options on bitcoin in December 2019.^[141] In December 2019, YouTube removed bitcoin and cryptocurrency videos, but later restored the content after judging they had “made the wrong call.”^[142]

In February 2019, Canadian cryptocurrency exchange Quadriga Fintech Solutions failed with approximately $200 million missing.^[143] By June 2019 the price had recovered to $13,000.^[144]

2020–present

On 13 March 2020, bitcoin fell below $4,000 during a broad market selloff, after trading above $10,000 in February 2020.^[145] On 11 March 2020, 281,000 bitcoins were sold, held by owners for only thirty days.^[144] This compared to ₿4,131 that had laid dormant for a year or more, indicating that the vast majority of the bitcoin volatility on that day was from recent buyers. During the week of 11 March 2020, cryptocurrency exchange Kraken experienced an 83% increase in the number of account signups over the week of bitcoin’s price collapse, a result of buyers looking to capitalize on the low price.^[144] These events were attributed to the onset of the COVID-19 pandemic.

In August 2020, MicroStrategy invested $250 million in bitcoin as a treasury reserve asset.^[146] In October 2020, Square, Inc. placed approximately 1% of total assets ($50 million) in bitcoin.^[147] In November 2020, PayPal announced that US users could buy, hold, or sell bitcoin.^[148] On 30 November 2020, the bitcoin value reached a new all-time high of $19,860, topping the previous high of December 2017.^[149] Alexander Vinnik, founder of BTC-e, was convicted and sentenced to five years in prison for money laundering in France while refusing to testify during his trial.^[150] In December 2020 Massachusetts Mutual Life Insurance Company announced a bitcoin purchase of USD $100 million, or roughly 0.04% of its general investment account.^[151]

On 19 January 2021, Elon Musk placed the handle #Bitcoin in his Twitter profile, tweeting “In retrospect, it was inevitable”, which caused the price to briefly rise about $5000 in an hour to $37,299.^[152] On 25 January 2021, Microstrategy announced that it continued to buy bitcoin and as of the same date it had holdings of ₿70,784 worth $2.38 billion.^[153] On 8 February 2021 Tesla’s announcement of a bitcoin purchase of USD $1.5 billion and the plan to start accepting bitcoin as payment for vehicles, pushed the bitcoin price to $44,141.^[154] On 18 February 2021, Elon Musk stated that “owning bitcoin was only a little better than holding conventional cash, but that the slight difference made it a better asset to hold”.^[155] After 49 days of accepting the digital currency, Tesla reversed course on 12 May 2021, saying they would no longer take Bitcoin due to concerns that “mining” the cryptocurrency was contributing to the consumption of fossil fuels and climate change.^[156] The decision resulted in the price of Bitcoin dropping around 12% on 13 May.^[157] During a July Bitcoin conference, Musk suggested Tesla could possibly help Bitcoin miners switch to renewable energy in the future and also stated at the same conference that if Bitcoin mining reaches, and trends above 50 percent renewable energy usage, that “Tesla would resume accepting bitcoin.” The price for bitcoin rose after this announcement.^[158]

In September 2020, the Canton of Zug, Switzerland, announced to start to accepting tax payments in bitcoin by February 2021.^[159][160]

In June 2021, the Legislative Assembly of El Salvador voted legislation to make Bitcoin legal tender in El Salvador.^{[j][169][164][170]} The law took effect on 7 September.^[171][8] The implementation of the law has been met with protests^[172] and calls to make the currency optional, not compulsory.^[173] According to a survey by the Central American University, the majority of Salvadorans disagreed with using cryptocurrency as a legal tender,^[174][175] and a survey by the Center for Citizen Studies (CEC) showed that 91% of the country prefers the dollar over Bitcoin.^[176] As of October 2021, the country’s government was exploring mining bitcoin with geothermal power and issuing bonds tied to bitcoin.^[177]

Also In June, the Taproot network software upgrade was approved, adding support for Schnorr signatures, improved functionality of Smart contracts and Lightning Network.^[178] The upgrade was installed in November.^[179]

On 16 October 2021, the SEC approved the ProShares Bitcoin Strategy ETF, a cash-settled futures exchange-traded fund (ETF). The first bitcoin ETF in the United States gained 5% on its first trading day on 19 October 2021.^[180][181]

Associated ideologies

Satoshi Nakamoto stated in his white paper that: “The root problem with conventional currencies is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.”^[182]

Austrian economics roots

According to the European Central Bank, the decentralization of money offered by bitcoin has its theoretical roots in the Austrian school of economics, especially with Friedrich von Hayek in his book Denationalisation of Money: The Argument Refined,^[183] in which Hayek advocates a complete free market in the production, distribution and management of money to end the monopoly of central banks.^[184]: 22

Anarchism and libertarianism

Further information: Crypto-anarchism

According to The New York Times, libertarians and anarchists were attracted to the philosophical idea behind bitcoin. Early bitcoin supporter Roger Ver said: “At first, almost everyone who got involved did so for philosophical reasons. We saw bitcoin as a great idea, as a way to separate money from the state.”^[182] The Economist describes bitcoin as “a techno-anarchist project to create an online version of cash, a way for people to transact without the possibility of interference from malicious governments or banks”.^[185] Economist Paul Krugman argues that cryptocurrencies like bitcoin are “something of a cult” based in “paranoid fantasies” of government power.^[186]

Nigel Dodd argues in The Social Life of Bitcoin that the essence of the bitcoin ideology is to remove money from social, as well as governmental, control.^[188] Dodd quotes a YouTube video, with Roger Ver, Jeff Berwick, Charlie Shrem, Andreas Antonopoulos, Gavin Wood, Trace Meyer and other proponents of bitcoin reading The Declaration of Bitcoin’s Independence. The declaration includes a message of crypto-anarchism with the words: “Bitcoin is inherently anti-establishment, anti-system, and anti-state. Bitcoin undermines governments and disrupts institutions because bitcoin is fundamentally humanitarian.”^[188][187]

David Golumbia says that the ideas influencing bitcoin advocates emerge from right-wing extremist movements such as the Liberty Lobby and the John Birch Society and their anti-Central Bank rhetoric, or, more recently, Ron Paul and Tea Party-style libertarianism.^[189] Steve Bannon, who owns a “good stake” in bitcoin, considers it to be “disruptive populism. It takes control back from central authorities. It’s revolutionary.”^[190]

A 2014 study of Google Trends data found correlations between bitcoin-related searches and ones related to computer programming and illegal activity, but not libertarianism or investment topics.^[191]

Economics

Main article: Economics of bitcoin

Bitcoin is a digital asset designed to work in peer-to-peer transactions as a currency.^[4][192] Bitcoins have three qualities useful in a currency, according to The Economist in January 2015: they are “hard to earn, limited in supply and easy to verify.”^[193] Per some researchers, as of 2015, bitcoin functions more as a payment system than as a currency.^[28]

Economists define money as serving the following three purposes: a store of value, a medium of exchange, and a unit of account.^[194] According to The Economist in 2014, bitcoin functions best as a medium of exchange.^[194] However, this is debated, and a 2018 assessment by The Economist stated that cryptocurrencies met none of these three criteria.^[185] Yale economist Robert J. Shiller writes that bitcoin has potential as a unit of account for measuring the relative value of goods, as with Chile’s Unidad de Fomento, but that “Bitcoin in its present form […] doesn’t really solve any sensible economic problem”.^[195]

According to research by Cambridge University, between 2.9 million and 5.8 million unique users used a cryptocurrency wallet in 2017, most of them for bitcoin. The number of users has grown significantly since 2013, when there were 300,000–1.3 million users.^[127]

Acceptance by merchants

The overwhelming majority of bitcoin transactions take place on a cryptocurrency exchange, rather than being used in transactions with merchants.^[196] Delays processing payments through the blockchain of about ten minutes make bitcoin use very difficult in a retail setting. Prices are not usually quoted in units of bitcoin and many trades involve one, or sometimes two, conversions into conventional currencies.^[28] Merchants that do accept bitcoin payments may use payment service providers to perform the conversions.^[197]

In 2017 and 2018 bitcoin’s acceptance among major online retailers included only three of the top 500 U.S. online merchants, down from five in 2016.^[196] Reasons for this decline include high transaction fees due to bitcoin’s scalability issues and long transaction times.^[198]

Bloomberg reported that the largest 17 crypto merchant-processing services handled $69 million in June 2018, down from $411 million in September 2017. Bitcoin is “not actually usable” for retail transactions because of high costs and the inability to process chargebacks, according to Nicholas Weaver, a researcher quoted by Bloomberg. High price volatility and transaction fees make paying for small retail purchases with bitcoin impractical, according to economist Kim Grauer. However, bitcoin continues to be used for large-item purchases on sites such as Overstock.com, and for cross-border payments to freelancers and other vendors.^[199]

Financial institutions

Bitcoins can be bought on digital currency exchanges.

Per researchers, “there is little sign of bitcoin use” in international remittances despite high fees charged by banks and Western Union who compete in this market.^[28] The South China Morning Post, however, mentions the use of bitcoin by Hong Kong workers to transfer money home.^[200]

In 2014, the National Australia Bank closed accounts of businesses with ties to bitcoin,^[201] and HSBC refused to serve a hedge fund with links to bitcoin.^[202] Australian banks in general have been reported as closing down bank accounts of operators of businesses involving the currency.^[203]

On 10 December 2017, the Chicago Board Options Exchange started trading bitcoin futures,^[204] followed by the Chicago Mercantile Exchange, which started trading bitcoin futures on 17 December 2017.^[205]

In September 2019 the Central Bank of Venezuela, at the request of PDVSA, ran tests to determine if bitcoin and ether could be held in central bank’s reserves. The request was motivated by oil company’s goal to pay its suppliers.^[206]

As an investment

The Winklevoss twins have purchased bitcoin. In 2013, The Washington Post reported a claim that they owned 1% of all the bitcoins in existence at the time.^[207]

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.^[208]

Forbes named bitcoin the best investment of 2013.^[209] In 2014, Bloomberg named bitcoin one of its worst investments of the year.^[210] In 2015, bitcoin topped Bloomberg’s currency tables.^[211]

According to bitinfocharts.com, in 2017, there were 9,272 bitcoin wallets with more than $1 million worth of bitcoins.^[212] The exact number of bitcoin millionaires is uncertain as a single person can have more than one bitcoin wallet.

In August 2020, MicroStrategy invested in Bitcoin.^[213][214]

In May 2021, the Bitcoin’s market share on exchanges dropped from 70% to 45% as investors pursued altcoins.^[215]

Venture capital

Peter Thiel‘s Founders Fund invested US$3 million in BitPay.^[216] In 2012, an incubator for bitcoin-focused start-ups was founded by Adam Draper, with financing help from his father, venture capitalist Tim Draper, one of the largest bitcoin holders after winning an auction of 30,000 bitcoins,^[217] at the time called “mystery buyer”.^[218] The company’s goal is to fund 100 bitcoin businesses within 2–3 years with $10,000 to $20,000 for a 6% stake.^[217] Investors also invest in bitcoin mining.^[219] According to a 2015 study by Paolo Tasca, bitcoin startups raised almost $1 billion in three years (Q1 2012 – Q1 2015).^[220]

Price and volatility

The price of bitcoins has gone through cycles of appreciation and depreciation referred to by some as bubbles and busts.^[221] In 2011, the value of one bitcoin rapidly rose from about US$0.30 to US$32 before returning to US$2.^[222] In the latter half of 2012 and during the 2012–13 Cypriot financial crisis, the bitcoin price began to rise,^[223] reaching a high of US$266 on 10 April 2013, before crashing to around US$50. On 29 November 2013, the cost of one bitcoin rose to a peak of US$1,242.^[224] 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.^[225]

According to Mark T. Williams, as of 30 September 2014, bitcoin has volatility seven times greater than gold, eight times greater than the S&P 500, and 18 times greater than the US dollar.^[226] Hodl is a meme created in reference to holding (as opposed to selling) during periods of volatility. Unusual for an asset, bitcoin weekend trading during December 2020 was higher than for weekdays.^[227] Hedge funds (using high leverage and derivates)^[228] have attempted to use the volatility to profit from downward price movements. At the end of January 2021, such positions were over $1 billion, their highest of all time.^[229] As of 8 February 2021, the closing price of bitcoin equaled US$44,797.^[230]

Legal status, tax and regulation

Further information: Legality of bitcoin by country or territory

Because of bitcoin’s decentralized nature and its trading on online exchanges located in many countries, regulation of bitcoin has been difficult. However, the use of bitcoin can be criminalized, and shutting down exchanges and the peer-to-peer economy in a given country would constitute a de facto ban.^[231] The legal status of bitcoin varies substantially from country to country and is still undefined or changing in many of them. Regulations and bans that apply to bitcoin probably extend to similar cryptocurrency systems.^[220]

According to the Library of Congress, an “absolute ban” on trading or using cryptocurrencies applies in nine countries: Algeria, Bolivia, Egypt, Iraq, Morocco, Nepal, Pakistan, Vietnam, and the United Arab Emirates. An “implicit ban” applies in another 15 countries, which include Bahrain, Bangladesh, China, Colombia, the Dominican Republic, Indonesia, Kuwait, Lesotho, Lithuania, Macau, Oman, Qatar, Saudi Arabia and Taiwan.^[232]

In October 2020, the Islamic Republic News Agency announced pending regulations that would require bitcoin miners in Iran to sell bitcoin to the Central Bank of Iran, and the central bank would use it for imports.^[233] Iran, as of October 2020, had issued over 1,000 bitcoin mining licenses.^[233] The Iranian government initially took a stance against cryptocurrency, but later changed it after seeing that digital currency could be used to circumvent sanctions.^[234] The US Office of Foreign Assets Control listed two Iranians and their bitcoin addresses as part of its Specially Designated Nationals and Blocked Persons List for their role in the 2018 Atlanta cyberattack whose ransom was paid in bitcoin.^[235]

Regulatory warnings

The U.S. Commodity Futures Trading Commission has issued four “Customer Advisories” for bitcoin and related investments.^[12] A July 2018 warning emphasized that trading in any cryptocurrency is often speculative, and there is a risk of theft from hacking, and fraud.^[236] In May 2014 the U.S. Securities and Exchange Commission warned that investments involving bitcoin might have high rates of fraud, and that investors might be solicited on social media sites.^[237] An earlier “Investor Alert” warned about the use of bitcoin in Ponzi schemes.^[238]

The European Banking Authority issued a warning in 2013 focusing on the lack of regulation of bitcoin, the chance that exchanges would be hacked, the volatility of bitcoin’s price, and general fraud.^[239] FINRA and the North American Securities Administrators Association have both issued investor alerts about bitcoin.^[240][241]

Price manipulation investigation

An official investigation into bitcoin traders was reported in May 2018.^[242] The U.S. Justice Department launched an investigation into possible price manipulation, including the techniques of spoofing and wash trades.^{[243][244][245]}

The U.S. federal investigation was prompted by concerns of possible manipulation during futures settlement dates. The final settlement price of CME bitcoin futures is determined by prices on four exchanges, Bitstamp, Coinbase, itBit and Kraken. Following the first delivery date in January 2018, the CME requested extensive detailed trading information but several of the exchanges refused to provide it and later provided only limited data. The Commodity Futures Trading Commission then subpoenaed the data from the exchanges.^[246][247]

State and provincial securities regulators, coordinated through the North American Securities Administrators Association, are investigating “bitcoin scams” and ICOs in 40 jurisdictions.^[248]

Academic research published in the Journal of Monetary Economics concluded that price manipulation occurred during the Mt Gox bitcoin theft and that the market remains vulnerable to manipulation.^[249] The history of hacks, fraud and theft involving bitcoin dates back to at least 2011.^[250]

Research by John M. Griffin and Amin Shams in 2018 suggests that trading associated with increases in the amount of the Tether cryptocurrency and associated trading at the Bitfinex exchange account for about half of the price increase in bitcoin in late 2017.^[251][252]

J.L. van der Velde, CEO of both Bitfinex and Tether, denied the claims of price manipulation: “Bitfinex nor Tether is, or has ever, engaged in any sort of market or price manipulation. Tether issuances cannot be used to prop up the price of bitcoin or any other coin/token on Bitfinex.”^[253]

Criticisms

The Bank for International Settlements summarized several criticisms of bitcoin in Chapter V of their 2018 annual report. The criticisms include the lack of stability in bitcoin’s price, the high energy consumption, high and variable transactions costs, the poor security and fraud at cryptocurrency exchanges, vulnerability to debasement (from forking), and the influence of miners.^{[254][255][256]}

François R. Velde, Senior Economist at the Chicago Fed, described bitcoin as “an elegant solution to the problem of creating a digital currency”.^[257] David Andolfatto, Vice President at the Federal Reserve Bank of St. Louis, 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.^{[41]: 33 [258][259]}

Economic concerns

Further information: Cryptocurrency bubble and Economics of bitcoin

Bitcoin, along with other cryptocurrencies, has been described as an economic bubble by at least eight Nobel Memorial Prize in Economic Sciences laureates at various times, including Robert Shiller on 1 March 2014,^[195] Joseph Stiglitz on 29 November 2017,^[260] and Richard Thaler on 21 December 2017.^[261][262] On 29 January 2018, a noted Keynesian economist Paul Krugman has described bitcoin as “a bubble wrapped in techno-mysticism inside a cocoon of libertarian ideology”,^[186] on 2 February 2018, professor Nouriel Roubini of New York University has called bitcoin the “mother of all bubbles”,^[263] and on 27 April 2018, a University of Chicago economist James Heckman has compared it to the 17th-century tulip mania.^[262]

Journalists, economists, investors, and the central bank of Estonia have voiced concerns that bitcoin is a Ponzi scheme.^{[264][265][266][267]} In April 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.”^[268] A July 2014 report by the World Bank concluded that bitcoin was not a deliberate Ponzi scheme.^[269]: 7 In June 2014, the Swiss Federal Council examined concerns that bitcoin might be a pyramid scheme, and 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.”^[270]: 21

Bitcoin wealth is highly concentrated, with 0.01% holding 27% of in-circulation currency, as of 2021.^[271]

Energy consumption and carbon footprint

Electricity consumption of the bitcoin network since 2016 (annualized) and comparison with the electricity consumption of various countries in 2019. The upper and lower bounds (grey traces) are based on worst-case and best-case scenario assumptions, respectively. The red trace indicates an intermediate best-guess estimate. (data sources: Cambridge Bitcoin Electricity Consumption Index, US Energy Information Administration; for details, see methodology)

Bitcoin has been criticized for the amount of electricity consumed by mining.

