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Bitcoin

Bitcoin

Bitcoin is a cryptocurrency and a digital payment system invented by an unknown programmer, or a group of programmers, under the name Satoshi Nakamoto. It was released as open-source software in 2009.

The system is peer-to-peer, and transactions take place between users directly, without an intermediary. These transactions are verified by network nodes and recorded in a public distributed ledger called the blockchain. Since the system works without a central repository or single administrator, bitcoin is called the first decentralized digital currency.

 

Besides being obtained by proof-of-work (PoW) "mining", bitcoins can be exchanged for other currencies, products, and services.

 

As of February 2015, over 100,000 merchants and vendors accept bitcoin as payment. According to a research produced by University of Cambridge in 2017, there were 2.9 to 5.8 million unique users actively using a cryptocurrency wallet, most of them using bitcoin.

History

Pioneering work on digital currencies prior to bitcoin was done by David Chaum, who published on blind signatures as the basis for untraceable electronic cash and mail throughout the 1980’s. Wei Dai proposed B-money in 1998, which contained the idea of generation of money through the solving of computational puzzles as well novel methods for reaching consensus among network participants. Adam Back introduced the Hashcash algorithm. Hal Finney later utilized Back’s hashcash when he introduced a reproducible proof of work (RPOW) token in 2005. Nick Szabo proposed Bit gold in 2008, a digital currency which utilizes a proof of work puzzle that is securely timestamped and contains links between transactions.

On October 31st 2008, an individual or group of individuals under the pseudonym Satoshi Nakamoto published the bitcoin whitepaper called “Bitcoin: A Peer-to-Peer Electronic Cash System". The open source code for bitcoin was released on January 9, 2009. The identity of Satoshi Nakamoto remains unknown, however they are thought to retain the largest known bitcoin wallet containing approximately 1 million bitcoins. No bitcoins have ever been transferred from this account to date.

CBOE launched Bitcoin futures trading on December 10, 2017. After experiencing a surge in price almost immediately the exchange halted trading for two minutes due to the volatility. CME group announced on October 31, 2017 that it intends to launch bitcoin futures in the fourth quarter of 2017. The futures will be based on the CME Bitcoin Reference Rate and will be cash settled.

Architecture
Public Key cryptography

Control of the Bitcoin currency BTC is governed by a pair of cryptographic digital keys known as the public and private keys. The public key is open to the public and can be used to create a unique Bitcoin Address where individuals may receive funds. The private key represents control and ownership over these funds enabling the private key holder to produce a digital signature which is essential for the transfer of bitcoins.

Private keys are a number chosen at random from numbers between 1 and 2256. The method used to generate this random number must not be reproducible by another party or the security of the key could be compromised. Good sources of entropy include the getnewaddress command on the Bitcoin Core client or flipping a coin. Pseudorandom methods, which appear to produce randomness but are created by a deterministic algorithm which can be reproduced and are not appropriate for private key generation.

Public keys are generated utilizing an elliptic-curve cryptography based multiplication of the private key. It is practically impossible to reverse engineer the private key from the public key without trying all 2256 possible values. Finally, the Bitcoin address is created by performing a one-way cryptographic hashing. The SHA256 hash is used on the public key, followed by a RIPEMD160 hash and then a base58 encoding. This outputs the Bitcoin address itself, which is a string of 34 numbers and letters which can safely be made available to the public. Anyone can send Bitcoin directly to this public Bitcoin Address.

Transactions

The creation & validation of transactions on the Bitcoin blockchain, along with the appending of these transactions to the Bitcoin blockchain, is the core feature of the Bitcoin network and most cryptocurrency in general. Transactions are created by the owner of the bitcoins, who generate a specific digital signature using the private keys to create a valid transaction. Any transaction broadcast to the network without a valid digital signature will not be validated and propagated by the honest nodes in the network and will fail to be added to the blockchain. All transactions in the Bitcoin blockchain are globally and publicly visible.

UTXO

The Bitcoin transaction system is based on the unspent transaction outputs (UTXOs) model. A new UTXO is created each time a transaction is created in a new Bitcoin block with a new output. The UTXO is eliminated when the owner of the keys initiates a transaction which empties all of the Bitcoin.

Security

There are a variety of assumptions made by the Bitcoin protocol with regards to transaction security and validity. The double spend attack or majority attack is possible when the attacker controls a larger portion of the mining power in the network, most effective at >50%. To date, no double spending attacks have occurred on Bitcoin, however multiple attacks on smaller chains such as Bitcoin Gold, Zencash, monacoin, and others have been successful. During the time that the attack controls this ability they are able to reverse specific arbitrary transactions by re-mining blocks with those transactions excluded. Thus cryptocurrency exchanges and others who accept large Bitcoin transactions typically wait for additional confirmation of blocks before relying on payment, as the cost to rewrite a transaction becomes larger the further back in the blockchain history it lies. The economic incentives for whether or not miners will benefit from attacking the network through a double spend rely on a number of factors and are actively debated.

In addition to the majority attack, there are lower thresholds of mining power required potentially only 33% of the network has rate to to perform other attacks such as selfish mining.

