Bitcoin is a cryptocurrency and worldwide payment system. It is the first decentralized digital currency, as the system works without a central bank or single administrator. The network is peer-to-peer and transactions take place between users directly, without an intermediary.
These transactions are verified by network nodes through the use of cryptography and recorded in a public distributed ledger called a blockchain. Bitcoin was invented by an unknown person or group of people under the name Satoshi Nakamoto and released as open-source software in 2009.
Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services. As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment.
Bitcoin can be purchased on online exchanges and some brick-and-mortar establishments. A variety of methods are used to engage in bitcoin transactions including wallets, exchanges, and ATMs.
The first bitcoin transaction took place on January 12, 2009, from creator Satoshi Nakamoto to computer scientist Hal Finney. Nakamoto reportedly mined about one million bitcoins before disappearing in 2010 when he claimed to have handed the network alert key and control of the code repository over to Gavin Andresen.
Andresen later became lead developer at the Bitcoin Foundation.
Finney downloaded the bitcoin software on its release date, and on January 9, 2009, received ten bitcoins from Nakamoto. Other early supporters were Wei Dai, creator of bitcoin predecessor b-money, and Nick Szabo, creator of bitcoin predecessor bit gold.
In 2010, 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.
” In 2012bitcoin miners began to form pools to increase their chances of receiving a block reward.
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%.
As of November 2016, around 78% of bitcoin mining is concentrated in China’s Sichuan province..