As of 2015, estimated combined electricity consumption attributed to mining was 166.7 megawatts and by 2017, was estimated to be between one and four gigawatts of electricity.^[272][193] In 2018, bitcoin was estimated to use 2.55 to 3.572 GW, or around 6% of the total power consumed by the global banking sector.^{[273][274][275]} In July 2019 BBC reported bitcoin consumes about 7 gigawatts, 0.2% of the global total, or equivalent to that of Switzerland.^[276] A 2021 estimate from the University of Cambridge suggests bitcoin consumes more than 178 (TWh) annually, ranking it in the top 30 energy consumers if it were a country.^[277]

Bitcoin is mined in places like Iceland where geothermal energy is cheap and cooling Arctic air is free.^[278] Bitcoin miners are known to use hydroelectric power in Tibet, Quebec, Washington (state), and Austria to reduce electricity costs.^[273][279] Miners are attracted to suppliers such as Hydro Quebec that have energy surpluses.^[280]

According to a University of Cambridge study, much of bitcoin mining is done in China, where electricity is subsidized by the government.^[281][282] A significant part of Bitcoin mining is powered by cheap electricity in Xinjiang, which mostly comes from coal power.^[283][284] In April 2021 a coal mine explosion in the province coincided with a 35% drop in hashing power and a flash crash in price.^[285][283] In other provinces, such as Hunan and Sichuan, mining farms use more hydropower, however these account for at most 4% of hash power. According to Alex de Vries, renewable energy is not a good match for Bitcoin mining as 24/7 operations are best for ROI on mining devices.^[285] In 2021, a US company purchased the Greenidge coal power plant and converted it to burn natural gas for the sole purpose of mining bitcoin, which has proven to be highly profitable, in spite of protests of local residents against air pollution^[286] and thermal pollution in the nearby Seneca lake.^[287]

Concerns about bitcoin’s environmental impact relate bitcoin’s energy consumption to carbon emissions.^[288][289] The difficulty of translating the energy consumption into carbon emissions lies in the decentralized nature of bitcoin impeding the localization of miners to examine the electricity mix used. The results of recent studies analyzing bitcoin’s carbon footprint vary.^{[290][291][292][293]} A study published in Nature Climate Change in 2018 claims that bitcoin “could alone produce enough CO
₂ emissions to push warming above 2 °C within less than three decades.”^[292] However, other researchers criticized this analysis, arguing the underlying scenarios were inadequate, leading to overestimations.^{[294][295][296]} According to studies published in Joule and American Chemical Society in 2019, bitcoin’s annual energy consumption results in annual carbon emission ranging from 17^[275] to 22.9 MtCO
₂ which is comparable to the level of emissions of countries as Jordan and Sri Lanka or Kansas City.^[293] George Kamiya, writing for the International Energy Agency, says that “predictions about bitcoin consuming the entire world’s electricity” are sensational, but that the area “requires careful monitoring and rigorous analysis”.^[297] Cryptocurrency mining is popular in countries where the cost of electricity is relatively low. As of 6 January 2022, Kosovo, which is experiencing an energy crisis, banned mining to reduce electricity usage. China has implemented a permanent ban and Iran has stopped digital mining for four months.^[298]

Use in illegal transactions

Further information: Cryptocurrency and crime and Bitcoin network § Alleged criminal activity

Bitcoin held at exchanges are vulnerable to theft through phishing, scamming, and hacking. As of December 2017, around 980,000 bitcoins have been stolen from cryptocurrency exchanges.^[37]

The use of bitcoin by criminals has attracted the attention of financial regulators, legislative bodies, law enforcement, and the media.^[299] Bitcoin gained early notoriety for its use on the Silk Road. The U.S. Senate held a hearing on virtual currencies in November 2013.^[300] The U.S. government claimed that bitcoin was used to facilitate payments related to Russian interference in the 2016 United States elections.^[301] However, a 2021 study led by former CIA director Michael Morell showed that broad generalizations about the use of bitcoin in illicit finance are significantly overstated and that blockchain analysis is an effective crime fighting and intelligence gathering tool.^[302]

Several news outlets have asserted that the popularity of bitcoins hinges on the ability to use them to purchase illegal goods.^[192][303] Nobel-prize winning economist Joseph Stiglitz says that bitcoin’s anonymity encourages money laundering and other crimes.^[304][305]

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”.^[191] Australian researchers have estimated that 25% of all bitcoin users and 44% of all bitcoin transactions are associated with illegal activity as of April 2017. There were an estimated 24 million bitcoin users primarily using bitcoin for illegal activity. They held $8 billion worth of bitcoin, and made 36 million transactions valued at $72 billion.^[306][307]

Software implementation

The start screen under Fedora
Original author(s)	Satoshi Nakamoto
Initial release	2009
Stable release	22.0 (13 September 2021; 3 months ago) [±]
Repository	github.com/bitcoin/bitcoin
Written in	C++
Operating system	Linux, Windows, macOS
Type	Cryptocurrency
License	MIT License
Website	bitcoincore.org

Bitcoin Core is free and open-source software that serves as a bitcoin node (the set of which form the bitcoin network) and provides a bitcoin wallet which fully verifies payments. It is considered to be bitcoin’s reference implementation.^[308] Initially, the software was published by Satoshi Nakamoto under the name “Bitcoin”, and later renamed to “Bitcoin Core” to distinguish it from the network.^[309] It is also known as the Satoshi client.^[310]

The MIT Digital Currency Initiative funds some of the development of Bitcoin Core.^[311] The project also maintains the cryptography library libsecp256k1.^[312]

Bitcoin Core includes a transaction verification engine and connects to the bitcoin network as a full node.^[310] Moreover, a cryptocurrency wallet, which can be used to transfer funds, is included by default.^[312] The wallet allows for the sending and receiving of bitcoins. It does not facilitate the buying or selling of bitcoin. It allows users to generate QR codes to receive payment.

The software validates the entire blockchain, which includes all bitcoin transactions ever. This distributed ledger which has reached more than 235 gigabytes in size as of Jan 2019, must be downloaded or synchronized before full participation of the client may occur.^[310] Although the complete blockchain is not needed all at once since it is possible to run in pruning mode. A command line-based daemon with a JSON-RPC interface, bitcoind, is bundled with Bitcoin Core. It also provides access to testnet, a global testing environment that imitates the bitcoin main network using an alternative blockchain where valueless “test bitcoins” are used. Regtest or Regression Test Mode creates a private blockchain which is used as a local testing environment.^[313] Finally, bitcoin-cli, a simple program which allows users to send RPC commands to bitcoind, is also included.

Checkpoints which have been hard coded into the client are used only to prevent Denial of Service attacks against nodes which are initially syncing the chain. For this reason the checkpoints included are only as of several years ago.^{[314][315][failed verification]} A one megabyte block size limit was added in 2010 by Satoshi Nakamoto. This limited the maximum network capacity to about three transactions per second.^[316] Since then, network capacity has been improved incrementally both through block size increases and improved wallet behavior. A network alert system was included by Satoshi Nakamoto as a way of informing users of important news regarding bitcoin.^[317] In November 2016 it was retired. It had become obsolete as news on bitcoin is now widely disseminated.

Bitcoin Core includes a scripting language inspired by Forth that can define transactions and specify parameters.^[318] ScriptPubKey is used to “lock” transactions based on a set of future conditions. scriptSig is used to meet these conditions or “unlock” a transaction. Operations on the data are performed by various OP_Codes. Two stacks are used – main and alt. Looping is forbidden.

Bitcoin Core uses OpenTimestamps to timestamp merge commits.^[319]

The original creator of the bitcoin client has described their approach to the software’s authorship as it being written first to prove to themselves that the concept of purely peer-to-peer electronic cash was valid and that a paper with solutions could be written. The lead developer is Wladimir J. van der Laan, who took over the role on 8 April 2014.^[320] Gavin Andresen was the former lead maintainer for the software client. Andresen left the role of lead developer for bitcoin to work on the strategic development of its technology.^[320] Bitcoin Core in 2015 was central to a dispute with Bitcoin XT, a competing client that sought to increase the blocksize.^[321] Over a dozen different companies and industry groups fund the development of Bitcoin Core.

In popular culture

Term “HODL”

Hodl (/ˈhɒdəl/ HOD-əl; often written HODL) is slang in the cryptocurrency community for holding a cryptocurrency rather than selling it. A person who does this is known as a Hodler. It originated in a December 2013 post on the Bitcoin Forum message board by an apparently inebriated user who posted with a typo in the subject, “I AM HODLING.”^[322] It is often humorously suggested to be a backronym to “hold on for dear life”.^[323] In 2017, Quartz listed it as one of the essential slang terms in Bitcoin culture, and described it as a stance, “to stay invested in bitcoin and not to capitulate in the face of plunging prices.”^[324] TheStreet.com referred to it as the “favorite mantra” of Bitcoin holders.^[325] Bloomberg News referred to it as a mantra for holders during market routs.^[326]

Literature

In Charles Stross‘ 2013 science fiction novel, Neptune’s Brood, the universal interstellar payment system is known as “bitcoin” and operates using cryptography.^[327] Stross later blogged that the reference was intentional, saying “I wrote Neptune’s Brood in 2011. Bitcoin was obscure back then, and I figured had just enough name recognition to be a useful term for an interstellar currency: it’d clue people in that it was a networked digital currency.”^[328]

Film

The 2014 documentary The Rise and Rise of Bitcoin portrays the diversity of motives behind the use of bitcoin by interviewing people who use it. These include a computer programmer and a drug dealer.^[329] The 2016 documentary Banking on Bitcoin is an introduction to the beginnings of bitcoin and the ideas behind cryptocurrency today.^[330]

Music

In 2018, a Japanese band called Kasotsuka Shojo – Virtual Currency Girls – launched. Each of the eight members represented a cryptocurrency, including Bitcoin, Ethereum and Cardano.^[331][332]

Academia

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.^[333] 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.^[334][335]

See also

• Alternative currency
• Base58
• Crypto-anarchism
• List of bitcoin companies
• List of bitcoin organizations
• SHA-256 crypto currencies
• Virtual currency law in the United States

Portals:Business and economicsFree and open-source softwareInternetNumismaticsMoney

Notes

As of 2014, BTC is a commonly used code. It does not conform to ISO 4217 as BT is the country code of Bhutan, and ISO 4217 requires the first letter used in global commodities to be ‘X’. As of 2014, XBT, a code that conforms to ISO 4217 though is not officially part of it, is used by Bloomberg L.P.,^[20]CNNMoney,^[21] and xe.com.^[22] The genesis block is block number 0. The timestamp of the block is 2009-01-03 18:15:05. This block is unlike all other blocks in that it does not have a previous block to reference. Bitcoin uses a custom elliptic curve called “secp256k1” with the ECDSA algorithm to produce signatures. The equation for this curve is y²=x³+7.^[32] A proposed upgrade that would add support for Schnorr signatures is in development.^[33]: 101 Relative mining difficulty is defined as the ratio of the difficulty target on 9 January 2009 to the current difficulty target. 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.^[41] The system used is based on Adam Back‘s 1997 anti-spam scheme, Hashcash.^{[42][failed verification][4]} The exact number is 20,999,999.9769 bitcoins.^{[6]: ch. 8} The private key can be printed as a series of letters and numbers, a seed phrase, or a 2D barcode. Usually, the public key or bitcoin address is also printed, so that a holder of a paper wallet can check or add funds without exposing the private key to a device. According to some reports, the law was approved on 8 June.^{[161][162][163]} According to others, it was approved on 9 June.^{[164][165][166]} The law was voted during the 8 June parliamentary session, and published in the official journal on 9 June.^[167][168]

