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.

Bitcoin is unique in that there are a finite number of them: 21 million.

Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services.

[17] As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment.[18].

Research produced by the University of Cambridge estimates that in 2017, there were 2.9 to 5.

8 million unique users using a cryptocurrency wallet, most of them using bitcoin.[19].

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.[citation needed]

In October 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.

[20] The US is considered bitcoin-friendly compared to other governments.[21] In China, buying bitcoins with yuan is subject to restrictions, and bitcoin exchanges are not allowed to hold bank accounts.[22].

Bitcoin taxes are a hot topic. The IRS recently issued guidance stating that it will treat virtual currencies, such as Bitcoin, as property for federal tax purposes.

This means that if you earn income from Bitcoin through selling goods or services, you will have to pay taxes on that income. And if you buy Bitcoin and hold it as an investment, you will have to pay capital gains taxes if you sell it for more than you paid for it.