What is a Bitcoin (USA Residents Only Edition) feb | Page 4

Bitcoin Defined
Definition from Wikipedia:
Bitcoin is a peer-to-peer payment system and digital currency introduced as open
source software in 2009 by pseudonymous developer Satoshi Nakamoto. It is a
cryptocurrency, so-called because it uses cryptography to control the creation and
transfer of money. Conventionally, "Bitcoin" capitalized refers to the techno logy and
network whereas lowercase "bitcoins" refers to the currency itself.
Bitcoins are created by a process called mining, in which participants verify and record
payments in exchange for transaction fees and newly minted bitcoins. Users send and
receive bitcoins using wallet software on a personal computer, mobile device, or a web
application. Bitcoins can be obtained by mining or in exchange for products, services,
or other currencies.
Bitcoin has been a subject of scrutiny due to ties with illicit activity. In 2013, the US FBI
shut down the Silk Road online black market and seized 144,000 bitcoins worth
US$28.5 million at the time. The US is considered Bitcoin-friendly compared to other
governments, however. In China, new rules restrict bitcoin exchange for local currency,
and the European Banking Authority has warned that Bitcoin lacks consumer
protections. Bitcoins can be stolen, and chargebacks are impossible.
Commercial use of Bitcoin, illicit or otherwise, is currently small compared to its use by
speculators, which has fueled price volatility. Bitcoin as a form of payment for products
and services has seen growth, however, and merchants have an incentive to accept
the currency because transaction fees are lower than the 2–3% typically imposed by
credit card processors.
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