1. Liquidity is estimated by a 365-day running sum of transaction outputs in USD.

References

“Unicode 10.0.0”. Unicode Consortium. 20 June 2017. Archived from the original on 20 June 2017. Retrieved 20 June 2017. Mick, Jason (12 June 2011). “Cracking the Bitcoin: Digging Into a $131M USD Virtual Currency”. Daily Tech. Archived from the original on 20 January 2013. Retrieved 30 September 2012. “Bitcoin Core 22.0”. Retrieved 14 September 2021. Nakamoto, Satoshi (31 October 2008). “Bitcoin: A Peer-to-Peer Electronic Cash System” (PDF). bitcoin.org. Archived (PDF) from the original on 20 March 2014. Retrieved 28 April 2014. Nakamoto; et al. (1 April 2016). “Bitcoin source code – amount constraints”. GitHub. Archived from the original on 1 July 2018. Antonopoulos, Andreas M. (April 2014). Mastering Bitcoin: Unlocking Digital Crypto-Currencies. O’Reilly Media. ISBN978-1-4493-7404-4. “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” (PDF). fincen.gov. Financial Crimes Enforcement Network. 19 November 2013. Archived (PDF) from the original on 9 October 2016. Retrieved 1 June 2014. “El Salvador’s dangerous gamble on bitcoin”. The editorial board. Financial Times. 7 September 2021. Retrieved 7 September 2021. On Tuesday, the small Central American nation became the first in the world to adopt bitcoin as an official currency. S., L. (2 November 2015). “Who is Satoshi Nakamoto?”. The Economist. The Economist Newspaper Limited. Archived from the original on 21 August 2016. Retrieved 23 September 2016. Davis, Joshua (10 October 2011). “The Crypto-Currency: Bitcoin and its mysterious inventor”. The New Yorker. Archived from the original on 1 November 2014. Retrieved 31 October 2014. GmbH, finanzen net. “Bitcoin’s limited real-world use and extreme volatility show its recent surge is still a speculative bubble, UBS Global Wealth Management says”. markets.businessinsider.com. Retrieved 28 March 2021. “Bitcoin”. U.S. Commodity Futures Trading Commission. Archived from the original on 1 July 2018. Retrieved 17 July 2018. “SEC.gov | INVESTOR ALERT: BITCOIN AND OTHER VIRTUAL CURRENCY-RELATED INVESTMENTS”. www.sec.gov. Archived from the original on 3 June 2019. Retrieved 1 June 2019. Lopez, Oscar; Livni, Ephrat (7 September 2021). “In Global First, El Salvador Adopts Bitcoin as Currency”. The New York Times. Archived from the original on 28 December 2021. Retrieved 30 September 2021. Vigna, Paul; Casey, Michael J. (January 2015). The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic Order (1 ed.). New York: St. Martin’s Press. ISBN978-1-250-06563-6. “bitcoin”. OxfordDictionaries.com. Archived from the original on 2 January 2015. Retrieved 28 December 2014. Bustillos, Maria (2 April 2013). “The Bitcoin Boom”. The New Yorker. Condé Nast. Archived from the original on 27 July 2014. Retrieved 22 December 2013. 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. Vigna, Paul (3 March 2014). “BitBeat: Is It Bitcoin, or bitcoin? The Orthography of the Cryptography”. WSJ. Archived from the original on 19 April 2014. Retrieved 21 April 2014. Metcalf, Allan (14 April 2014). “The latest style”. Lingua Franca blog. The Chronicle of Higher Education (chronicle.com). Archived from the original on 16 April 2014. Retrieved 19 April 2014. Romain Dillet (9 August 2013). “Bitcoin Ticker Available On Bloomberg Terminal For Employees”. TechCrunch. Archived from the original on 1 November 2014. Retrieved 2 November 2014. “Bitcoin Composite Quote (XBT)”. CNN Money. CNN. Archived from the original on 27 October 2014. Retrieved 2 November 2014. “XBT – Bitcoin”. xe.com. Archived from the original on 2 November 2014. Retrieved 2 November 2014. “Regulation of Bitcoin in Selected Jurisdictions” (PDF). The Law Library of Congress, Global Legal Research Center. January 2014. Archived (PDF) from the original on 14 October 2014. Retrieved 26 August 2014. Katie Pisa & Natasha Maguder (9 July 2014). “Bitcoin your way to a double espresso”. cnn.com. CNN. Archived from the original on 18 June 2015. Retrieved 23 April 2015. “Blockchair”. Blockchair.com. Archived from the original on 13 October 2019. Retrieved 13 October 2019. “Charts”. Blockchain.info. Archived from the original on 3 November 2014. Retrieved 2 November 2014. “The great chain of being sure about things”. The Economist. The Economist Newspaper Limited. 31 October 2015. Archived from the original on 3 July 2016. Retrieved 3 July 2016. Rainer Böhme; Nicolas Christin; Benjamin Edelman; Tyler Moore (2015). “Bitcoin: Economics, Technology, and Governance”. Journal of Economic Perspectives. 29 (2): 213–238. doi:10.1257/jep.29.2.213. Sparkes, Matthew (9 June 2014). “The coming digital anarchy”. The Daily Telegraph. London. Archived from the original on 23 January 2015. Retrieved 7 January 2015. Joshua A. Kroll; Ian C. Davey; Edward W. Felten (11–12 June 2013). “The Economics of Bitcoin Mining, or Bitcoin in the Presence of Adversaries” (PDF). The Twelfth Workshop on the Economics of Information Security (WEIS 2013). Archived (PDF) from the original on 9 May 2016. Retrieved 26 April 2016. A transaction fee is like a tip or gratuity left for the miner. Orcutt, Mike (19 May 2015). “Leaderless Bitcoin Struggles to Make Its Most Crucial Decision”. MIT Technology Review. Archived from the original on 18 October 2017. Retrieved 22 June 2017. Houria, Azine; Mohamed Abdelkader, Bencherif; Abderezzak, Guessoum (1 March 2019). “A comparison between the secp256r1 and the koblitz secp256k1 bitcoin curves”. Indonesian Journal of Electrical Engineering and Computer Science. 13 (3): 910. doi:10.11591/ijeecs.v13.i3.pp910-918. S2CID196058538. Van Hijfte, Stijn (2020). Blockchain Platforms: A Look at the Underbelly of Distributed Platforms. Morgan & Claypool Publishers. ISBN9781681738925. “Man Throws Away 7,500 Bitcoins, Now Worth $7.5 Million”. CBS DC. 29 November 2013. Archived from the original on 15 January 2014. Retrieved 23 January 2014. Krause, Elliott (5 July 2018). “A Fifth of All Bitcoin Is Missing. These Crypto Hunters Can Help”. The Wall Street Journal. Archived from the original on 9 July 2018. Retrieved 8 July 2018. Jeffries, Adrianne (19 December 2013). “How to steal Bitcoin in three easy steps”. The Verge. Archived from the original on 27 July 2019. Retrieved 17 January 2014. Harney, Alexandra; Stecklow, Steve (16 November 2017). “Twice burned – How Mt. Gox’s bitcoin customers could lose again”. Reuters. Archived from the original on 29 August 2019. Retrieved 6 September 2018. Martindale, Jon (16 March 2018). “Who owns all the Bitcoin? A few billionaire whales in a small pond”. Digital Trends. Archived from the original on 30 June 2019. Retrieved 1 July 2019. “Bitcoin mania is hurting PC gamers by pushing up GPU prices”. 30 January 2018. Archived from the original on 2 February 2018. Retrieved 2 February 2018. “Cryptocurrency mining operation launched by Iron Bridge Resources”. World Oil. 26 January 2018. Archived from the original on 30 January 2018. Andolfatto, David (31 March 2014). “Bitcoin and Beyond: The Possibilities and Pitfalls of Virtual Currencies” (PDF). Dialogue with the Fed. Federal Reserve Bank of St. Louis. Archived (PDF) from the original on 9 April 2014. Retrieved 16 April 2014. Sherman, Alan; Javani, Farid; Golaszewski, Enis (25 March 2019). “On the Origins and Variations of Blockchain Technologies”. IEEE Security and Policy. 17 (1): 72–77. arXiv:1810.06130. doi:10.1109/MSEC.2019.2893730. S2CID53114747. “Difficulty History” (The ratio of all hashes over valid hashes is D x 4,295,032,833, where D is the published “Difficulty” figure.). Blockchain.info. Archived from the original on 8 April 2015. Retrieved 12 September 2021. “Bitcoin boom benefiting TSMC: report”. Taipei Times. 4 January 2014. Hampton, Nikolai (5 September 2016). “Understanding the blockchain hype: Why much of it is nothing more than snake oil and spin”. Computerworld. IDG. Archived from the original on 6 September 2016. Retrieved 5 September 2016. Biggs, John (8 April 2013). “How To Mine Bitcoins”. Techcrunch. Archived from the original on 6 July 2017. Ashlee Vance (14 November 2013). “2014 Outlook: Bitcoin Mining Chips, a High-Tech Arms Race”. Businessweek. Archived from the original on 21 November 2013. Retrieved 24 November 2013. Browne, Ryan (11 May 2020). “Bitcoin investors are bracing for a key technical event — here’s what you need to know”. CNBC. Ritchie S. King; Sam Williams; David Yanofsky (17 December 2013). “By reading this article, you’re mining bitcoins”. qz.com. Atlantic Media Co. Archived from the original on 17 December 2013. Retrieved 17 December 2013. Meola, Andrew (5 October 2017). “How distributed ledger technology will change the way the world works”. Business Insider. Archived from the original on 27 April 2018. Retrieved 26 July 2018. Jerry Brito & Andrea Castillo (2013). “Bitcoin: A Primer for Policymakers” (PDF). Mercatus Center. George Mason University. Archived (PDF) from the original on 21 September 2013. Retrieved 22 October 2013. Tschorsch, Florian; Scheuermann, Björn (2016). “Bitcoin and Beyond: A Technical Survey on Decentralized Digital Currencies”. IEEE Communications Surveys & Tutorials. 18 (3): 2084–2123. doi:10.1109/comst.2016.2535718. S2CID5115101. Beikverdi, A.; Song, J. (June 2015). Trend of centralization in Bitcoin’s distributed network. 2015 IEEE/ACIS 16th International Conference on Software Engineering, Artificial Intelligence, Networking and Parallel/Distributed Computing (SNPD). pp. 1–6. doi:10.1109/SNPD.2015.7176229. ISBN978-1-4799-8676-7. S2CID15516195. Gervais, Arthur; Karame, Ghassan O.; Capkun, Vedran; Capkun, Srdjan. “Is Bitcoin a Decentralized Currency?”. InfoQ. InfoQ & IEEE Computer Society. Archived from the original on 10 October 2016. Retrieved 11 October 2016. Wilhelm, Alex. “Popular Bitcoin Mining Pool Promises To Restrict Its Compute Power To Prevent Feared ‘51%’ Fiasco”. TechCrunch. Archived from the original on 5 December 2017. Retrieved 25 January 2018. Chan, Edwin (9 April 2019). “China Plans to Ban Cryptocurrency Mining in Renewed Clampdown”. Bloomberg.com. Archived from the original on 18 December 2019. Retrieved 10 April 2019. While China was once home to about 70 percent of Bitcoin mining and 90 percent of trades, authorities have waged a nearly two-year campaign to shrink the crypto industry amid concerns over speculative bubbles, fraud and wasteful energy consumption. Simonite, Tom (5 September 2013). “Mapping the Bitcoin Economy Could Reveal Users’ Identities”. MIT Technology Review. Retrieved 2 April 2014. Lee, Timothy (21 August 2013). “Five surprising facts about Bitcoin”. The Washington Post. Archived from the original on 12 October 2013. Retrieved 2 April 2014. McMillan, Robert (6 June 2013). “How Bitcoin lets you spy on careless companies”. Wired. Conde Nast. Archived from the original on 9 February 2014. Retrieved 3 April 2020. Ben-Sasson, Eli; Chiesa, Alessandro; Garman, Christina; Green, Matthew; Miers, Ian; Tromer, Eran; Virza, Madars (2014). “Zerocash: Decentralized Anonymous Payments from Bitcoin” (PDF). 2014 IEEE Symposium on Security and Privacy. IEEE computer society. Archived (PDF) from the original on 14 October 2014. Retrieved 31 October 2014. Möser, Malte; Böhme, Rainer; Breuker, Dominic (2013). An Inquiry into Money Laundering Tools in the Bitcoin Ecosystem (PDF). 2013 APWG eCrime Researchers Summit. IEEE. ISBN978-1-4799-1158-5. Archived (PDF) from the original on 26 June 2018. Retrieved 19 June 2019. Adam Serwer & Dana Liebelson (10 April 2013). “Bitcoin, Explained”. motherjones.com. Mother Jones. Archived from the original on 27 April 2014. Retrieved 26 April 2014. “Bitcoin: Bitcoin under pressure”. The Economist. 30 November 2013. Archived from the original on 30 November 2013. Retrieved 30 November 2013. Skudnov, Rostislav (2012). Bitcoin Clients (PDF) (Bachelor’s Thesis). Turku University of Applied Sciences. Archived (PDF) from the original on 18 January 2014. Retrieved 16 January 2014. “Bitcoin Core version 0.9.0 released”. bitcoin.org. Archived from the original on 27 February 2015. Retrieved 8 January 2015. Metz, Cade (19 August 2015). “The Bitcoin Schism Shows the Genius of Open Source”. Wired. Condé Nast. Archived from the original on 30 June 2016. Retrieved 3 July 2016. Vigna, Paul (17 January 2016). “Is Bitcoin Breaking Up?”. The Wall Street Journal. Archived from the original on 20 August 2016. Retrieved 8 November 2016. Allison, Ian (28 April 2017). “Ethereum co-founder Dr Gavin Wood and company release Parity Bitcoin”. International Business Times. Archived from the original on 28 April 2017. Retrieved 28 April 2017. “Blockchain Size”. Blockchain.info. Archived from the original on 27 May 2017. Retrieved 16 January 2018. Gervais, Arthur; O. Karame, Ghassan; Gruber, Damian; Capkun, Srdjan. “On the Privacy Provisions of Bloom Filters in Lightweight Bitcoin Clients” (PDF). Archived (PDF) from the original on 5 October 2016. Retrieved 3 September 2016. Bill Barhydt (4 June 2014). “3 reasons Wall Street can’t stay away from bitcoin”. NBCUniversal. Archived from the original on 3 April 2015. Retrieved 2 April 2015. “MtGox gives bankruptcy details”. bbc.com. BBC. 4 March 2014. Archived from the original on 12 March 2014. Retrieved 13 March 2014. Roberts, Daniel (15 December 2017). “How to send bitcoin to a hardware wallet”. Yahoo Finance. Archived from the original on 17 February 2018. Retrieved 17 February 2018. Barski, Conrad; Wilmer, Chris (2015). Bitcoin for the Befuddled. No Starch Press. ISBN978-1-59327-573-0. Arapinis, Myrto; Gkaniatsou, Adriana; Karakostas, Dimitris; Kiayias, Aggelos (2019). A Formal Treatment of Hardware Wallets (PDF) (Technical report). University of Edinburgh, IOHK. Staff, Verge (13 December 2013). “Casascius, maker of shiny physical bitcoins, shut down by Treasury Department”. The Verge. Archived from the original on 10 January 2014. Retrieved 10 January 2014. Ahonen, Elias; Rippon, Matthew J.; Kesselman, Howard (15 April 2016). Encyclopedia of Physical Bitcoins and Crypto-Currencies. ISBN978-0-9950-8990-7. Mack, Eric (25 October 2011). “Are physical Bitcoins legal?”. CNET. Archived from the original on 26 June 2019. Retrieved 19 May 2019. British Museum (2012). “Bitcoin token with digital code for bitcoin currency”. Retrieved 17 May 2019. Bernard, Zoë (2 December 2017). “Everything you need to know about Bitcoin, its mysterious origins, and the many alleged identities of its creator”. Business Insider. Archived from the original on 15 June 2018. Retrieved 15 June 2018. Finley, Klint (31 October 2018). “After 10 Years, Bitcoin Has Changed Everything—And Nothing”. Wired. Archived from the original on 5 November 2018. Retrieved 9 November 2018. Nakamoto, Satoshi (3 January 2009). “Bitcoin”. Archived from the original on 21 July 2017. Nakamoto, Satoshi (9 January 2009). “Bitcoin v0.1 released”. Archived from the original on 26 March 2014. Wallace, Benjamin (23 November 2011). “The Rise and Fall of Bitcoin”. Wired. Archived from the original on 31 October 2013. Retrieved 13 October 2012. “Block 0 – Bitcoin Block Explorer”. Archived from the original on 15 October 2013. Pagliery, Jose (2014). Bitcoin: And the Future of Money. Triumph Books. ISBN9781629370361. Archived from the original on 21 January 2018. Retrieved 20 January 2018. “Here’s The Problem with the New Theory That A Japanese Math Professor Is The Inventor of Bitcoin”. San Francisco Chronicle. 19 May 2013. Archived from the original on 4 January 2015. Retrieved 24 February 2015. Peterson, Andrea (3 January 2014). “Hal Finney received the first Bitcoin transaction. Here’s how he describes it”. The Washington Post. Archived from the original on 27 February 2015. Popper, Nathaniel (30 August 2014). “Hal Finney, Cryptographer and Bitcoin Pioneer, Dies at 58”. NYTimes. Archived from the original on 3 September 2014. Retrieved 2 September 2014. Cooper, Anderson. “Meet the man who spent millions worth of bitcoin on pizza”. https://www.cbsnews.com/. CBS News. Retrieved 8 December 2021. External link in |website= (help) Griswold, Alison (23 May 2014). “The First-Ever Bitcoin Purchase Was Remarkably Inglorious”. https://slate.com/. Slate. Retrieved 8 December 2021. External link in |website= (help) Hankin, Aaron. “Bitcoin Pizza Day: Celebrating the $80 Million Pizza Order”. https://www.investopedia.com/. Investopedia. Retrieved 8 December 2021. External link in |website= (help) Sparks, Hannah (24 May 2021). “Infamous bitcoin pizza guy who squandered $365M haul has no regrets”. https://nypost.com/. New York Post. Retrieved 8 December 2021. External link in |website= (help) Kharpal, Arjun (18 June 2018). “Everything you need to know about the blockchain”. CNBC. Archived from the original on 13 September 2018. Retrieved 13 September 2018. McMillan, Robert. “Who Owns the World’s Biggest Bitcoin Wallet? The FBI”. Wired. Condé Nast. Archived from the original on 21 October 2016. Retrieved 7 October 2016. Simonite, Tom. “Meet Gavin Andresen, the most powerful person in the world of Bitcoin”. MIT Technology Review. Retrieved 6 December 2017. Odell, Matt (21 September 2015). “A Solution To Bitcoin’s Governance Problem”. TechCrunch. Archived from the original on 26 January 2016. Retrieved 24 January 2016. “Bitcoin Historical Prices”. OfficialData.org. Archived from the original on 4 July 2018. Retrieved 3 July 2018. French, Sally (9 February 2017). “Here’s proof that this bitcoin crash is far from the worst the cryptocurrency has seen”. Market Watch. Archived from the original on 3 July 2018. Retrieved 3 July 2018. Bustillos, Maria (1 April 2013). “The Bitcoin Boom”. The New Yorker. Archived from the original on 2 July 2018. Retrieved 30 July 2018. “Bitcoin-Qt version 0.5.0 released”. Bitcoin Project. 1 November 2011. Retrieved 13 November 2016. Lee, Timothy (11 March 2013). “Major glitch in Bitcoin network sparks sell-off; price temporarily falls 23%”. arstechnica.com. Archived from the original on 22 April 2013. Retrieved 15 February 2015. Blagdon, Jeff (12 March 2013). “Technical problems cause Bitcoin to plummet from record high, Mt. Gox suspends deposits”. The Verge. Archived from the original on 22 April 2013. Retrieved 12 March 2013. “Bitcoin Charts”. Archived from the original on 9 May 2014. Lee, Timothy (20 March 2013). “US regulator Bitcoin Exchanges Must Comply With Money Laundering Laws”. Arstechnica. Archived from the original on 21 October 2013. Retrieved 28 July 2017. Bitcoin miners must also register if they trade in their earnings for dollars.“US govt clarifies virtual currency regulatory position”. Finextra. 19 March 2013. Archived from the original on 26 March 2014. “Application of FinCEN’s Regulations to Persons Administering, Exchanging, or Using Virtual Currencies” (PDF). Department of the Treasury Financial Crimes Enforcement Network. Archived from the original (PDF) on 28 March 2013. Retrieved 19 March 2013. Roose, Kevin (8 April 2013) “Inside the Bitcoin Bubble: BitInstant’s CEO – Daily Intelligencer”. Archived from the original on 9 April 2014.. Nymag.com. Retrieved on 20 April 2013. “Bitcoin Exchange Rate”. Bitcoinscharts.com. Archived from the original on 24 June 2012. Retrieved 15 August 2013. Dillet, Romain. “Feds Seize Assets From Mt. Gox’s Dwolla Account, Accuse It Of Violating Money Transfer Regulations”. Archived from the original on 9 October 2013. Retrieved 15 May 2013. Berson, Susan A. (2013). “Some basic rules for using ‘bitcoin’ as virtual money”. American Bar Association. Archived from the original on 29 October 2013. Retrieved 26 June 2013. Sampson, Tim (2013). “U.S. government makes its first-ever Bitcoin seizure”. The Daily Dot. Archived from the original on 30 June 2013. Retrieved 15 October 2013. Ember, Sydney (2 July 2014). “Winner of Bitcoin Auction, Tim Draper, Plans to Expand Currency’s Use”. The New York Times DealBook. Archived from the original on 28 August 2019. Retrieved 13 June 2019. “After Silk Road seizure, FBI Bitcoin wallet identified and pranked”. ZDNet. Archived from the original on 5 April 2014. “Silkroad Seized Coins”. Archived from the original on 9 January 2014. Retrieved 2 November 2013. Hill, Kashmir. “The FBI’s Plan For The Millions Worth Of Bitcoins Seized From Silk Road”. Forbes. Archived from the original on 2 May 2014. Kelion, Leo (18 December 2013). “Bitcoin sinks after China restricts yuan exchanges”. bbc.com. BBC. Archived from the original on 19 December 2013. Retrieved 20 December 2013. “China bans banks from bitcoin transactions”. The Sydney Morning Herald. Reuters. 6 December 2013. Archived from the original on 23 March 2014. Retrieved 31 October 2014. “Baidu Stops Accepting Bitcoins After China Ban”. Bloomberg. New York. 7 December 2013. Archived from the original on 10 December 2013. Retrieved 11 December 2013. “China bars use of virtual money for trading in real goods”. English.mofcom.gov.cn. 29 June 2009. Archived from the original on 29 November 2013. Retrieved 10 January 2014. Rayman, Noah (30 July 2014). “You Can Now Donate to Wikipedia in Bitcoin”. TIME. Archived from the original on 30 July 2014. Retrieved 27 April 2019. “Bitcoin Core version 0.11.2 released”. Bitcoin Project. 13 November 2015. Retrieved 14 November 2016. Kyle Torpey (15 April 2016). “Bitcoin Core 0.12.1 Released, Major Step Forward for Scalability”. Bitcoin Magazine. NASDAQ.com. Retrieved 7 November 2016. Antonopoulos, Andreas (2017). Mastering Bitcoin: Programming the Open Blockchain (2nd ed.). O’Reilly Media. ISBN978-1491954386. BIP-68 and BIP-112 were activated in May 2016 as a soft fork upgrade to the consensus rules.“Bitcoin Core 0.13.1”. Bitcoin Core. Retrieved 25 October 2016. “Segregated Witness Benefits”. Bitcoin Core. 26 January 2016. Retrieved 20 October 2018. Hileman, Garrick; Rauchs, Michel. “Global Cryptocurrency Benchmarking Study” (PDF). Cambridge University. Archived (PDF) from the original on 10 April 2017. Retrieved 14 April 2017. Vigna, Paul (21 July 2017). “Bitcoin Rallies Sharply After Vote Resolves Bitter Scaling Debate”. The Wall Street Journal. Archived from the original on 26 January 2020. Retrieved 26 January 2020. Selena Larson (1 August 2017). “Bitcoin split in two, here’s what that means”. CNN Tech. Cable News Network. Archived from the original on 27 February 2018. Retrieved 2 April 2018. “Bitcoin Hits a New Record High, But Stops Short of $20,000”. Fortune. Archived from the original on 14 November 2018. Retrieved 16 April 2019. “RMB Bitcoin trading falls below 1 pct of world total”. Xinhuanet. Xinhua. 7 July 2018. Archived from the original on 10 July 2018. Retrieved 10 July 2018. “Bitcoin USD”. Yahoo Finance!. Archived from the original on 28 January 2019. Retrieved 27 January 2019. Dawkins, David (10 July 2018). “Has CHINA burst the bitcoin BUBBLE? Trading in RMB drops from 90% to 1%”. Express. Archived from the original on 10 July 2018. Retrieved 10 July 2018. “Bitcoin turns 10: The obscure technology that became a household name”. CNBC. 4 January 2019. Archived from the original on 19 January 2019. Retrieved 18 January 2019. “CVE-2018-17144 Full Disclosure”. Bitcoin Core. Retrieved 23 September 2018. Chavez-Dreyfuss, Gertrude (3 July 2018). “Cryptocurrency exchange theft surges in first half of 2018: report”. Reuters. Archived from the original on 4 July 2018. Retrieved 10 July 2018. “Cryptocurrencies Tumble After $32 Million South Korea Exchange Hack”. Fortune. Bloomberg. 20 July 2018. Archived from the original on 11 July 2018. Retrieved 10 July 2018. Shane, Daniel (11 June 2018). “Billions in cryptocurrency wealth wiped out after hack”. CNN. Archived from the original on 11 July 2018. Retrieved 10 July 2018. Russell, Jon (10 July 2018). “The crypto world’s latest hack sees Israel’s Bancor lose $23.5M”. TechCrunch. Archived from the original on 10 July 2018. Retrieved 10 July 2018. Osipovich, Alexander (22 September 2019). “NYSE Owner Launches Long-Awaited Bitcoin Futures”. The Wall Street Journal. Archived from the original on 24 September 2019. Retrieved 24 September 2019. Olga Kharif (24 October 2019). “Bakkt Plans First Regulated Options Contracts on Bitcoin Futures”. bloomberg.com. Bloomberg. Archived from the original on 24 October 2019. Retrieved 5 November 2019. “YouTube admits error over Bitcoin video purge”. bbc.com. BBC. 28 December 2019. Archived from the original on 28 December 2019. Retrieved 28 December 2019. Alexander, Doug (4 February 2019). “Crypto CEO Dies Holding Only Passwords That Can Unlock Millions in Customer Coins”. bloomberg.com. Bloomberg. Archived from the original on 16 December 2019. Retrieved 27 January 2020. del Castillo, Michael (19 March 2020). “Bitcoin’s Magic Is Fading, And That’s A Good Thing”. Forbes.com. Archived from the original on 20 March 2020. Retrieved 21 March 2020. “Bitcoin loses half of its value in two-day plunge”. CNBC. 13 March 2020. Retrieved 9 December 2020. “MicroStrategy buys $250M in Bitcoin as CEO says it’s superior to cash”. Washington Business Journal. 11 August 2020. Retrieved 11 August 2020. Oliver Effron. “Square just bought $50 million in bitcoin”. CNN. Retrieved 22 October 2020. “PayPal says all users in US can now buy, hold and sell cryptocurrencies”. Techcrunch. 13 November 2020. Retrieved 26 November 2020. “Bitcoin hits an all-time high of just under $20,000”. CNN. 30 November 2020. Retrieved 1 December 2020. Catalin Cimpanu (7 December 2020). “BTC-e founder sentenced to five years in prison for laundering ransomware funds”. ZDNet. Retrieved 9 December 2020. Olga Kharif (11 December 2020). “169-Year-Old MassMutual Invests $100 Million in Bitcoin”. Bloomberg. Retrieved 26 December 2020. Ryan Browne (29 January 2021). “Bitcoin spikes 20% after Elon Musk adds #bitcoin to his Twitter bio”. CNBC. Retrieved 2 February 2021. Will Daniel (26 January 2021). “Crypto miner Marathon Patent Group pours $150 million into bitcoin as the token pulls back from record highs”. Business Insider. Retrieved 1 February 2021. Yun Li (8 February 2021). “Bitcoin surges above $44,000 to record after Elon Musk’s Tesla buys $1.5 billion worth”. CNBC. Retrieved 9 February 2021. “Elon Musk says bitcoin is slightly better than holding cash”. The Economic Times. Retrieved 19 February 2021. “Tesla will no longer accept Bitcoin over climate concerns, says Musk”. BBC News. 13 May 2021. Retrieved 13 May 2021. Iyengar, Rish (13 May 2021). “Bitcoin drops around 12% after Elon Musk tweets that Tesla will not accept it as payment”. CNN. Retrieved 13 May 2021. “Elon Musk Says Tesla Likely to Accept Bitcoin Again”. Gizmodo. Retrieved 22 July 2021. “Canton Zug to accept cryptocurrencies for tax payment beginning in 2021”. Canton of Zug. 3 September 2020. Retrieved 24 January 2021. “Kanton Zug akzeptiert Kryptowährungen bei Steuern” (in German). Schweizerischen Radio- und Fernsehgesellschaft. 3 September 2020. Retrieved 24 January 2021. Aleman, Marcos (9 June 2021). “El Salvador makes Bitcoin legal tender”. Associated Press. Retrieved 16 June 2021. “El Salvador aprueba el uso de Bitcoin como moneda de intercambio”. Agencia EFE (in Spanish). 9 June 2021. Retrieved 16 June 2021. “El Salvador first country to approve bitcoin as legal tender”. Agence France Presse. 9 June 2021. Retrieved 16 June 2021. Ostroff, Caitlin (9 June 2021). “El Salvador Becomes First Country to Approve Bitcoin as Legal Tender”. Wall Street Journal. Retrieved 9 June 2021. Renteria, Nelson; Wilson, Tom; Strohecker, Karin (9 June 2021). “In a world first, El Salvador makes bitcoin legal tender”. Reuters. Retrieved 16 June 2021. Webber, Jude; Szalay, Eva (9 June 2021). “El Salvador becomes first country to adopt bitcoin as legal tender”. Financial Times. Retrieved 16 June 2021. Portillo, Denni (11 June 2021). “Gobierno publica Ley Bitcóin en el Diario Oficial”. La Prensa Gráfica. Retrieved 6 July 2021. Magaña, Yolanda (11 June 2021). “¿Cuándo estará vigente la Ley Bitcoin en El Salvador?”. El Mundo (El Salvador). Retrieved 6 July 2021. Jagtiani, Sunil (9 June 2021). “El Salvador President Says Nation Adopts Bitcoin as Legal Tender”. Bloomberg. Retrieved 9 June 2021. El Salvador, primer país del mundo en reconocer al Bitcoin como moneda de curso legal, 9 June 2021, Legislative Assembly of El Salvador, “La Asamblea Legislativa decretó este 8 de junio de 2021 un total de 10 artículos como disposiciones generales:” Renteria, Nelson (25 June 2021). “Bitcoin to become legal tender in El Salvador on Sept 7”. Reuters. Retrieved 25 June 2021. Silver, Katie (8 September 2021). “Bitcoin crashes on first day as El Salvador’s legal tender”. BBC. “Uso de bitcóin cumple 2 meses en El Salvador entre polémicas y “ganancias””. Noticias de El Salvador – La Prensa Gráfica | Informate con la verdad (in Spanish). 