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. Transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain.
Bitcoin was invented in 2008 by an unknown person or group of people using the name Satoshi Nakamoto, and started in 2009 when its source code was released as open-source software.
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 bought on digital currency exchanges. In 2014, the US Internal Revenue Service categorized bitcoin as a virtual asset for federal tax purposes.
The first bitcoin transaction took place on January 12, 2009, between Satoshi Nakamoto and Hal Finney, when Nakamoto sent 10 bitcoins to Finney as a test. This transaction is also known as the genesis block.
Nakamoto subsequently created more bitcoins, and transmitted them to others on the network. These early transactions were manually entered into the database where blockchain now resides.