5 November 2021. Retrieved 11 December 2021. Tidy, Joe (7 September 2021). “Fear and excitement in El Salvador as Bitcoin becomes legal tender”. BBC. More than 68% of those questioned said they disagreed with using cryptocurrency as a legal tender.“Majority of Salvadorans do not want bitcoin, poll shows”. Reuters. 2 September 2021. Retrieved 30 November 2021. Urquilla, EFE- K. (22 November 2021). “Más del 91 % de los salvadoreños prefieren el dólar sobre el Bitcoin, según nueva encuesta”. Noticias de El Salvador – elsalvador.com (in Spanish). Retrieved 11 December 2021. Kurmanaev, Anatoly (7 October 2021). “Bitcoin Preaches Financial Liberty. A Strongman Is Testing That Promise”. NYT. Archived from the original on 7 October 2021. Retrieved 8 October 2021. Sigalos, MacKenzie (9 June 2021). “Bitcoin just got its first makeover in four years”. CNBC. Retrieved 15 June 2021. Sigalos, MacKenzie (14 November 2021). “Bitcoin’s biggest upgrade in four years just happened – here’s what changes”. CNBC. Retrieved 15 November 2021. Monica, Paul R. La; Business, CNN (19 October 2021). “The first bitcoin ETF finally begins trading”. CNN. Retrieved 22 October 2021. Mccrank, John (22 October 2021). “Bitcoin falls from peak, U.S. ETF support questioned”. Reuters. Retrieved 27 October 2021. Feuer, Alan (14 December 2013). “The Bitcoin Ideology”. The New York Times. Archived from the original on 1 July 2018. Retrieved 1 July 2018. Friedrich von Hayek (October 1976). Denationalisation of Money: The Argument Refined. 2 Lord North Street, Westminster, London SWIP 3LB: The institute of economic affairs. ISBN978-0-255-36239-9. Archived from the original on 11 January 2020. Retrieved 10 September 2015. European Central Bank (October 2012). Virtual Currency Schemes (PDF). Frankfurt am Main: European Central Bank. ISBN978-92-899-0862-7. Archived (PDF) from the original on 6 November 2012. “Bitcoin and other cryptocurrencies are useless”. The Economist. 30 August 2018. Archived from the original on 4 September 2018. Retrieved 4 September 2018. Lack of adoption and loads of volatility mean that cryptocurrencies satisfy none of those criteria. Krugman, Paul (29 January 2018). “Bubble, Bubble, Fraud and Trouble”. The New York Times. Archived from the original on 4 June 2018. Tourianski, Julia (13 August 2014). “The Declaration Of Bitcoin’s Independence”. Archive.org. Archived from the original on 23 March 2019. Retrieved 1 July 2018. Dodd, Nigel (2017). “The social life of Bitcoin” (PDF). LSE Research Online. Archived (PDF) from the original on 1 July 2018. Retrieved 1 July 2018. Golumbia, David (2015). Lovink, Geert (ed.). Bitcoin as Politics: Distributed Right-Wing Extremism. Institute of Network Cultures, Amsterdam. pp. 117–131. ISBN978-90-822345-5-8. SSRN2589890. Peters, Jeremy W.; Popper, Nathaniel (14 June 2018). “Stephen Bannon Buys Into Bitcoin”. The New York Times. Archived from the original on 1 July 2018. Retrieved 1 July 2018. Matthew Graham Wilson & Aaron Yelowitz (November 2014). “Characteristics of Bitcoin Users: An Analysis of Google Search Data”. Social Science Research Network. Working Papers Series. SSRN2518603. “Monetarists Anonymous”. The Economist. The Economist Newspaper Limited. 29 September 2012. Archived from the original on 20 October 2013. Retrieved 21 October 2013. “The magic of mining”. The Economist. 13 January 2015. Archived from the original on 12 January 2015. Retrieved 13 January 2015. “Free Exchange. Money from nothing. Chronic deflation may keep Bitcoin from displacing its rivals”. The Economist. 15 March 2014. Archived from the original on 25 March 2014. Retrieved 25 March 2014. Shiller, Robert (1 March 2014). “In Search of a Stable Electronic Currency”. The New York Times. Archived from the original on 24 October 2014. Murphy, Hannah (8 June 2018). “Who really owns bitcoin now?”. Financial Times. Archived from the original on 10 June 2018. Retrieved 10 June 2018. Karkaria, Urvaksh (23 September 2014). “Atlanta-based BitPay hooks up with PayPal to expand bitcoin adoption”. Atlanta Business Chronicle. Archived from the original on 26 October 2014. Katz, Lily (12 July 2017). “Bitcoin Acceptance Among Retailers Is Low and Getting Lower”. Bloomberg. Archived from the original on 25 January 2018. Retrieved 25 January 2018. Kharif, Olga (1 August 2018). “Bitcoin’s Use in Commerce Keeps Falling Even as Volatility Eases”. Bloomberg. Archived from the original on 2 August 2018. Retrieved 2 August 2018. Chan, Bernice (16 January 2015). “Bitcoin transactions cut the cost of international money transfers”. South China Morning Post. Archived from the original on 31 May 2019. Retrieved 31 May 2019. “Bitcoin firms dumped by National Australia Bank as ‘too risky'”. The Guardian. Australian Associated Press. 10 April 2014. Archived from the original on 23 February 2015. Retrieved 23 February 2015. Weir, Mike (1 December 2014). “HSBC severs links with firm behind Bitcoin fund”. bbc.com. BBC. Archived from the original on 3 February 2015. Retrieved 9 January 2015. “ACCC investigating why banks are closing bitcoin companies’ accounts”. Financial Review. 19 October 2015. Archived from the original on 11 February 2016. Retrieved 28 January 2016. “Bitcoin futures surge in first day of trading”. CBS News. 11 December 2017. Archived from the original on 31 May 2019. Retrieved 31 May 2019. “Chicago Mercantile Exchange jumps into bitcoin futures”. CBS News. 18 December 2017. Archived from the original on 31 May 2019. Retrieved 31 May 2019. “Venezuela Has Bitcoin Stash and Doesn’t Know What to Do With It”. Bloomberg. 26 September 2019. Archived from the original on 26 September 2019. Retrieved 26 September 2019. Lee, Timothy B. “The $11 million in bitcoins the Winklevoss brothers bought is now worth $32 million”. The Switch. The Washington Post. Archived from the original on 6 July 2017. Retrieved 11 August 2017. “Jersey approve Bitcoin fund launch on island”. BBC news. 10 July 2014. Archived from the original on 10 July 2014. Retrieved 10 July 2014. Hill, Kashmir. “How You Should Have Spent $100 In 2013 (Hint: Bitcoin)”. Forbes. Archived from the original on 19 February 2015. Retrieved 16 February 2015. Steverman, Ben (23 December 2014). “The Best and Worst Investments of 2014”. bloomberg.com. Bloomberg LP. Archived from the original on 9 January 2015. Retrieved 9 January 2015. Gilbert, Mark (29 December 2015). “Bitcoin Won 2015. Apple … Did Not”. Bloomberg. Archived from the original on 29 December 2015. Retrieved 29 December 2015. “Top 100 Richest Bitcoin Addresses and Bitcoin distribution”. bitinfocharts.com. Archived from the original on 15 October 2017. Retrieved 14 October 2017. “MicroStrategy Buys $50 Million Worth Of Bitcoin, Topping Up Holdings To $766M”. 5 December 2020. “MicroStrategy buys $250M in Bitcoin as CEO says it’s superior to cash”. Washington Business Journal. 11 August 2020. Retrieved 11 August 2020. Wilson, Tom (18 May 2021). “Buyers beware as “altcoin” frenzy bruises bitcoin”. Reuters. Retrieved 19 May 2021. Simonite, Tom (12 June 2013). “Bitcoin Millionaires Become Investing Angels”. Computing News. MIT Technology Review. Retrieved 13 June 2013. Robin Sidel (1 December 2014). “Ten-hut! Bitcoin Recruits Snap To”. The Wall Street Journal. Dow Jones & Company. Retrieved 9 December 2014.^{[dead link]} Alex Hern (1 July 2014). “Silk Road’s legacy 30,000 bitcoin sold at auction to mystery buyers”. The Guardian. Archived from the original on 23 October 2014. Retrieved 31 October 2014. “CoinSeed raises $7.5m, invests $5m in Bitcoin mining hardware – Investment Round Up”. Red Herring. 24 January 2014. Archived from the original on 9 March 2014. Retrieved 9 March 2014. Tasca, Paolo (7 September 2015), Digital Currencies: Principles, Trends, Opportunities, and Risks, Social Science Research Network, SSRN2657598 Moore, Heidi (3 April 2013). “Confused about Bitcoin? It’s ‘the Harlem Shake of currency'”. The Guardian. Archived from the original on 1 March 2014. Retrieved 2 May 2014. Lee, Timothy (5 November 2013). “When will the people who called Bitcoin a bubble admit they were wrong”. The Washington Post. Archived from the original on 11 January 2014. Retrieved 10 January 2014. Liu, Alec (19 March 2013). “When Governments Take Your Money, Bitcoin Looks Really Good”. Motherboard. Archived from the original on 7 February 2014. Retrieved 7 January 2014. Ben Rooney (29 November 2013). “Bitcoin worth almost as much as gold”. CNN. Archived from the original on 26 October 2014. Retrieved 31 October 2014. “Bitcoin prices remain below $600 amid bearish chart signals”. nasdaq.com. August 2014. Archived from the original on 14 October 2014. Retrieved 31 October 2014.. Williams, Mark T. (21 October 2014). “Virtual Currencies – Bitcoin Risk” (PDF). World Bank Conference Washington DC. Boston University. Archived (PDF) from the original on 11 November 2014. Retrieved 11 November 2014. Irrera, Tom Wilson, Anna (11 January 2021). “Analysis: Cancel your weekends! Bitcoin doesn’t rest, and neither can you”. Reuters. Archived from the original on 6 February 2021. Trading volumes across six major cryptocurrency exchanges have been 10% higher at weekends than weekdays in that period Zaki, Myret (14 January 2021). “Bitcoin: The Derivative Bomb”. The Market (in German). Archived from the original on 15 January 2021. the lion’s share of institutional trading in bitcoin is being done without owning any single bitcoin. The bitcoin derivative boom was encouraged by the fact that you can get 2 to 3 times leverage on the CME, and more than 100 x leverage on native crypto derivative exchanges. In 2020, the ratio between bitcoin futures and spot volumes has increased from 2,3 to 4,6 in 2019“CFTC Commitments of Traders Short Report – Financial Traders in Markets (Futures Only)”. cftc.gov. Commodity Futures Trading Commission (CFTC). 2–5 February 2021. Archived from the original on 8 February 2021. BITCOIN – CHICAGO MERCANTILE EXCHANGE, CFTC Code #133741“WSJ Markets Bitcoin USD”. Retrieved 8 February 2021. “China May Be Gearing Up to Ban Bitcoin”. pastemagazine.com. 18 September 2017. Archived from the original on 3 October 2017. Retrieved 6 October 2017. The decentralized nature of bitcoin is such that it is impossible to “ban” the cryptocurrency, but if you shut down exchanges and the peer-to-peer economy running on bitcoin, it’s a de facto ban.“Regulation of Cryptocurrency Around the World” (PDF). Library of Congress. The Law Library of Congress, Global Legal Research Center. June 2018. pp. 4–5. Archived (PDF) from the original on 14 August 2018. Retrieved 15 August 2018. “Iran: New Crypto Law Requires Selling Bitcoin Directly to Central Bank to Fund Imports”. aawsat.com. 31 October 2020. Retrieved 1 November 2020. “Iran Is Pivoting to Bitcoin”. vice.com. 3 November 2020. Retrieved 10 November 2020. “Iran Has a Bitcoin Strategy to Beat Trump”. foreignpolicy.com. 24 January 2020. Retrieved 10 November 2020. “Customer Advisory: Use Caution When Buying Digital Coins or Tokens” (PDF). U.S.Commodity Futures Trading Commission. Archived (PDF) from the original on 17 July 2018. Retrieved 17 July 2018. “Investor Alert: Bitcoin and Other Virtual Currency-related Investments”. Investor.gov. U.S. Securities and Exchange Commission. 7 May 2014. Archived from the original on 30 June 2018. Retrieved 17 July 2018. “Ponzi schemes Using virtual Currencies” (PDF). sec.gov. U.S. Securities and Exchange Commission. Archived (PDF) from the original on 16 June 2018. Retrieved 17 July 2018. “Warning to consumers on virtual currencies” (PDF). European Banking Authority. 12 December 2013. Archived from the original (PDF) on 28 December 2013. Retrieved 23 December 2013. “Investor Alerts Don’t Fall for Cryptocurrency-Related Stock Scams”. FINRA.org. Financial Industry Regulatory Authority. 21 December 2017. Archived from the original on 1 July 2018. Retrieved 23 July 2018. “Informed Investor Advisory: Cryptocurrencies”. North American Securities Administrators Association. April 2018. Archived from the original on 23 July 2018. Retrieved 23 July 2018. Dean, James (25 May 2018). “Bitcoin investigation to focus on British traders, US officials examine manipulation of cryptocurrency prices”. The Times. Archived from the original on 25 May 2018. Retrieved 25 May 2018. Cornish, Chloe (24 May 2018). “Bitcoin slips again on reports of US DoJ investigation”. Financial Times. Archived from the original on 24 May 2018. Retrieved 24 May 2018. Robinson, Matt; Schoenberg, Tom (24 May 2018). “U.S. Launches Criminal Probe into Bitcoin Price Manipulation”. Bloomberg. Archived from the original on 24 May 2018. Retrieved 24 May 2018. McCoy, Kevin (24 May 2018). “Bitcoin value gyrates amid report of Department of Justice manipulation investigation”. USA Today. Archived from the original on 24 May 2018. Retrieved 25 May 2018. Rubin, Gabriel T.; Michaels, Dave; Osipovich, Alexander (8 June 2018). “U.S. regulators demand trading data from bitcoin exchanges in manipulation probe”. MarketWatch. Archived from the original on 8 June 2018. Retrieved 9 June 2018. Note:this is a short open access version of a Wall Street Journal article Rubin, Gabriel T.; Michaels, Dave; Osipovich, Alexander (8 June 2018). “U.S. regulators demand trading data from bitcoin exchanges in manipulation probe”. The Wall Street Journal. Archived from the original on 8 June 2018. Retrieved 9 June 2018. (paywalled) Fung, Brian (21 May 2018). “State regulators unveil nationwide crackdown on suspicious cryptocurrency investment schemes”. The Washington Post. Archived from the original on 27 May 2018. Retrieved 27 May 2018. Gandal, Neil; Hamrick, J.T.; Moore, Tyler; Oberman, Tali (May 2018). “Price manipulation in the Bitcoin ecosystem”. Journal of Monetary Economics. 95: 86–96. doi:10.1016/j.jmoneco.2017.12.004. S2CID26358036. Lee, Tim (12 December 2017). “A brief history of Bitcoin hacks and frauds”. Ars Technica. Archived from the original on 28 May 2018. Retrieved 27 May 2018. Griffin, John M.; Shams, Amin (13 June 2018). “Is Bitcoin Really Un-Tethered?”. Social Science Research Network. SSRN3195066. Popper, Nathaniel (13 June 2018). “Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say”. The New York Times. Archived from the original on 13 June 2018. Retrieved 13 June 2018. Shaban, Hamza (14 June 2018). “Bitcoin’s astronomical rise last year was buoyed by market manipulation, researchers say”. The Washington Post. Archived from the original on 15 June 2018. Retrieved 14 June 2018. Janda, Michael (18 June 2018). “Cryptocurrencies like bitcoin cannot replace money, says Bank for International Settlements”. ABC (Australia). Archived from the original on 18 June 2018. Retrieved 18 June 2018. Hyun Song Shin (June 2018). “Chapter V. Cryptocurrencies: looking beyond the hype” (PDF). BIS 2018 Annual Economic Report. Bank for International Settlements. Archived (PDF) from the original on 18 June 2018. Retrieved 19 June 2018. Put in the simplest terms, the quest for decentralised trust has quickly become an environmental disaster. Hiltzik, Michael (18 June 2018). “Is this scathing report the death knell for bitcoin?”. Los Angeles Times. Archived from the original on 18 June 2018. Retrieved 19 June 2018. Velde, François (December 2013). “Bitcoin: A primer” (PDF). Chicago Fed letter. Federal Reserve Bank of Chicago. p. 4. Archived (PDF) from the original on 26 October 2014. Retrieved 3 September 2016. Wile, Rob (6 April 2014). “St. Louis Fed Economist: Bitcoin Could Be A Good Threat To Central Banks”. businessinsider.com. Business Insider. Archived from the original on 24 September 2015. Retrieved 16 April 2014. Andolfatto, David (24 December 2013). “In gold we trust?”. MacroMania. David Andolfatto. Archived from the original on 12 April 2017. Retrieved 17 April 2014. 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. Costelloe, Kevin (29 November 2017). “Bitcoin ‘Ought to Be Outlawed,’ Nobel Prize Winner Stiglitz Says”. Bloomberg. Archived from the original on 12 June 2018. Retrieved 5 June 2018. It doesn’t serve any socially useful function.“Economics Nobel prize winner, Richard Thaler: “The market that looks most like a bubble to me is Bitcoin and its brethren””. ECO Portuguese Economy. 22 January 2018. Archived from the original on 12 June 2018. Retrieved 7 June 2018. Wolff-Mann, Ethan (27 April 2018). “‘Only good for drug dealers’: More Nobel prize winners snub bitcoin”. Yahoo Finance. Archived from the original on 12 June 2018. Retrieved 7 June 2018. “Bitcoin biggest bubble in history, says economist who predicted 2008 crash”. TheGuardian.com. 2 February 2018. Archived from the original on 12 June 2018. Braue, David (11 March 2014). “Bitcoin confidence game is a Ponzi scheme for the 21st century”. ZDNet. Archived from the original on 6 October 2016. Retrieved 5 October 2016. Clinch, Matt (10 March 2014). “Roubini launches stinging attack on bitcoin”. CNBC. Archived from the original on 6 October 2014. Retrieved 2 July 2014. “This Billionaire Just Called Bitcoin a ‘Pyramid Scheme'”. Archived from the original on 24 September 2017. Retrieved 23 September 2017. Ott Ummelas & Milda Seputyte (31 January 2014). “Bitcoin ‘Ponzi’ Concern Sparks Warning From Estonia Bank”. bloomberg.com. Bloomberg. Archived from the original on 29 March 2014. Retrieved 1 April 2014. Posner, Eric (11 April 2013). “Fool’s Gold: Bitcoin is a Ponzi scheme—the Internet’s favorite currency will collapse”. Slate. Archived from the original on 26 March 2014. Retrieved 1 April 2014. Kaushik Basu (July 2014). “Ponzis: The Science and Mystique of a Class of Financial Frauds” (PDF). World Bank Group. Archived (PDF) from the original on 31 October 2014. Retrieved 30 October 2014. “Federal Council report on virtual currencies in response to the Schwaab (13.3687) and Weibel (13.4070) postulates” (PDF). Federal Council (Switzerland). Swiss Confederation. 25 June 2014. Archived (PDF) from the original on 5 December 2014. Retrieved 28 November 2014. Vigna, Paul (20 December 2021). “Bitcoin’s ‘One Percent’ Controls Lion’s Share of the Cryptocurrency’s Wealth”. Wall Street Journal. ISSN0099-9660. Mooney, Chris; Mufson, Steven (19 December 2017). “Why the bitcoin craze is using up so much energy”. The Washington Post. Archived from the original on 9 January 2018. Retrieved 11 January 2018. several experts told The Washington Post that bitcoin probably uses as much as 1 to 4 gigawatts, or billion watts, of electricity, roughly the output of one to three nuclear reactors. Roberts, Paul (9 March 2018). “This Is What Happens When Bitcoin Miners Take Over Your Town – Eastern Washington had cheap power and tons of space. Then the suitcases of cash started arriving”. Politico. Archived from the original on 9 March 2018. Retrieved 16 March 2018. de Vries, Alex (May 2018). “Bitcoin’s Growing Energy Problem”. Joule. 2 (5): 801–805. doi:10.1016/j.joule.2018.04.016. Köhler, Susanne; Pizzol, Massimo (20 November 2019). “Life Cycle Assessment of Bitcoin Mining”. Environmental Science & Technology. 53 (23): 13598–13606. Bibcode:2019EnST…5313598K. doi:10.1021/acs.est.9b05687. PMID31746188. Baraniuk, Chris (3 July 2019). “Bitcoin’s global energy use ‘equals Switzerland'”. BBC News. Archived from the original on 16 January 2020. Retrieved 2 February 2020. “How bad is Bitcoin for the environment really?”. Independent. 12 February 2021. Retrieved 15 February 2021. requires nearly as much energy as the entire country of Argentina O’Brien, Matt (13 June 2015). “The scam called Bitcoin”. Daily Herald. Archived from the original on 16 June 2015. Retrieved 20 September 2016. Potenza, Alessandra (21 December 2017). “Can renewable power offset bitcoin’s massive energy demands?”. TheVerge News. Archived from the original on 12 January 2018. Retrieved 12 January 2018. Lampert, Allison (12 January 2018). “Chinese bitcoin miners eye sites in energy-rich Canada”. Reuters. Archived from the original on 14 January 2018. Retrieved 14 January 2018. “Bitcoin is literally ruining the earth, claim experts”. The Independent. 6 December 2017. Archived from the original on 19 January 2018. Retrieved 23 January 2018. “The Hard Math Behind Bitcoin’s Global Warming Problem”. WIRED. 15 December 2017. Archived from the original on 21 January 2018. Retrieved 23 January 2018. Ponciano, Jonathan (18 April 2021). “Crypto Flash Crash Wiped Out $300 Billion In Less Than 24 Hours, Spurring Massive Bitcoin Liquidations”. Forbes. Retrieved 24 April 2021. Murtaugh, Dan (9 February 2021). “The Possible Xinjiang Coal Link in Tesla’s Bitcoin Binge”. Bloomberg.com. Retrieved 24 April 2021. Tully, Shawn (20 April 2021). “Commentary: How much Bitcoin comes from dirty coal? A flooded mine in China just spotlighted the issue”. Fortune. Retrieved 23 April 2021. Chant, Tim De (10 May 2021). “Private-equity firm revives zombie fossil-fuel power plant to mine bitcoin”. Ars Technica. Retrieved 10 May 2021. Chant, Tim De (6 July 2021). “Bitcoin power plant is turning a 12,000-year-old glacial lake into a hot tub”. Ars Technica. Retrieved 6 July 2021. Hern, Alex (17 January 2018). “Bitcoin’s energy usage is huge – we can’t afford to ignore it”. The Guardian. Archived from the original on 23 January 2018. Retrieved 18 September 2019. Ethan, Lou (17 January 2019). “Bitcoin as big oil: the next big environmental fight?”. The Guardian. Archived from the original on 29 August 2019. Retrieved 18 September 2019. Foteinis, Spyros (2018). “Bitcoin’s alarming carbon footprint”. Nature. 554 (7691): 169. Bibcode:2018Natur.554..169F. doi:10.1038/d41586-018-01625-x. Krause, Max J.; Tolaymat, Thabet (2018). “Quantification of energy and carbon costs for mining cryptocurrencies”. Nature Sustainability. 1 (11): 711–718. doi:10.1038/s41893-018-0152-7. S2CID169170289. Mora, Camilo; et al. (2018). “Bitcoin emissions alone could push global warming above 2°C”. Nature Climate Change. 8 (11): 931–933. Bibcode:2018NatCC…8..931M. doi:10.1038/s41558-018-0321-8. S2CID91491182. Stoll, Christian; Klaaßen, Lena; Gallersdörfer, Ulrich (2019). “The Carbon Footprint of Bitcoin”. Joule. 3 (7): 1647–1661. doi:10.1016/j.joule.2019.05.012. Masanet, Eric; et al. (2019). “Implausible projections overestimate near-term Bitcoin CO2 emissions”. Nature Climate Change. 9 (9): 653–654. Bibcode:2019NatCC…9..653M. doi:10.1038/s41558-019-0535-4. hdl:2066/207817. OSTI1561950. S2CID202851477. Dittmar, Lars; Praktiknjo, Aaron (2019). “Could Bitcoin emissions push global warming above 2°C?”. Nature Climate Change. 9 (9): 656–657. Bibcode:2019NatCC…9..656D. doi:10.1038/s41558-019-0534-5. S2CID202859187. Houy, Nicolas (2019). “Rational mining limits Bitcoin emissions”. Nature Climate Change. 9 (9): 655. Bibcode:2019NatCC…9..655H. doi:10.1038/s41558-019-0533-6. Kamiya, George. “Commentary: Bitcoin energy use – mined the gap”. iea.org. Archived from the original on 3 March 2020. Retrieved 5 December 2019. “Kosovo bans cryptocurrency mining to save electricity amid blackouts”. The Independent. 6 January 2022. Lavin, Tim (8 August 2013). “The SEC Shows Why Bitcoin Is Doomed”. bloomberg.com. Bloomberg LP. Archived from the original on 25 March 2014. Retrieved 20 October 2013. Lee, Timothy B. (21 November 2013). “Here’s how Bitcoin charmed Washington”. The Washington Post. Archived from the original on 1 January 2017. Retrieved 10 October 2016. Popper, Nathaniel (13 July 2018). “How Russian Spies Hid Behind Bitcoin in Hacking Campaign”. NYT. Archived from the original on 14 July 2018. Retrieved 14 July 2018. Ehrlich, Steven. “Janet Yellen, Bitcoin And Crypto Fearmongers Get Pushback From Former CIA Director”. Forbes. Ball, James (22 March 2013). “Silk Road: the online drug marketplace that officials seem powerless to stop”. theguardian.com. Guardian News and Media Limited. Archived from the original on 12 October 2013. Retrieved 20 October 2013. Montag, Ali (9 July 2018). “Nobel-winning economist: Authorities will bring down ‘hammer’ on bitcoin”. CNBC. Archived from the original on 11 July 2018. Retrieved 11 July 2018. Newlands, Chris (9 July 2018). “Stiglitz, Roubini and Rogoff lead joint attack on bitcoin”. Financial News. Archived from the original on 11 July 2018. Retrieved 11 July 2018. Foley, Sean; Karlsen, Jonathan R.; Putniņš, Tālis J. (19 February 2018). “Sex, drugs, and bitcoin: How much illegal activity is financed through cryptocurrencies?”. University of Oxford Faculty of Law. Oxford Business Law Blog. Archived from the original on 10 June 2018. Retrieved 11 June 2018. Foley, Sean; Karlsen, Jonathan R.; Putniņš, Tālis J. (30 January 2018). “Sex, Drugs, and Bitcoin: How Much Illegal Activity Is Financed Through Cryptocurrencies?”. Social Science Research Network. SSRN3102645. Antonopoulos, Andreas (2017). “3”. Mastering Bitcoin: Programming the Open Blockchain (2nd ed.). O’Reilly Media. ISBN978-1491954386. Bitcoin Core is the reference implementation of the bitcoin system, meaning that it is the authoritative reference on how each part of the technology should be implemented. Bitcoin Core implements all aspects of bitcoin, including wallets, a transaction and block validation engine, and a full network node in the peer-to-peer bitcoin network.“Bitcoin Core version 0.9.0 released”. Bitcoin Core. 19 March 2014. Retrieved 21 October 2018. Antonopoulos, Andreas M. (2014). Mastering Bitcoin: Unlocking Digital Cryptocurrencies. O’Reilly Media, Inc. pp. 31–32. ISBN978-1491902646. Retrieved 6 November 2016. “MIT Announces $900,000 Bitcoin Developer Fund”. Inc. 29 March 2016. Retrieved 21 October 2018. “About”. Bitcoin Core. Retrieved 21 October 2018. “Bitcoin Developer Examples”. Bitcoin. Retrieved 21 October 2018. “checkpoints.cpp”. Repository source code. GitHub, Inc. Retrieved 13 November 2016. “bitcoin/chainparams.cpp”. GitHub. Retrieved 21 October 2018. Mike Orcutt (19 May 2015). “Leaderless Bitcoin Struggles to Make Its Most Crucial Decision”. MIT Technology Review. Retrieved 15 November 2016. “Alert System Retirement”. Bitcoin Project. 1 November 2016. Retrieved 16 November 2016. Antonopoulos, Andreas (29 May 2013). “Bitcoin is a money platform with many APIs”. Radar. O’Reilly. Retrieved 19 November 2016. “Bitcoin Core devtools README – Create and verify timestamps of merge commits”. GitHub. Retrieved 5 May 2018. Preukschat, Alex; Josep Busquet (2015). Bitcoin: The Hunt of Satoshi Nakamoto. Europe Comics. p. 87. ISBN9791032800201. Retrieved 16 November 2016. Maria Bustillos (25 August 2015). “Inside the Fight Over Bitcoin’s Future”. New Yorker. Retrieved 29 June 2020. Kaminska, Izabella (22 December 2017). “The HODL”. Financial Times. Retrieved 21 November 2018. Montag, Ali (26 August 2018). “‘HODL,’ ‘whale’ and 5 other cryptocurrency slang terms explained”. CNBC. Retrieved 12 November 2020. Wong, Joon Ian. “Buy and hodl, just don’t get #rekt: The slang that gets you taken seriously as a bitcoin trader”. Quartz. Archived from the original on 22 December 2017. Retrieved 22 December 2017. Akhtar, Tanzeel (22 December 2017). “As Bitcoin plunges, cryptocurrency fans chant ‘HODL’ for comfort”. TheStreet. Archived from the original on 23 December 2017. Retrieved 22 December 2017. Hajric, Vildana (19 November 2020). “All the Bitcoin Lingo You Need to Know as Crypto Heats Up”. Bloomberg. Retrieved 1 December 2020. Stross, Charles (2013). Neptune’s Brood (First ed.). New York: Penguin Group USA. ISBN978-0-425-25677-0. It’s theft-proof too – for each bitcoin is cryptographically signed by the mind of its owner.“Crib Sheet: Neptune’s Brood – Charlie’s Diary”. www.antipope.org. Archived from the original on 14 June 2017. Retrieved 5 December 2017. I wrote Neptune’s Brood in 2011. Bitcoin was obscure back then, and I figured had just enough name recognition to be a useful term for an interstellar currency: it’d clue people in that it was a networked digital currency. Kenigsberg, Ben (2 October 2014). “Financial Wild West”. The New York Times. Archived from the original on 18 May 2015. Retrieved 8 May 2015. Michel, Lincoln (16 December 2017). “What the Hell Is Bitcoin? Let This Documentary on Netflix Explain”. GQ. Archived from the original on 18 November 2018. Retrieved 10 October 2018. Financial Times (2018) “Japan girl band gives voice to cryptocurrencies”, 12 January. https://www.ft.com/content/01ad80d6-f77d-11e7-88f7-5465a6ce1a00 Ong, Thuy (12 January 2018). “Japan has a new cryptocurrency-themed J-pop band”. The Verge. Retrieved 1 January 2022. “Introducing Ledger, the First Bitcoin-Only Academic Journal”. Motherboard. Archived from the original on 10 January 2017. “Editorial Policies”. ledgerjournal.org. Archived from the original on 23 December 2016. Retrieved 10 January 2017.

1. “How to Write and Format an Article for Ledger” (PDF). Ledger. 2015. doi:10.5195/LEDGER.2015.1 (inactive 31 October 2021). Archived (PDF) from the original on 22 September 2015.

External links

Wikimedia Commons has media related to Bitcoin.

• Bitcoin.org website
• Bitcoin at Curlie

Source: Bitcoin, https://en.wikipedia.org/w/index.php?title=Bitcoin&oldid=1064072335 (last visited Jan. 9, 2022).

Satoshi Nakamoto Whitepaper on Bitcoin

Original title Bitcoin: A Peer-to-Peer Electronic Cash System

Bitcoin: A Peer-to-Peer Electronic Cash System

Bitcoin: Ein elektronisches Peer-to-Peer- Cash-System

Bitcoin : un système de paiement électronique pair-à-pair

Bitcoin: un sistema de dinero en efectivo electrónico peer-to-peer

Here is a relaxing video on bitcoin prices:

#Bitcoin is going up to infinity because its supply is finitepic.twitter.com/1pGVcRYt2t

— Documenting Bitcoin 📄 (@DocumentingBTC) September 23, 2022

21 Days of Bitcoin

This series was originally published via Bitcoin Magazine. If you’d like to earn 2100 free sats, sign up for the email version here.

By Sarah Satoshi

Welcome to the world of Bitcoin! Through the lessons below, you’ll gain a deeper understanding of what exactly this mysterious, revolutionary new technology is. And by the end of this course, you’ll finally figure out what millions of people around the world are already realizing: Bitcoin is hope.

If you’d like to earn some free sats (small denominations of bitcoin) for 21 Days Of Bitcoin course, sign up for our email version here.

Lesson 1: Magic Internet Money

A Brief History

On January 3, 2009, a pseudonymous genius named Satoshi Nakamoto officially invented Bitcoin.

Whoever this mystery person or group is, they managed to create the world’s first cryptocurrency that would soon change everything as we know it. Formally defined, Bitcoin (capital “B”) is a global, borderless, decentralized protocol that enables the peer-to-peer exchange of the bitcoin currency (lowercase “b”), which has a fixed maximum supply and a known, decreasing issuance rate.

While Bitcoin may appear as magical, it doesn’t aim to do anything innovative — rather, it offers an improved alternative to the existing inequitable, inaccessible, and inflationary financial system. By open-sourcing finance, we are taking a system so complex and indecipherable that it locks out nearly two billion people worldwide, and turning it into a transparent, permission-less network that anyone can be a part of.

What Does Bitcoin Solve?

Centralization: Bitcoin alleviates the need for a centralized third-party system — like a credit card company or a central bank — to confirm and validate transactions. Rather than requiring the current base-layer financial system to broker our transfers and settlements, Bitcoin works purely peer-to-peer, ridding the need for trust in a centralized government controller.

Verifiability: Bitcoin enables unit-level currency validation that isn’t possible with fiat (government-backed money). For instance, there are plenty of fake dollar bills in circulation (the U.S. Treasury estimates that one in every 10,000 bills is counterfeit) that the average person fails to discover. However, nobody can create fake bitcoin because the Bitcoin network is secured cryptographically via a public blockchain that anybody can access and validate any amount of bitcoin as real.

Inflation: Bitcoin’s supply is capped at 21 million. There will never be any more bitcoin than that. No one can just “print more bitcoin” like we currently print dollars, inflating the money supply. Unlike fiat currencies, bitcoin doesn’t take away your purchasing power over time.

“I don’t understand anything you just said”

Don’t worry, if concepts like “blockchain” and “decentralization” are confusing to you right now, I’ll be explaining everything in detail over the next 21 days. The truth is, we don’t need to dive too deeply into exactly how the technical aspects of Bitcoin function. However, you’re right to be skeptical if I just tell you to trust that it works. After all, bitcoin is all about getting rid of the need for trust.

But…how can it be that I don’t need to trust anyone? How do I know that Bitcoin isn’t a scam? Will bitcoin make me rich? What is bitcoin’s intrinsic value? There must be someone managing Bitcoin, right?

These are all valid questions that will soon be answered in a way that, hopefully, anyone can understand. For this introductory lecture, we’ll briefly cover the skeleton of how bitcoin operates. Over the next three weeks, you’ll learn everything from how to make your first bitcoin transaction to how bitcoin is already bringing global financial freedom to millions around the world.

---

The Bitcoin Blockchain

Ah, yes. The mystical, almighty blockchain that is supposedly revolutionizing the tech industry right now. While it may seem daunting to try and understand what a blockchain is and how it operates, you basically already know what it is — the name gives it away.

Yes, it is literally a chain of (digital) blocks that holds data as a publicly visible ledger. Its history and validity are verified by Bitcoin full nodes across the globe that each keep a full copy of the blockchain history.

Because transactions are secured by the public blockchain, there is no need for an intermediary source of trust in order to confirm that your coins are real or that your transactions aren’t fraudulent; the publicly verifiable, mathematically programmed, cryptographically sound Bitcoin blockchain is the only proof you need.

Bitcoin is Sound Money

It’s no secret that the current financial system is deeply broken. With rampant hyperinflation, global economic inequity, and dependence on the nation-states that hold global power, fiat isn’t truly backed by anything sound — it’s a product of power and control.

If we want to escape the control of the powers that be, we’ll need an alternative system. Bitcoin is a currency with no central authority. No government can control it, so it’s not going to suffer from endless rounds of quantitative easing or any other money printing schemes governments employ.

Might this be the money solution we’ve been looking for?

Lesson 2: Who Is In Charge Of Bitcoin?

trust: Who is at the top of the Bitcoin ladder? Is this a scam?

And here’s the simple answer: Bitcoin isn’t controlled by any one country, entity, or person. It’s decentralized, meaning it can’t be corrupted or controlled — and that’s a beautiful thing.

Why Do We Need Decentralization?

Perhaps the most important aspect of Bitcoin is its decentralization; this is the principal difference that separates Bitcoin from the central banking system we’re currently used to. Inherently, our worldwide banking system is centralized because our money is controlled and distributed by the government. We call this money “fiat” — originating from the latin word meaning: “a determination by authority.”

When you have a centralized fiat currency like the US dollar (the current global reserve currency), you are coerced into a financial system that can change the rules at any time. You are subjected to the big banking system that charges you overdraft fees, requires minimum balances, and lends your money out to other people only to pay you less than 1% in annual interest.

And while big banks in the United States have healthy competition and therefore have incentives to offer better, freer services to consumers, many countries around the world don’t offer this privilege. In fact, many banks overseas actually charge their consumers to keep their money in the bank.

What is this highway robbery? You might as well keep all your cash under your mattress.

As much as we like to joke about this, the use of physical, insecure piggy banks are a reality for over a billion people around the world who remain unbanked.

Financial services create expensive barriers like fees, minimums, and identification requirements that don’t allow people to participate fairly in it. Additionally, not everyone has access to a competently secured and insured central banking system; they must participate in the one handed to them by their government, no matter how unstable or corrupt it is.

What Fixes This?

There’s a saying in the Bitcoin community: Bitcoin fixes this.

Because nobody is in charge of Bitcoin, Bitcoin works for everyone. Rather than having someone at the top, the Bitcoin Network is based on the consensus of everyone who participates in it.

It doesn’t matter what country you’re in or how controlling your government is — your wealth is secured by the bitcoin blockchain all the same, and no one has the authority or power to change this. While it is technically possible for bitcoin to be “hacked” or controlled, I’ll go over why this won’t ever happen in a later email.

Bitcoin is an opportunity for the unbanked to store and grow their wealth in a secured way, where nobody can be locked out or denied — and it doesn’t care about your credit score.

Decentralization Is Privacy

In traditional banking, you are subjected to approvals based on credit scores and government identification. This makes everyone susceptible to fraud; if someone steals your identity, they can open up credit cards, generate debt in your name, and destroy your credit score.

With Bitcoin, your participation is not dependent on your identity. Anyone and everyone can participate anonymously, as names and personal data are not connected to transactions on the Bitcoin blockchain.

Although most cryptocurrency exchanges (places where you can buy bitcoin) require a Know Your Customer (KYC) process that requires you to verify your identity with a selfie and photo ID, once you take your bitcoin off of the exchange and into your own self-custodial wallets, all transactions from that point forward are pseudonymous.

Later on in this series, I’ll show you how you can secure your bitcoin by taking it off of exchanges and into your own self-custody solutions.

Ultimately, nobody controls Bitcoin at the top — but Bitcoin allows you to be your own bank and fully control your own wealth without the oversight of anyone else.

Lesson 3: What Is Money?

What is money anyway?

Formally defined, money is something that is widely accepted for purchasing goods and services, or repaying debts and taxes. You might think that this is limited to paper bills and minted coins, but the reality is that anything can be money, so long as it fulfills these fundamental use cases: a unit of account, a medium of exchange, and a store of value.

Looking back in history, the items that our ancient ancestors once traded and bartered with were considered their forms of money. This included everything from shells and animals to silver and gold. In modern times, we see a reflection of this in places where government money is of little value, such as in prisons, where cigarettes and instant ramen are well-known units of account.

From the 14th century all the way to the 20th century, cowrie shells were used as currency to barter and trade across Africa and Asia. Durable, divisible, identifiable, and scarce, cowries were the perfect pre-coin era natural currency. Other items like glass beads, stones, and salt were used throughout different cultures as well. Imagine: you might be skipping rocks on the ocean today that were once regarded like the dollars in your bank account. Those ancient currencies are all worthless today because they eventually fell victim to the killer of value: hyperinflation.

Learning from the Rai Stones on Yap Island

One of the most interesting ancient monetary systems was the use of Rai stones on the Island of Yap (part of Micronesia).

The Yapese people used large, heavy stones — up to 12 feet in diameter — with a hole in the center as their currency because of their rarity and difficulty to procure from the neighboring islands. To ship the Rai stones to Yap via rafts and canoes, often hundreds of people were needed, meaning it was nearly impossible for anyone to quickly inflate the supply.

For centuries, the Rai stones were used as sound money. Placed in a central location where everyone had access, the Rai stones were only exchanged in recognition of ownership rather than possession (since they were impossible to carry around).

This monetary system worked well for centuries. But in 1871, an Irish American by the name of David O’Keefe washed ashore and saw a huge business opportunity in producing coconut oil procured by the island’s abundant coconuts. He realized that the Yapese people had no interest in foreign money, so he set sail to the nearby island Palau where he used modern tools and explosives to procure several large Rai stones to take back to Yap.

However, the value in the Rai stones was calculated based on a complex formula of size, history, quality, and the number of lives lost due to the labor of procuring these stones. Simply put, they had value because they were difficult to obtain; O’Keefe’s Rai stones were obtained easily, negligent of tradition, so many villagers were not keen on accepting the stones as valid. An ancient remnant of counterfeit currency, if you will.

Unfortunately, other Yapese did not understand the concepts of scarcity and sound money, so they gladly accepted these false stones, which eventually led to the demise of the Rai as the sound currency it once was.

Modern Hyperinflation

Taking a look at modern examples of exorbitant money printing in countries like Venezuela and Zimbabwe, we see a similar modern hyper-inflationary story playing out. If we are to learn from history, we must realize workable solutions to the vulnerabilities that previous currencies have fallen victim to. But rather than worrying so much about things we can’t change in fiat, we can look towards real solutions.

Before, we could only dream of such impossible things. Now, we have Bitcoin.

Bitcoin is a new form of money that solves the issues surrounding scarcity and currency debasement. Tomorrow, I’ll go over bitcoin’s fixed supply cap and the case for why bitcoin will never lose its purchasing power the way every other money before it has.

Lesson 4: The Magic Number — 21 Million

Imagine central banking as this guy:

The Monopoly Man represents the central bank.

On the first few passes around the Monopoly board, you have the opportunity to buy real estate and other commodities. The market is open, prices are affordable, and competition is low. Sometimes, you get unlucky and have to pay a surprise fine or a hefty tax. But, such is life.

He allows you to collect $200 when you pass GO, just because he’s a nice guy. Perhaps you’ve now replenished some of your savings, so you return back to the board and take another pass around.

After a few rounds of properties purchased, rents paid out to owners, and collecting free money at GO, a certain dreadful doom starts to set in — you pray you don’t land on someone’s duplex, or even worse, their hotel. With each pass around the board, you’re still collecting your $200. Not to rain on your parade, but $200 doesn’t mean much when your savings is wiped out and rent seems to double each turn you take.

While this is an exaggerated version of the game of life, the basic principles remain: Those who have invested in assets (like real estate or stocks) see their net worth appreciate; those who owe debts and have little to no assets continue to see their savings wiped out. Their purchasing power weakens, commodities and assets become more expensive, and no amount of government handouts can save them.

In fact, the “free money” comes back to bite them even harder the next round. While the rich see their assets inflate in price because more money is introduced into the game, the poor see their savings debased because the necessities they could once afford (like rent) become unbearably expensive.

This is a result of inflation: where the government prints money on a whim to fuel the economy. But in the end, the rich only get richer and the price of goods become more expensive, thus trapping people in a cycle of poverty — even though they may collect $200 at GO.

The government is allowed to inflate the monetary supply whenever they want. They want you to think everything’s under control — and it is, literally. Therein lies the issue: They’ll stab you in the back while shaking your hand.

With Bitcoin, however, nobody is in control. Bitcoin’s supply is capped at 21 million, whereas fiat dollars can be boundlessly printed.

The result of bitcoin’s supply cap is scarcity. As demand for bitcoin rises, so will its price, and thus, its purchasing power as well.

The Magic Number

Nobody knows where the 21 million bitcoin cap comes from; this is likely just an arbitrarily chosen number. However, what’s important is that this number can’t be changed — ever. It’s baked into the code, and in order to change the software to increase this supply cap, everyone would have to agree. However, people don’t want the value of their bitcoin to decrease, so there’s no way we would reach the consensus required to increase this number.

Obviously, there are more than 21 million people in the world; this means that not everyone can own a whole bitcoin. In fact, there are twice as many current millionaires as there are bitcoin in the world; this should give you a sense of the future value of bitcoin as adoption continues to grow.

Even though bitcoin supply is capped, each bitcoin can be split into “satoshis,” kind of like how dollars can be split into cents. Each bitcoin contains 100 million satoshis, and so there are 2.1 quadrillion satoshis in total.

Supply and Demand

Currently, not all 21 million bitcoin are up for grabs yet — I’ll go over this later when I talk about how new bitcoin is mined. But as we slowly increase the supply until no more new bitcoin is available, demand and adoption will determine the price of bitcoin.

In your basic high school economics class, you probably learned about a microeconomic concept called the supply and demand curve. Although no economic model is perfectly representative of a real-world scenario, bitcoin’s curve is a little bit special.

Let’s take a look at this supply and demand chart comparing salmon and bitcoin:

While the supply of salmon is not necessarily fixed because we can farm fish and source fish from different areas of the world, the supply of bitcoin is capped strictly to 21 million — this is what we call a perfectly inelastic supply.

As a result, this means that only shifts in demand affect price; as demand continues to increase with institutional adoption and countries like El Salvador declaring bitcoin legal tender, there’s only one place bitcoin price is headed: the moon. Short term though, demand can dip and the price will fall with it.

Although we’re still far from using bitcoin in the way that we use dollars to purchase goods, what we can do is hold our wealth in bitcoin. As the purchasing power of the dollar weakens due to ever-inflating supply, bitcoin supply remains immutable, and so the purchasing power of bitcoin should continue to rise over time — forever.

Lesson 5: PoW — Proof Of Work Explained

You might have heard this term thrown around in the bitcoin space: PoW.

PoW reminds me of this old superhero comic:

And it’s a good symbol, too. Proof of Work really is like a superhero since it allows Bitcoin to work without a centralized controller such as the government. It’s the key that unlocks the self-sovereign solution we’ve been looking for — a computer algorithm that just might fix our financial system.

Here’s what it means.

Working Selfishly for the Greater Good

Proof of Work is a consensus algorithm that requires its participants — the Bitcoin miners — to expend energy and computational power in order to lock-in batches of new transactions. In exchange, they are rewarded with bitcoin if they are the first to successfully calculate a difficult 64-character hexadecimal serial number (a hash) that identifies the past transaction history, the new transactions, and their own ID as the winning miner.

In other words, miners want this bitcoin reward for themselves, so they will work tirelessly to try and create a winning solution. The winner then sends their solution and the list of transactions it includes to the blockchain, thus securing those transactions publicly, forever. About every ten minutes, this process repeats itself to help decentralize, secure, and confirm all transactions on the blockchain while rewarding miners for their proof of work.

If very little of that made any sense to you, here’s an analogy to help you better understand.

Looking for Diamonds

Diamonds, like bitcoin, are rare. They can’t be faked, they’re hard to find, and everybody wants one. For the sake of this analogy, we’ll just pretend that lab-grown diamonds don’t exist.

Imagine that a client wants a diamond of at least a certain size. If you find a diamond that fits the requirement, then you get paid. The bigger the diamonds are, the harder they are to find. Now, because diamonds are so rare, you need to spend time gathering stones and spend effort breaking into them. It’s a luck of the draw — some stones you just throw out, while others can make a diamond ring.

Occasionally, you get lucky and the first ore you break into meets the size requirement. Other times, it takes you much longer to find just a small diamond. But even if you do find several small diamonds, it doesn’t matter to the client if none of them are the right size. This is an important point to make for bitcoin mining — that work doesn’t accumulate. Results are largely based on luck. But, the harder you work, the luckier you may get.

Mining Pools

Some miners realize that all this work might be better done as a group effort, so they collaborate and form groups. They decide that if someone in the group finds a diamond big enough for the client, then the entire group gets paid out depending on how much work they’ve done. They measure the work done by individually weighing the little diamonds that people were able to find against the total.

In Bitcoin, miners come together to form mining pools in a similar way. Bitcoin rewards are distributed within a mining pool depending on how much work the miners have done.

Adjusting for Difficulty

As more people realize that there is money to be made looking for diamonds, the overall number of participants increases, which thereby increases the likelihood of someone finding a diamond of the right size quickly.

Well, let’s say that every two weeks, the client takes note of how long it took to find a diamond of a certain size. If there are more people working and it takes less time on average to find the diamonds, then the size requirements for the diamonds get bigger for the next two weeks. Because larger diamonds are rarer, it becomes much harder for someone to find a diamond if the size requirements get bigger, and vice versa.

The Bitcoin protocol has a built-in difficulty adjustment. Every 2,016 blocks (about two weeks), the difficulty to mine bitcoin adjusts as more miners either come online or go offline. If there is more computational power working to solve the hash, then it becomes more difficult to find a winning solution. If miners come offline for some reason (like after China banned miners), then it becomes easier for miners who are still online to mine bitcoin.

The goal is to ultimately find equilibrium and issue new bitcoin at a steady rate — an average of ten minutes per new block. You can track how difficulty adjusts here: https://btc.com/stats/diff

Lesson 6: The Halving — Bitcoin’s Mining Schedule

Yesterday, we went over how Proof of Work functions in confirming transactions and creating new bitcoin. Today, I’ll paint a more general picture of what mining looks like and how new bitcoin is distributed over time.

What Does Mining Look Like?

Mining in the industrial age vs mining in the digital age:

Bitcoin mining is unlike any other kind of mining. It’s simple to set up, runs 24/7, and violates no human rights or labor laws.

Here’s how it works. Basically, a bunch of specialized computers (ASICs: application-specific integrated circuits) are set up to mine bitcoin somewhere where electricity is cheap (since miners require a lot of computing power). As stated yesterday, miners can work together in pools to split profits and increase their odds of winning a new block.

With each new Bitcoin block that is mined, batches of transactions are recorded and confirmed to the blockchain. By confirming transactions and computing a winning hash, miners are rewarded with newly minted bitcoin. However, this block reward won’t last forever, since the supply of bitcoin is capped.

The Incoming Supply of New Bitcoin

Bitcoin is limited to a total supply of 21 million. But that doesn’t mean that all 21 million are currently up for grabs.

Miners will continue to receive new bitcoin until the final bitcoin is mined — this is estimated to be in the year 2140. When all 21 million bitcoin are exhausted, miners will need to be incentivized to continue investing the time, energy, and expenses necessary to help confirm transactions.

As the network grows, it’s expected that the fees users pay them in exchange for their continued proof of work will rise significantly enough to keep mining profitable. Later on, I’ll go over the concerns that revolve around high user transaction fees.

As of 2021, around 18.5 million bitcoin have already been mined. Over the next century, as the last of the remaining bitcoin are mined, the bitcoin block rewards will slowly be reduced at a set schedule. This is called “the halving.”

The Halving: a Four Year Cycle

At the Bitcoin network’s genesis, 50 bitcoin were mined in each block.

For every 210,000 blocks — approximately every four years — the number of new bitcoin mined per block is cut in half. As of 2021, only 6.25 new bitcoin are mined in each block. Some time in 2024, the block reward will be cut to 3.125 bitcoin.

This is the Bitcoin halving schedule:

When the supply of new bitcoin introduced is cut in half, its rate of inflation is effectively cut in half as well. This brings us back to our basic concepts of supply and demand.

Over time, as more people are introduced to the Bitcoin network and start participating in it, demand rises. At the same time, supply growth shrinks because of the halvings. As a result, the price of bitcoin is pushed higher and higher over every four-year cycle.

Another reason for miners to receive fewer bitcoin rewards each halving cycle is with the anticipation of the network growth. As more users enter the Bitcoin network, more transactions take place. Each block can only hold so many transactions, so users must essentially “bid” on a spot for their transaction to be confirmed.

For miners, this means that they receive high fees from users as incentives to include their transaction in the next block.

For users, this means increasingly higher fees or slower transaction times.

This is an issue that has been thought about long and hard, and new developments are still in their early stages. But, there are viable solutions, such as the Lightning Network. As you continue to learn about Bitcoin over the next few weeks, I’ll go more deeply into solutions for scaling transactions and how we can continue to develop the network.

Lesson 7: Bitcoin Full Nodes — “Verify, Don’t Trust”

There are three types of nodes: mining nodes, full nodes, and light nodes. We just went over mining nodes (aka miners), which confirm pending transactions to the blockchain and mine new bitcoin. Full nodes and light nodes are what validate the new blocks and transactions submitted by the miners.

Bitcoin full nodes have three main jobs: to keep a copy of the entire Bitcoin blockchain, to validate transactions, and to enforce the rules of the network. Bitcoin light nodes do the same thing that full nodes do, but they don’t keep a copy of the entire blockchain history. We’ll mainly focus on full nodes.

The Purpose of Nodes in a Network

The more nodes that are distributed across a global network, the more decentralized a system is. Since the Bitcoin network has the most nodes (including miners) of any cryptocurrency, it’s the most secure blockchain. While many other cryptocurrencies are prone to hacks and blockchain attacks, Bitcoin is virtually immune — and I’ll explain exactly why tomorrow.

The role of a node is to communicate with the other nodes in the network directly, verifying that their history of transactions is aligned with the next node. As they verify new transactions, they check to see that the bitcoin being transacted has not been double-spent and that no bitcoin is being created out of thin air. If a node does see malicious transaction attempts, it along with the other nodes in the network will reject the transactions.

Bitcoin transactions are verified across nodes in a similar way that rumors are spread: Terrible and cruel, a rumor echoes through the network of gossip until everyone in the third grade knows about the crush you have on Joshua. But unlike rumors, full nodes only pass on transactions that they have verified themselves, according to the rules that they enforce and the blockchain history that they reference.

Since nodes run the Bitcoin core software that lists out all the rules of the network (such as the 21 million hard-cap), all full nodes help protect the network by only verifying proper transactions to a pending block, along with verifying completed blocks broadcasted by the miners. If by chance, a node accepts a malicious transaction onto a block, the other nodes in the network will reject the block altogether.

Running Your Own Full Node!

Did you know that you can run your own node? It’s very easy with user-friendly, open source node installers like Umbrel! You can follow their guide for detailed instructions. It’s inexpensive, fairly straightforward, and helps contribute to the security of the Bitcoin network.

Although Bitcoin is fairly secure and many claim that running an extra node will not do much for enhancing the network, it helps to have an excess number of nodes worldwide in the case of rare Black Swan events, such as nodes under certain government jurisdictions being shut down all at once.

Running your own node also helps you eliminate the trust needed for other nodes to remain honest. Though most of them remain true, by running transactions through your own full node, you are essentially becoming your own bank. That’s a pretty cool feature that isn’t really possible with fiat, gold, or anything else that can be used as money.

Lesson 8: Can Bitcoin Be Hacked?

You might have heard the alarming stories of DeFi and cryptocurrency exchange hacks.

Need a reminder? Bitcoin exchange Mt. Gox was famously hacked in 2014 and $460 million worth of bitcoin — equivalent to $38 billion today — was stolen. Ouch.

Just recently, a hacker stole $600 million worth of various cryptocurrency assets from DeFi project Poly Network. Most of the funds have since been returned, but I can’t imagine putting your trust and securities into an exchange, just to have a shadowy super coder make away with all of your investments.

With the cryptocurrency industry being hacked left and right, it’s important to proceed with caution. However, there are ways to protect yourself from these hacks: Take your bitcoin off exchanges, and don’t play with altcoins.

In a few days, I’ll walk you through buying, transacting, and self-custodying bitcoin, step by step. But today, I want to discuss cryptocurrency network hacks. Specifically, why bitcoin is specially “unhackable” compared to the other cryptocurrency networks (DeFi/altcoin projects). While it’s technically possible for the Bitcoin network to be hacked and funds to be stolen directly off of the blockchain, it will never happen with bitcoin (though, it can and does happen to other cryptos).

Here’s why.

The 51% Attack

The reason why the Bitcoin network is so strongly decentralized is because of how many participants there are in it. With each additional miner and node that comes online, the overall security of the network is strengthened, and it becomes increasingly harder for some malicious entity or group to try and take over the network.

But if a blockchain network is not strong, then it is prone to something called a 51% attack, where if miners are able to gain a hold of over 50% of the network, they can effectively take over and “double spend” their existing crypto. Similar to counterfeit bills, hackers would be able to use “fake copies” of an existing cryptocurrency, thus inflating the supply and devaluing the currency.

A 51% attack on proof of work protocols like bitcoin are able to take place successfully since the network will always default to the longest chain with the highest mining power as the chain of truth.

But ultimately, this won’t happen on the Bitcoin network because Bitcoin’s proof of work algorithm requires a lot of power for a 51% attack to occur (as much power as a small country consumes along with more than $23 billion worth of hardware alone); it wouldn’t make much sense for a hacker to spend this much money in an attempt to make risky money.

Additionally, hackers cannot “steal” bitcoin from others — they can only “double-spend” their own bitcoin, just as counterfeiters make fake dollar bills instead of robbing a bank. Once again, this would be foolish to do because the value of bitcoin would quickly drop as the network recognizes that bitcoin has been double-spent and people start to lose confidence in bitcoin.

Quantum Computing Concerns

Many skeptics also bring up the concern for quantum computing rendering the Bitcoin network’s security useless, since quantum computing would be able to break the network’s encryption algorithms and reveal users’ private keys.

Another concern is that quantum computing could allow for “super miners” that can mine bitcoin at an extremely high speed, thus centralizing mining and allowing them to take control over the chain.

While these situations may appear daunting, they are far off into the future of quantum computing. In any case, the Bitcoin network has much time to “upgrade” to prepare for such dire circumstances and will inevitably be able to protect itself from any sort of attack we see coming. To do this, Bitcoin would “hard fork” to a protocol that accommodates quantum-secure features (tomorrow I’ll go over what it means for a cryptocurrency to “fork”).

What Can You Do to Protect Your Bitcoin?

For now, just continue to execute your best internet security practices, such as using password generators and turning on two-factor authentication for your crypto exchange accounts. Later on, I’ll teach you how to transfer your bitcoin off of exchanges and into your own self-custody solutions to prevent your bitcoin from potential hacker theft.

However, a word of warning: self-custody isn’t an inherently simple task yet for most people. It’s imperative for the industry to continue to develop and optimize user-experience for bitcoin wallets, but also to hold exchanges accountable for safeguarding people’s funds who aren’t ready for self-custody storage solutions yet. Ultimately, self-sovereignty is the end-goal for securing your bitcoin — but remember to take the time to learn first.

Lesson 9: The Great Fork Wars Of 2017

A fork in the road.

2017: Civil War

We’re starting today off with a small history lesson. While it seems like eons ago already, a fairly recent civil war emerged between two sides of the bitcoin community in 2017 — changing everything.

By now, you’re familiar with bitcoin, or what we know as BTC (alternatively, XBT on some exchanges). In 2017, Bitcoin Cash (BCH) emerged as the result of a “hard fork” that transpired. Hard forks are pretty intuitively explained by the graphic above, but in essence, when some people want to change the rules of a blockchain network (without full consensus approval), they break off into a separate blockchain completely to change their network’s rules. Kind of like a divorce, if you will.

This is exactly what happened with BTC and BCH. On August 1, 2017, everyone who held bitcoin now held an equal amount of bitcoin cash. The community soon decided that BTC would be the winner (as proven by the price difference and hash-rate today). But why the contention in the first place?

The Scaling Problem

If you ask many bitcoiners today what they think about bitcoin’s scaling issues, they will chuckle and tell you that bitcoin doesn’t have a scaling problem. However arguably problematic the scaling issue is, the underlying truth is still the same: bitcoin cannot scale on its own. It needs solutions if the world is to adopt it.

Tomorrow I’ll go over layered solutions for scaling bitcoin for use as a peer-to-peer cash, but today we’ll be covering how bitcoin cash attempts to natively scale bitcoin — on the blockchain.

The Block Size Debate

Early adopters of bitcoin debated over how to scale bitcoin. While some argued that scaling should be solved with patiently developed off-chain solutions, others pushed for increasing bitcoin’s 1MB block-size, so as to not drive away new adopters when blocks became increasingly congested with transactions.

At first glance, it seems like a good idea to increase block size capacity and lower transaction fees for users. But going down this route would require more expensive and sophisticated hardware, making it less accessible for individual users (as opposed to massive corporations) to be able to verify blocks with their own nodes. As block size increases, it becomes more difficult for full nodes to efficiently validate blocks, thus increasing the barrier to entry for running nodes and making bitcoin less decentralized.

Bitcoin must scale, but it needs to do so without compromising security and decentralization.

Because of this contention in the bitcoin community, those who pushed for a larger block-size launched bitcoin cash by creating a bitcoin hard fork that would increase the block-size from 1MB to 32MB capacity.

Unfortunately for the bitcoin cash community, the last few years have phased it out of relevance. While there are still many proponents of bitcoin cash today, the general community has dictated bitcoin the winner, as proven by its market dominance and the mining power dedicated to the Bitcoin network.

Other Types of Forks

Many more hard forks have come out of different cryptocurrencies over the years. One of the most popular forks of bitcoin is Litecoin (LTC), and a prominent fork of bitcoin cash is Bitcoin SV (BSV).

Typically, hard forks result from those who are unsatisfied with an existing protocol’s rules, such as block size or the amount of time required to mine a new block. Although hard forks continue to emerge, it is highly unlikely that any of these cryptocurrencies become anything but a “pump and dump” scheme. If they do survive as a top cryptocurrency, such as litecoin has, their goals to replace bitcoin as an “improvement” are quite impossible; this is due to bitcoin’s existing network dominance.

Lesson 10: How Can We Scale Bitcoin?

Previously, we talked about the bitcoin vs. bitcoin cash debate, where proponents of bitcoin cash argued that bitcoin isn’t scalable enough. Many people like to criticize Bitcoin’s limited network bandwidth by referencing payment processors like Visa and MasterCard, which process over 5000 transactions per second; in comparison, the Bitcoin network processes about five transactions per second.

There’s a valid concern here — how can bitcoin replace this existing payment network if it can’t even scale?

But the mistake people make is assuming that credit card processors act as payment settlement base layers. This is certainly not the case, and actual transaction settlements often take several days to resolve — instant credit card transactions are merely sitting on top.

So, why are people treating Bitcoin like a secondary payment layer when it’s really a base settlement layer?

Proposed Solutions

Numerous proposed solutions have been brought up over the years as the network continues to grow larger and larger. One such proposal is a conjunction system between the existing financial system and the Bitcoin network.

For a few brief decades from the late 1800s to the early 1900s, under the gold standard, banks held reserves in gold and handed out paper “certificates” or “bills” that represented an IOU to their gold reserves. To put it simply, people needed a way to pay in small denominations in a way that was easy to carry and store — they certainly weren’t going to run around cutting off little pieces of gold bars to exchange for groceries.

Under a similar hypothetical “bitcoin standard” we could hold bitcoin under custody and execute layered transactions as custodians batch them onto the blockchain. For instance, you can send bitcoin back and forth on CashApp for free, but you are not really “sending” bitcoin. Rather, you are receiving an IOU anytime someone pays you, and only when you transfer your bitcoin to your own wallet is when the transaction is confirmed on the blockchain.

There are other options like scaling via sidechains such as Blockstream’s Liquid, but the most popular in-use remedy at the moment is this layer 2 solution: the Lightning Network.

The Lightning Network

The Lightning Network was created in 2015, designed as a second layer protocol that would help scale bitcoin transactions in order to lower user fees and allow for instantaneous transactions.

When you transact with someone via Lightning, you only perform bitcoin base-layer transactions when opening and closing the channel. While the channel is open, you can send thousands of micro-transactions instantly with negligibly low fees (often less than a penny).

Additionally, you can send funds to those you aren’t directly connected to.

Imagine that you are back in primary school playing a game of telephone with your friends. In order for the person at the end of the line to receive the message, you need to whisper the message to the person next to you, who then passes it on to the person next to them, and on and on.

Since you’re not connected to the person on the end, you can’t just whisper the message to them — you need to pass it to someone else first. Lightning channels work similarly in that they can “pass on” transactions through shared channels, in a trust-less way. When you want to send a Lightning payment to a merchant, for instance, you don’t need to open a direct channel with them. Rather, the network finds the fastest route to channel your payment through, making the transaction process seamless and easy.

The Future of Scaling Payments

When bitcoin is realistically scaled, people won’t really need to know exactly how these payments are routed — just like how you probably don’t exactly know how your credit cards and wire transfer payments are settled. But, if Lightning is something that sparks a technical interest, you can read more on how it works here.

While Lightning is still a fairly new system, it’s developing at a fast pace. Already, it is being used practically en-masse for people to send tips or pay for consumer goods (like in El Salvador) instantaneously in bitcoin.

With solutions like Lightning, other altcoins such as litecoin or bitcoin cash that claim to solve the scaling problem are rendered inconsequential.

Bitcoin is a full on rainstorm, while fiat is a house of cards ready to collapse at any moment. As the world keeps their eye on Lightning and how it helps scale bitcoin in an entire small country, I only hope this will captivate the attention of other nation states to follow suit in adopting this sound, decentralized currency.

Lesson 11: Does Bitcoin Have Any “Intrinsic Value”?

Bitcoin is a novel invention that is hard for most people to wrap their heads around.

We can easily understand why gold and other precious metals have value. We understand that fiat money has value as assigned by our government. We understand that investing in a company is investing in its people and in their innovations.

But investing in bitcoin is just investing in…nothing that we can see, feel, or immediately understand. And this begs the question that comes to everyone’s mind when they first hear about bitcoin: what is its “intrinsic value?”

Bitcoin vs Gold

You might have heard the phrase, “bitcoin is digital gold.” Now, in the sense that it’s a store of value (and a better one than gold at that), this is true. However, at face value, gold is a tangible thing that can be seen, held, and used in jewelry and electronics. Bitcoin achieves…none of this. Yet, it is still a better store of value. Because while gold has the benefits of being seen and used as a physically tangible asset, these are the same things that make it a poorer store of value than bitcoin.

Let’s compare gold to bitcoin:

Shaving off pieces of your gold bar to pay for pumpkin spice lattes was never a viable option. Enter: fiat backed by gold, then eventually fiat backed by nothing but the government’s word.

What is the “Intrinsic Value” of the US Dollar?

That’s right, the dollar bills printed and distributed by the government aren’t backed by anything. Fiat money is just…paper with security tags on it? The only reason it has value is because the government says so, and this isn’t a good thing. Eventually, the cards will fall, and the housed trust that the government once held might someday render the dollar worthless.

This isn’t an unreasonable scare tactic, either. We’ve seen this play out in countries like Venezuela, where government corruption has rendered their national currency, the bolivar, effectively useless after suffering an inflation rate of nearly 54 million percent just a few years ago.

With bitcoin, nobody alone gets to dictate that there is value to it. Rather, the entirety of the Bitcoin network agrees to assign a certain monetary value to bitcoin, depending on its demand(which continues to rise over time). Not to mention, it does this without the threat of violence and power that all fiat currencies are upheld by. The value of the Bitcoin network and all the transactions that take place within it are secured by the blockchain, automatically managed without a middleman.

We Don’t Need “Intrinsic Value”

Unlike gold, bitcoin cannot be smelted to make jewelry or leafed to cover your gourmet soft serve. But bitcoin’s purpose isn’t to serve you in any physical way. It’s merely a medium of exchange, a store of wealth, and a peer-peer electronic cash that you can store access to in your memory.

And honestly, that’s a benefit over gold. Its value isn’t dependent on physical use cases — just purely predictable scarcity.

In a few emails, I’ll go over self-custody and what exactly that entails. But long story short, if you want to ensure security and ease of access, you can carry your bitcoin in a device no larger than a USB stick and keep a backup of it in your mind (pure magic). Or, you can buy heavy gold bars that are expensive to store and pray that we don’t start mining gold from asteroids and flooding the supply; if that were to actually happen, you wouldn’t be able to sell your gold fast enough.

Lesson 12: Bitcoin Is Apolitical

In its core doctrine, bitcoin is about privacy, freedom, and self-sovereignty. Politically, many bitcoiners tend to be libertarian, with ideologies ranging across the conservative-liberal scale. No matter how they disagree on certain socio-economic stances, there is one unwavering, common belief: the government has no business dealing in your money.

A separation of state and money — this is what the bitcoin ethos is built on.

Let’s Talk About Politics

Ah, one of the two dreadful topics you never dare to bring up at the dinner table. It seems like everything is made political these days, from voting eligibility to how we deal with the COVID-19 pandemic. One thing is clear, from a bipartisan stance: these are topics that should not host a partisan divide, yet they manifest now more drastically than ever.

Bitcoin is dangerously close to becoming politicized — and many would argue that it already is.

With Elizabeth Warren, a highly influential Democratic senator in the United States publicly denouncing bitcoin, and Ted Cruz, a highly influential Republican senator publicly endorsing bitcoin, it seems like we’ve once again manifested a crooked path in a straight line down.

Contention is expected in the debate of bettering the world. But to paint things in black and white is certainly not how we progress forward, and it’s a misrepresentation of what bitcoin symbolizes for all of us.

Bitcoin Works for You No Matter What You Believe In

Do you strongly believe in your freedoms and accesses (to guns, abortion, or whatever else) as laid out by your constitutional rights? Are you passionate about protecting the planet at all costs? Do you think you’re paying too many taxes for no good reason? Are you wearing a hoodie that says “Eat the Rich” on it?

If you answered yes, no, or I don’t care to any of the questions above, then bitcoin is for you!

In our modern political climate, those who are part of democratic nation-states hold a privilege of liberty and autonomy as allowed by the law — as long as we are not infringing on the individual rights of others. However, even in nations like the United States (known as the “land of the free”), many of us feel an injustice in the legal dictation of what is increasingly allowed or disallowed.

This all ties back to money: policy is fueled by lobbying funding, elections by marketing budgets. Well, at least in countries like the United States.

Other nation-states are not so lucky. They deal with dictatorial control, exacerbated power imbalances, and extreme poverty and war as a result of corrupted and poorly structured leadership. Many of us could argue that, on a smaller scale, this is even happening in our own backyards.

Bitcoin Gives Us Back Our Independence

One of the most prominent arguments politicians make against bitcoin is that bitcoin fuels crime and corruption due to its pseudonymous transactional nature. But take a look at this from a different stance — global governing policies are not always ethically (or common sensibly) created.

There are states and countries out there where basic rights like access to education or personal banking services are denied to certain groups. It may be a crime to curb these policies with bitcoin, but most of us would probably argue that the real crimes are the existing laws themselves. To fight for justice, we need private and self-sovereign methods of storing our wealth. Really, it’s no different than hoarding cash. The difference though, is that with cash, we have potential issues with transporting wealth, counterfeiting, confiscation, accidental loss or theft, and robbery. Bitcoin solves all of this.

Seeing Bitcoin as a Solution

Whatever issues you’re concerned about, try and see how bitcoin can be a solution rather than another layer to our pile of problems. Over the next few days, I’ll dive into how bitcoin can help solve global wealth inequity, incentivize clean energy production, and protect the vulnerable from corrupt government regimes worldwide.

If bitcoin is pushed away by certain political parties, I’ll only hope we can go back and remember what we were fighting for — freedom, liberty, and justice. Bitcoin brings us closer to that commonwealth goal, no matter your party preference.

So the next time you’re at the dinner table surrounded by family members scattered across the political spectrum, I encourage you to talk about bitcoin. Bitcoin is apolitical, and everyone should be a part of the conversation.

Lesson 13: Investing In Bitcoin

Friends,

You have spent the last two weeks learning about how bitcoin works and why it works. For this final week, we’ll be discussing what bitcoin can do for you, but more importantly, what bitcoin can do for the world.

Perhaps you’re a seasoned bitcoin expert and you’ve got bitcoin wallets hidden all over the world, like this family that went all in on bitcoin when it was just $900.

Or, perhaps you’ve only just discovered what bitcoin is.

In any case, bitcoin is something that is for everyone, accessible to all — no matter your social or financial standing.

Many big banks and brokers are telling people that only their wealthiest, “accredited,” elite customers have access to this relatively new asset class. This is a ridiculous ploy by the legacy financial system that continues to unfairly deny equal participation in financial services that should be accessible to all. Fortunately, bitcoin requires no permission to participate.

What Are You Investing in Exactly?

At the moment, bitcoin is still viewed by some as a risky and volatile asset class that one invests in, hoping to make significant returns on. While there exists a culture within bitcoin that tells you to “buy and hold,” there are many people out there actively trading, holding short-term, or using bitcoin as a diversification asset tool as well.

While you should continue to do your own research and make the financial decisions that best suit you, if you’re ready to buy, sell, or transact bitcoin, I’ll break down how to do all of that step by step.

How to Buy Bitcoin

The easiest way to buy bitcoin is off of an exchange. You can use any exchange you’d like (I personally use Okcoin or River, and CashApp is great for beginners), but there are plenty of options to choose from. Keep in mind, however, when choosing an exchange, to make sure you choose one that allows you to transfer your bitcoin off of the exchange. This means you should not buy any bitcoin off of Robinhood or similar exchanges, since you would have to sell your bitcoin to take your money off of the exchange.

When you buy from an exchange, you are required to go through a process called KYC (Know Your Customer). This process requires your social security number, photos of your ID, and photos of your face to prove that you are you. Many bitcoiners are concerned with greater privacy and security than these exchanges can accommodate, so they choose to purchase “non-KYC” bitcoin from peers off of websites like Bisq — at a premium.

After you purchase bitcoin, you should send your bitcoin to a self-custody solution, which we’ll go over tomorrow. This is to protect your bitcoin just in case an exchange is hacked — while it’s more and more unlikely to happen now, this tragedy has unfolded multiple times before.

Why Should You Buy Bitcoin?

Okay, aside from being philosophically and economically sound, why should someone buy bitcoin? Buying bitcoin means storing wealth for yourself or your family — it’s not for anyone else’s benefit.

As inflation burns through working-class American stories and hyperinflation paints entire countries blue, it’s important to protect your future before it gets printed away. Creating generational wealth may have been easier for our parents and grandparents, but those who are growing up today see astronomically high tuition, real estate, and costs of living that aren’t adjacent to wage growth. By buying bitcoin, you’re shielding yourself and your family from the battle against currency debasement.

I’m Still Skeptical…

However, a big reason why many people continue to shy away from their first bitcoin investment is because bitcoiners are so deeply passionate about onboarding them (since they want to see you protect yourself), in the same way that your old high school classmate suddenly wants to be your best friend as they try to get you to sign up for their MLM.

While bitcoiners are purely intentioned, it often comes off as them shilling a Ponzi scheme. And although that’s the case with many altcoin cryptocurrencies (otherwise known as scams), nobody individually stands to benefit from an additional bitcoin user. Rather, the network expands and strengthens, and users are rewarded for their long-term investment holdings. So, negating any of this as financial advice, if you want to buy bitcoin, you should assess your own portfolio risk management and consider an allocation.

And although previous price performance doesn’t predict the future of how an asset or stock will perform, it might satisfy you to look over bitcoin’s performance in the last decade.

The soundest recommendation for those who buy bitcoin (and most other investment assets) is simply to just hold it long-term. Timing the market and trying to trade doesn’t usually fare well, and you’re better off just setting and forgetting it. Remember this: play stupid games, win stupid prizes.

Investment Takeaways

Disclaimer: none of this is financial advice. I personally own bitcoin and I believe in its long-term success. However, with any investment, it’s important to do your own due diligence and understand exactly what you’re buying. With that said, many financial advisors today would tell you it’s considerably a good idea to allocate at least a small non-zero percentage of your investments into bitcoin. This way, you’re leveraging a low risk with a potential of high future returns.

Lesson 14: Bitcoin Self Custody — Not Your Keys, Not Your Cheese

Today is the day you learn about self-custody. This is a challenging process that takes time to learn and is a daunting next-step to take. However, continue to ask questions (tweet them with #21DaysofBitcoin for help!) and do the necessary research, because self-custody is the entire purpose of owning bitcoin.

Why Self Custody?

Yesterday, we went over buying bitcoin from exchanges. However, the bitcoin you’re currently keeping on Coinbase isn’t technically “yours” yet. If someone hacks your Coinbase account (or Coinbase itself), there would be no way to recover your funds or trace who did the crime.

Even if you’re not worried about hackers, it is in the bitcoin ethos to strive for self-sovereignty; after all, if the government can access and seize your bitcoin because it’s on a centralized exchange, doesn’t that defeat the purpose of this decentralized asset?

What Does it Mean to “Own” Your Bitcoin?

In order to truly own and protect your bitcoin, you will need to have your own set of “private keys” that only you have access to, unlike the publicly shared invoice address that you use to receive bitcoin with.

Private Keys Explained

Private keys are essentially very complex, randomly-generated passwords that allow us to access our bitcoin and to verify or “sign” our transactions. These keys are then represented in a 12 or 24-word “seed phrase,” which allows us to more easily record, memorize, and backup our private keys.

On an exchange like Coinbase, your bitcoin is stored in a “hot wallet,” where Coinbase owns your private keys. Because they own your keys, if they get hacked, so does everyone who keeps their bitcoin on there — yikes.

Only when you have control of your private keys will you have secure control over your bitcoin transactions.

Keep in mind though, that self-custody means you’re responsible for keeping these seed phrases offline and in a safe place where you won’t lose access to them. While there are methods of backing up your seeds onto physical, stainless steel cards, it’s not as easy as storing it in an online password manager.

Many of us have heard the woes of those who lost access to or forgot their seed phrases, thus losing access to millions of dollars worth of bitcoin. Let this be a lesson to us all: keep your seeds safe, secure, and accessible.

Easy Self-Custody Methods

In this lesson, I’ll introduce two easy forms of bitcoin storage methods so that you can begin your self-custody journey:

1. Software wallets

There are a few open source mobile options out there that are great starting points for beginners, such as Blue Wallet and Muun Wallet. Desktop versions like Electrum are also an option.

Although these wallets are connected to the internet, they generate a new private key that only you can control, which is a big step up from exchange-hosted wallets.

The great thing about having mobile/desktop wallets is that you can easily access your bitcoin anytime. The downside is that if you don’t take the right security measures, someone who has access to your phone or computer could also have access to your online bitcoin wallet.

While mobile wallets are good for on-the-go use, they’re not the most secure. If you are just starting out with minimal funds, software wallets are a great, free option.

Fortunately, there are also more advanced options to utilize your software wallets as “watch only” wallets, where they merely act as a user interface for your cold storage but do not hold your private keys. This would allow you to generate invoice addresses for receiving bitcoin, but would prevent a hacker from transferring anything out.

2. Hardware wallets

Hardware wallets are the most straightforward and popular form of offline cold storage. These wallets securely contain your private keys and typically come in the form of a flash drive-like device (popular ones include the Ledger Nano S or the Coldcard). The devices themselves are protected with a PIN so that your private key will still be somewhat safe even if your hardware wallet is stolen.

Because your hardware is not connected to the internet, it is considered “cold” and a much safer method of private key storage than online “hot” wallets. These physical devices allow you to access your bitcoin securely by storing your private keys offline.

It’s a common misconception to think that your hardware wallets “hold” your bitcoin — your bitcoin lives on the blockchain; the hardware wallet is merely a means of storing and using your private key to authorize transactions that move funds. Although a hacker could guess your pin to access your hardware wallet, it is extremely unlikely as most wallets will wipe themselves out after a few wrong guesses.

If this physical device is lost or stolen, you can still recover your funds with a new hardware or software wallet, as long as you have access to your seed phrase.

Additional Security Measures

With great power comes great responsibility, and the ability to self-custody your bitcoin is a great power indeed. Aside from removing your bitcoin off of exchanges, making sure your seed phrases are kept private and secure is of utmost importance — this is your only backup.

Many people like to take on additional security measures by storing backups of their seed phrases in vaults, or setting up more advanced multi-signature wallets that require additional private keys to authorize transactions.

On another note, be aware of phishing scams like fake hardware wallets being sold by scammers on Amazon or Ebay; always purchase directly from the manufacturer to ensure that your hardware wallet is the real deal.

It’s time to take your first step in bitcoin self-custody.

Lesson 15: Going Green — How Bitcoin Incentivizes Clean Energy Production

The number one complaint I hear about bitcoin is that it’s “bad for the environment.” This has caused a lot of FUD (fear, uncertainty, and doubt) about how positive bitcoin really is.

Now, while it’s easy to get caught up in the many biased Bitcoin articles arguing for or against this statement — typically with cherry picked statistics — here’s the reality: Most of us aren’t environmental experts, but I’ll bet that most of us care about the environment. Let’s look at this logically and put things into perspective.

Yes, Bitcoin requires a lot of energy to operate. Yes, some of our energy sources are unclean and bad for the environment. And yes, the Bitcoin network is a “waste” of energy — just like everything that requires energy is a “waste” of energy, depending on your perspective.

To many environmentalists, your modern appliances and big-city living habits are unspeakably hedonistic carbon footprint culprits. To others, energy usage for modern necessities isn’t so distressing. The same goes for Bitcoin: If you think it’s a useless fake internet money with no inherent value, then you’d question why we spend any energy on it at all.

As the numbers continue to change and all energy production leans towards clean, renewable sources, I’ll help paint a general picture for why we shouldn’t be too cynical. Bitcoin should not be scapegoated with “destroying the environment,” and here’s why.

Bitcoin Mining Incentivizes Clean Energy Production

To start, let’s consider this concept: Bitcoin works because every participant in the Bitcoin network is acting selfishly. The network is set up so that as long as we continue to act selfishly, we are also supporting the security and structure of the network as a whole (this was covered previously when we talked about how bitcoin is “unhackable”).

For miners, this means finding the cheapest long-term electricity in order to confirm transactions and receive new bitcoin rewards. It just so happens that clean, renewable energy is the cheapest, most sustainable source of power, while environmentally damaging fossil fuels are the most unsustainable. After all, the sun keeps shining and the winds keep blowing, but coal doesn’t burn unless we throw it in the furnace.

As such, bitcoin mining incentivizes a transition toward a 100% renewable, clean energy future.

Unfortunately, we currently don’t have the technology to store or transport clean power very well. This makes it so that tons of clean energy is curtailed and gone to waste, simply because we don’t have the ability to use it efficiently.

Here’s how bitcoin mining efficiently uses this wasted power.

Excess Regional Power

Take a look at the hydropower situation in Sichuan, China. When bitcoin mining was banned in China in early 2021, Sichuan was a lagging enforcer, allowing miners until September to withdraw from the province. This is due to the fact that in the summer, Sichuan has ample natural hydropower, but no means to utilize or store the excess energy produced. As much as three times the amount of normal power is produced during the summer, but power usage from ACs only increases by 30%. Thus, bitcoin mining uniquely allows Sichuan to not waste excess energy.

While unfortunate that mining has been banned in China now, similar circumstances play out worldwide where excess clean power is produced.

How Bitcoin Uses Energy

Contrary to popular belief, bitcoin transactions are not directly proportional to energy usage. In fact, it’s flawed to claim that bitcoin has a “per-transaction energy usage” at all. Transactions are batched into blocks at limited quantities due to the block size, and more transactions per block doesn’t mean more energy usage.

Lyn Alden proposes a great analogy: Imagine bitcoin block confirmations like running your dishwasher. No matter if your dishwasher is half full or completely full, it takes the same amount of water and energy to run every night. The same goes for bitcoin.

Your single transaction doesn’t marginally affect bitcoin’s energy usage, so you shouldn’t be guilted into not making a transaction just because a misinformed journalist told you your single bitcoin transaction could have powered 24 days of your household electricity.

Rather, a bulk of bitcoin’s energy usage comes from miners using proof of work to earn block rewards. Though it may seem like a “waste of energy” that so many miners spend so much energy just for only one miner to “win” a block, it ensures the security of the Bitcoin network, and I’d say that warrants bitcoin’s energy usage a place in this world — well, at least as much as your Christmas lights do.

Lesson 16: Bitcoin Is Freedom

Bitcoin is freedom.

From Britney Spears’ conservatorship to entire countries of people in poverty, bitcoin shines a new light of hope on those who are economically trapped or excluded from the existing financial system.

Many of you reading through this right now likely don’t see the necessity for something like bitcoin in our personal lives; some of you might be occasionally tight on cash, others are living in a first-world opulence.

You might think that in order to solve the world’s issues surrounding inequity and inequality, we should be redistributing our wealth in a way that levels the playing field — and thus far, that seems to be what we’re doing as a society.

But to foster a system where we create dependency on others such as state actors to help us out is to push for a continual power imbalance — where ultimately, symptoms are (poorly) fixed and issues aren’t tackled at their core.

Bitcoin presents a true solution. If you fix the money, you’ll fix the world.

How Does Bitcoin Solve Our Global Problems?

The reason you might not see the value in bitcoin is because people don’t recognize the benefits of privacy and decentralization as forms of resilience against corrupt state actors, until they themselves experience an event that demonstrates the value behind such resilience. But, perhaps by listening to some stories of those whose lives have or can be improved because of bitcoin, you’ll start to see it in a new light.

Bitcoin isn’t just another investment asset to some. For many people around the world, bitcoin is just the thing they need in order to live a free and fulfilling life.

Currently, 4.2 billion people are living under authoritarian rule, and 1.2 billion are experiencing double or triple digit inflation. Most of us reading this right now aren’t familiar with these experiences, but the truth is, this issue is more prevalent than you think.

Venezuela as a Case Study

At the Bitcoin Conference in 2021, there was a dumpster filled with Venezuelan bolivars, all virtually worthless. Though the story is much more complicated, long story short, the bolivar had its value essentially printed away. Imagine you’re paying $5 for a cup of coffee one day and a year later you’re seeing hundreds and thousands of dollar bills inside a dumpster because they have no use anymore.

This may seem like a dystopian, far-fetched reality, but from 2016 to 2019, inflation of the bolivar had reached nearly 54,000,000%, rendering origami crafts made from the bills more valuable than the bills themselves. To realistically buy a loaf of bread or a gallon of milk with cash, you would need to roll wheelbarrows full of stacked bills to your local store. Not only that, but under a hyper-inflationary economy, these prices would shift daily — or even hourly.

Adopting Sound Money

While many claim that “this will never happen to the US dollar,” to that I say, never say never. In relation to other fiat currencies, the U.S. dollar is very sound. But in comparison to bitcoin, it’s just a ticking time bomb with a longer countdown. While we may be the last to fall, it proves how fiat stability is rooted in power and corruption. Through war, sanctions, market dominance, and corruption, we’ve made everyone else in the world dependent on the stability of our dollar and central government.

But slowly, countries are realizing they need to default to a sounder form of money.

On September 7, 2021, El Salvador became the first country to officially adopt bitcoin as legal tender.

While many are skeptical to see how this will play out (as bitcoin is still in its very early stages of adoption and stability), many more are hopeful. If the government of El Salvador becomes corrupted, its citizens will be able to hold their wealth without their savings being debased. This is something that so many people in Turkey, Lebanon, Afghanistan, and other unstable countries can only pray for.

I only hope as many of these people as possible can discover bitcoin and realize that there is a solution. Rather than trying to carry jewels and gold across borders, one now only needs a simple seed phrase stored inside their memory to access and transport their wealth.

We’ve come a long way in our fights for justice, but it’s time to open the blinds and see how bitcoin can help us gain back our freedoms once and for all. You wouldn’t be the first renegade, but unlike those in the past, you now have full, self-sovereign control over your own wealth.

Lesson 17: What If Bitcoin Gets Banned?

Can Bitcoin be banned by the government?

Short answer— no.

Long answer— technically. But ultimately, any ban is highly unlikely (and would not be in the interest of nation states). If a ban on Bitcoin were enacted somewhere, however, there would be no way to enforce said ban. In fact, many countries have already tried banning Bitcoin one way or another — Bolivia, Ecuador, Russia, India, China, etc. — just to name a few. But because of how Bitcoin is built — as a permissionless, pseudonymous medium of exchange — it’s about as effective as the government trying to ban free thought.

They might be able to ban it legally, but the only way they can stop free thought is by trying to manipulate public sentiment. We are no stranger to this phenomenon; you can probably think of a few scenarios where people appear to be tragically misinformed and brainwashed.

While I’m not of the cynical camp that everything is a psychological operation these days, the reality is that everything comes down to sales and marketing — especially for schools of thought.

Why Would the Government Want to Ban Bitcoin?

Bitcoin works in parallel: Governments trying to hold onto central banking power are working on framing Bitcoin as an evil that works against the betterment of society.

To quote Senator Elizabeth Warren,

“[cryptocurrencies] undermine the government’s ability to maintain robust economic growth over time…Online theft, drug trafficking, ransom attacks and other illegal activity have all been made easier with crypto. Experts estimate that last year more than $412 million was paid to criminals in ransom through cryptocurrencies.”

And yet, she and other politicians alike fail to mention that between $800 billion and $2 trillion of fiat money is globally laundered each year, according to estimates from the United Nations —about 400 times more than in cryptocurrencies. In 2020, the criminal share of all cryptocurrency activity was just 0.34%.

What it seems to all come down to is control: The government currently regulates the economy by manipulating fiscal and monetary policy to foster economic growth. But to put our trust in the government is to put our trust in people who lack integrity, make decisions based on lobbying, and happily bail out big banks when they mess up without any care for what happens to the people (if you want an example, look up the Financial Crisis of 2008).

In China, Bitcoin has been “banned” countless times, one way or another. In general, China’s stance has been very anti-Bitcoin, since they want to create a digital yuan (a CBDC: central bank digital currency) that can be controlled and surveilled on. Bitcoin scares those with centralized control: What if the people choose something that we can no longer manipulate? It must be stopped.

If the government tries to ban Bitcoin or cryptocurrencies, what will most likely result is a large pushback from the cryptocurrency community that attracts worldwide media attention — causing people who previously had never been interested in Bitcoin to now start looking into it.

The Concern for Mass Adoption

Okay, so what if the government can’t stop Bitcoin? They can at least stop people from adopting it, right?

The government may think they can slow down Bitcoin adoption, but their endeavors may not work out so well for them.

Allow me to introduce you to the law of unintended consequences. Some of my favorite examples include the Cobra effect and the Streisand effect (these stories are worth a quick search) — both are examples of situations where the exact opposite of what was intended ended up happening.

If Bitcoin does get “banned,” it will only end up being the biggest free marketing campaign that Bitcoin has ever had.

Can you see it now? The walls that they put up to hold us back will fall down. It’s a revolution against the existing, corrupt financial system that has harmed too many for far too long, and change is coming whether or not our leaders want to embrace it.

Lesson 18: How Does Bitcoin Advance The Human Race?

One small step for Bitcoin, one giant leap for mankind.

For Bitcoin, global adoption is just a few more nodes. But for humans, it means finally reaching a point where we share a common currency — the bitcoin standard. One day in our future, we may just adopt a global bitcoin standard, where country currencies are either backed by bitcoin or we simply default to some scalable Bitcoin system (such as the Lightning Network).

The Kardashev scale

Let’s get into some interesting alien science for a second.

The Kardashev scale was created by astrophysicist Nikolai Kardashev, who proposed a system for classifying extraterrestrial societies and their advancements based on how they were able to utilize energy in a solar system. There are three main types (properly named type I, II, and III), though succeeding scientists have expanded the scale. Here’s what it looks like:

Now, guess where the human race stands? That’s right, if you chose “none of the above,” then you’d be correct! The human race currently sits at about a 0.7 on the Kardashev scale; in order for us to reach type I, we would need to harness all the energy we can from the sun—that means fusion power on a large scale, which is still in its developmental infancy.

However, as stated previously, Bitcoin mining really encourages the development of cheap, renewable electricity. As a type I civilization, we would eliminate the need for any fossil fuels while making power cheap and abundant, doing good for the planet and society at the same time.

But, this is way off into the future, so instead I’ll present to you the monetary case for advancement: that we, as a human race, will progress toward a type I civilization under commonalities in language, communication methods, monetary systems, and more.

Our common language looks like it might be English. Our common means of communication are web-based. Our monetary system is…currently a mess that can be fixed under a bitcoin standard. With a common currency that relies on no centralized power (and no war), bitcoin could become our global uniting currency that knows no borders or permissions, taking us another step closer towards reaching type I civilization status.

The Euro as a Case Study

The EU has united most of Europe under a commonly governed currency. This makes it much easier for countries in the European Union to economically grow in a stable and efficient manner. The common currency allows for a capturing of a larger market that can easily trade and share business operations across borders while maintaining stability and cooperation between countries.

There’s just one big flaw: It’s centralized. The European Central Bank (ECB), like any other central bank, has the authority to adapt its monetary policy strategy by dictating target inflationary practices and inflating the monetary supply as they see fit. This means that trust in the ECB requires, well, trust.

Eliminating Trust

A country like the United States would likely never join in on a union currency that requires giving trust to other countries — it wants to be a powerful stronghold, and it currently is. This is why a common centralized global currency would never work, since countries are constantly fighting over power.

Unfortunately, many other countries rely on the US dollar as a reserve currency, since comparatively, their native currencies are not as sound as the USD. This creates an imbalance and dependence on a nation state that others have no control over. All fiat currencies are sinking ships — the USD just happens to be on more inviting waters.

Bitcoin so graciously solves this problem for us by not requiring nor permitting a centralized authority in order to function properly — allowing free market economies to organically fall into place like dominoes.

Bitcoin eliminates this need for the fragile system of trust that is constantly hanging over our heads in the balance of powers.

The Future of Bitcoin

Bitcoin just might be the thing that unites the world in a way that has never been done before. But it doesn’t just enforce a potential common global monetary policy; things can actually be built on top of the Bitcoin network, allowing us to create an internet that holds the same security and transparency as the Bitcoin blockchain.

Tomorrow, we’ll go over the developments and future potential of the Bitcoin network. Bitcoin is not just hailed as a currency for our advancing global society; it lays the foundation for an entirely new, revolutionary decentralized internet ecosystem.

Lesson 19: Why Bitcoin Over Any Other Cryptocurrency?

Bitcoin is the original cryptocurrency. Since its genesis in 2009, countless DeFi projects and altcoins have popped up; from Dogecoin to ETH, there’s undoubtedly a huge market for alternatives to bitcoin.

People love how applications of different altcoins have use cases beyond just bitcoin’s main selling point as a store of value. Several new altcoin projects built on Ethereum or forked off of existing cryptocurrencies have improved privacy, increased scalability, enabled smart contract capabilities, and much more. Arguably, there’s a case for choosing other cryptocurrencies over Bitcoin; Bitcoin’s technology is far from perfect, and new developments are slow to implement.

Yet, it’s this “hard to change” feature that makes bitcoin so special — and that’s due to the vast size of the Bitcoin network.

Network Effects

Network effects are a special phenomenon because with each additional user, there isn’t just a linear growth in network dominance — there’s an exponential one. Think about it this way: If Nick and Alex are part of the network, then they make one connection with each other. If Jeremy comes into the picture, the three of them can now make three connections in total. Now add Nicole, and we have six connections. Here’s what the numbers look like if we keep adding people to the network:

This is how Facebook, Amazon, and Bitcoin have each dominated their respective industries. Facebook, one of the biggest companies and social networking sites alive today, was once just a competitor in a rapidly growing space. Before Facebook’s dominance, MySpace had held the title for #1 social networking site. As Facebook grew and honed in on its mobile app development, it became a far better product than MySpace — arguably, a 10x better product — leading to its status as social media king. This is due to a concept known as the “10x Rule,” where a new competitor must be magnitudes better than the incumbent in order to take over the incumbent network.

In the world of cryptocurrency, no altcoin will come close to being 10x better than bitcoin. That’s because Bitcoin’s security and network dominance strengthen exponentially: As more nodes join the network, Bitcoin becomes more secure, and it becomes increasingly more impossible for a new crypto to dominate.

Bitcoin Needs No Campaign

The craziest thing is that bitcoin needs no marketing — it has achieved market dominance all on its own. Many altcoins require that sales push for even a minimal market cap. Take a look at the number of celebrities promoting altcoins such as Tron, and you’ll realize how desperate these very centralized cryptocurrencies are.

The concept of the dominating network effect was what ultimately convinced me of Bitcoin’s success over all other cryptocurrencies. While we can deeply study technical intricacies and debate tokenomics all day long, it ultimately doesn’t matter — Bitcoin has already won because it has network dominance that continues to grow.

ETH, Doge, and any other cryptocurrency will never be able to surpass bitcoin (despite what many people might try to tell you) — no matter how “improved” their technologies claim to be. Simply put, if these altcoins can’t even match up to Bitcoin’s entrenched strength in decentralization and security, how can they ever contend to dominate the network?

Lesson 20: DeFi On Bitcoin

If you’ve dabbled in the cryptocurrency world, you might know of bitcoin as a “store of value,” and ether (the Ethereum Network token) as the “smart contract thing.”

Yes, you can build cool stuff on Ethereum. You can write “smart” and programmable contracts. You can mint NFTs. You can create entirely new decentralized finance (DeFi) ecosystems on Ethereum and come out with your own tokens if you wanted to.

But ultimately, none of that cool technology that’s sitting on top of the Ethereum blockchain or any other blockchain project matters in the long-run. Why? Because the next generation of the internet should and will be built on Bitcoin instead.

Creating a Decentralized Web

Bitcoin doesn’t need to operate the way that Ethereum does. It works all on its own as a decentralized digital currency, and many people think that’s enough; bitcoin has a simple investment thesis and there’s no need to innovate beyond that when it comes to treating bitcoin as a store of value and high growth asset.

However, problems remain regarding the centralization of the infrastructure built around bitcoin — this includes exchanges and lending platforms that are centrally hosted and remain under the threat of jurisdiction. This creates barriers to entry (unequal distribution based on borders) that could be fixed with a new, decentralized internet infrastructure.

As we went over last week, Bitcoin is the ultimate blockchain protocol to build the next generation internet on, due to its incumbent status as the most secure and decentralized network of any cryptocurrency. Therefore, it only makes sense to innovate DeFi on Bitcoin.

How Will This Happen?

There is an entirely separate technical deep dive required for one to begin understanding the DeFi universe, but the simple reason for why Bitcoin-native DeFi is so far behind is due to its initial design. Other cryptocurrency networks like Ethereum and Solana were built with the intent to create DeFi and Web3.0, but Bitcoin remains simply as a sound monetary network.

While it is difficult to “upgrade” Bitcoin natively, developers can create BIPs (Bitcoin Improvement Proposals) to formally suggest improvements to the core software. However, due to this decentralized process (that makes bitcoin so secure in the first place), it is a difficult and lengthy journey to implement new features such as user-friendly complex smart contract capabilities (which are currently being worked on, such as via BIP-119!).

So instead, many companies and developers are creating layered solutions to help advance Bitcoin’s features, while continuing to secure these projects on the native Bitcoin blockchain. The Lightning Network is one such layer 2 example, and there are other solutions such as Blockstream’s Liquid side-chain or the Stacks ecosystem. All these projects and many more are worth a deeper look into.

Why a Decentralized Internet Needs to be Built on Bitcoin

As we progress into the next generation of the internet, it’s important that we do it securely—and that means building on Bitcoin. Building decentralized projects on centralized, proof-of-stake ecosystems (like Ethereum 2.0) means tolerating the existing financial infrastructures and re-packaging them into “blockchain technologies,” that gleam and glisten on the surface, while centralized stake-holders and those at the top dictate network changes. Additionally, those using the current Ethereum ecosystem must deal with astronomically high fees that often don’t warrant the lower-scale transactions being made.

If we are to make proper decentralized improvements to our existing digital and financial systems, we should do it properly, from the beginning. Use your best colors to paint the portraits of progress on Bitcoin’s canvas. In the end, these are the works of art that will stand the test of time.

Lesson 21: Hyperbitcoinization — Life Under The Bitcoin Standard

There’s one important question left to be answered.

When we talk about how fiat currencies are “unstable,” this simply means that there is room for instability within the structural design of fiat currencies — that governments can be corrupted and make poor fiscal decisions such as printing exorbitant amounts of money. But there remains a concern for instability in bitcoin, in that the price of bitcoin fluctuates too much for it to be used as a day-to-day currency.

There is a difference between the instabilities here — Bitcoin is secure, fiat is insecure; bitcoin is volatile, fiat is relatively stable in price(at least in powerful nation-states). In order to actually use bitcoin the way we currently use fiat one day, it needs to be stable. So, the question remains: How can we ever enforce a bitcoin standard if the price in terms of fiat dollars fluctuates so much?

Will Bitcoin Replace Fiat?

There are a few hypothetical scenarios that could play out. Some people think fiat will never disappear, while others think that bitcoin will completely overturn the existing financial system. Whatever happens, one thing remains true: Bitcoin is here to stay and will continue to play an increasingly prevalent role in our global financial system.

Realistically, bitcoin will not do a complete overhaul of fiat. However, anything is possible, and it’s a scenario that hasn’t played out before which is why it’s so hard to imagine. If bitcoin were to replace fiat, it would likely require the good-will of worldwide governments to concede to a decentralized currency. Knowing anything about any of our governments, it’s a highly unlikely scenario.

Instead, the path to global adoption will look more like individuals choosing self-sovereign stores of wealth. Keep in mind that because Bitcoin is permissionless, taking the right privacy measures means you can use and hold bitcoin even where outlawed.

Most likely, we will continue treating bitcoin as a store of wealth — an asset like real estate or stocks — that we can utilize in conjunction with the legacy lending system. By storing a portion of bitcoin as collateral, people can borrow fiat money to pay for day-to-day living expenses. There are a few lenders in some countries who have released this capability already.

CBDCs: Central Bank Digital Currencies

Many politicians have called for the implementation of CBDCs — a centralized digital currency — that would allow governments to retain their central authorities over monetary policies. This, if implemented, may come with less privacy than the cash system we still use today.

They foolishly think that this will kill the cryptocurrency industry as a whole. However, because so many people are afraid of CBDCs like the digital yuan potentially exercising privacy and personal security violations, this may well push bitcoin adoption forward as people seek the only truly self-sovereign money solution out there.

The Bitcoin Standard

When we think about the volatility of bitcoin, we think about it in terms of dollars, or whichever other fiat currency is native to us. But if we were to truly adopt a bitcoin standard — without fiat in the picture — then…what exactly are we comparing bitcoin’s price to? Is one bitcoin today not still one bitcoin tomorrow? Are 50 sats not still 50 sats?

As technology advances, our consumer goods naturally become cheaper — deflationary, if you will. As central governments strive to manipulate markets and prevent deflation at all costs, I implore you to think about the true alternative that bitcoin allows. If our current system is so broken, why are we still trying to break it? For more reading on this topic, I encourage you to read “The Price of Tomorrow,” by Jeff Booth.

Over the last three weeks, we’ve taken down our fiat walls and opened the door to true sound money. This is just the beginning of your Bitcoin journey, and you have so much left to learn.

Bitcoin is our newfound grace — and all we know since our fiat days is, everything has changed.