Timeline

April 27, 2021
Bitcoin rose after Tesla Inc. reported a $272 million gain on "digital assets" after its $1.5 billion investment in the cryptocurrency.
April 26, 2021
Bitcoin rose as much as 12% Monday morning to trade at almost $54,000, the biggest intraday gain since early February.
April 14, 2021
Bitcoin surges to an all-time high near $65,000 ahead of the Coinbase IPO.

Bitcoin hit an all-time high for the second day running on Wednesday as excitement around the direct listing of exchange Coinbase helped push the cryptocurrency close to $65,000.

February 4, 2021
Bitcoin rises above the threshold in Thursday trading before sinking back below $37,000 later in the day.

The token traded 1% higher from 24 hours ago, at $38,065.03, as of 10:10 a.m. ET Friday.

The positive momentum and new demand place bitcoin on track for another run at the $40,000 level, Ed Moya, senior market analyst at Oanda, said Thursday.

January 7, 2021
Bitcoin crosses $40K mark, doubling in less than a month
January 3, 2021
Bitcoin hit a new all-time high of $34,800 (£25,672) but subsequently dropped to below $30,000 (£22,131).
January 2021
The digital currency Bitcoin rocketed to a record high this month above $35,000 a coin.
December 10, 2017
Bitcoin futures start trading

The Chicago Board Options Exchange (CBOE) launches Bitcoin futures trading, enabling investors to speculate on the price of BTC without actually owning Bitcoins themselves. After experiencing a surge in price almost immediately the exchange halted trading for two minutes due to the volatility.

December 2017
Bitcoin got close to $20,000 in December 2017 in a retail-led bubble that grabbed the attention of investors worldwide.
October 24, 2017
Bitcoin Gold (BTG) forks from Bitcoin (BTC)

The Bitcoin Gold forks on block 491406 from the Bitcoin network.

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People

Name
Role
LinkedIn

Adam Back

Andreas Antonopoulos

BtcDrak

Cory Fields

Eric Lombrozo

Gavin Andresen

Gregory Maxwell

Hal Finney

Jameson Lopp

Jeff Garzik

Johnson Lau

Jorge Timon

Luke Dash jr

Michal Ford

Nicolas Dorier

Patric Strateman

paveljanik

Peter Todd

Pieter Wuille

Roger Ver

Satoshi Nakamoto

Suhas Daftuar

Further reading

Title
Author
Link
Type
Date

Bitcoin-NG

Ittay Eyal, Adem Efe Gencer, Emin Gun Sirer, Robbert van Renesse

Academic paper

Bitcoin: A Peer-to-Peer Electronic Cash System

Satoshi Nakamoto

Bitcoin’s academic pedigree

Arvind Narayanan and Jeremy Clark

CABRA — Comprehensive Academic Bitcoin Research Archive

Christian Decker

How the bitcoin protocol actually works

Michael Nielsen

Information Propagation in the Bitcoin Network

Christian Decker, Roger Wattenhofer

Academic paper

Seasonality and Interconnectivity Within Cryptocurrencies - An Analysis on the Basis of Bitcoin, Litecoin and Namecoin

Martin Haferkorn, Manuel Quintana Diaz

Academic paper

U.S. Bitcoin Futures Climb in First Day of Trade

Alexander Osipovich and Gabriel T. Rubin

Documentaries, videos and podcasts

Title
Date
Link

Banking on Bitcoin

2016

Bitcoin - Proof of work by Khan Academy

May 1, 2013

Bitcoin Halving Vs Bitcoin Cash Halving Price Prediction 2020 Forecast

April 7, 2020

Bitcoin in Uganda - Empowering People

May 16, 2014

Bitcoin Paper Annotated/Explained

Ever wonder how bitcoin (and other cryptocurrencies) actually work?

Jul 7, 2017

Life on Bitcoin

2017

The Bitcoin Doco

2014

The importance of layer two — an HTTP of bitcoin and blockchains

Aug 11, 2017

The Rise and Rise of Bitcoin

2014

What is Bitcoin? (v1)

Mar 22, 2011

Companies

Company
CEO
Location
Products/Services

Bittrex

Bill Shihara

Nevada, US

Cryptocurrency exchange

Coinbase

Brian Armstrong

San Francisco, US

Cryptocurrency exchange

Gemini

Tyler Winklevoss

New York, US

Cryptocurrency exchange

LocalBitcoins.com

Nikolaus Kangas

Finland

In person bitcoin exchange

News

Title
Author
Date
Publisher
Description
Emmanuel Akinwotu in Lagos
July 31, 2021
the Guardian
As leaders around the world grapple with cryptocurrencies, what happened when the African country tried to ban them?
Brian McGleenon
July 31, 2021
Express.co.uk
BITCOIN's price is set 'to close the year on a high note' with a long term target of $60,000, an expert has predicted.
July 29, 2021
BBC News
Environmentalists have criticised the gas-fired mine but the company says it offsets its emissions.
Ciaran McGrath
July 30, 2021
Express.co.uk
POUND Sterling edged close to a one-month high against the dollar on Friday, and is on course for its strongest week since December, prior to next week's crunch Bank of England (BoE) meeting.
Steven Brown
July 30, 2021
Express.co.uk
NATWEST is set to return at least £3billion to investors due to a sharp rise in profits thanks to the improved economic outlook.
Wolfie Zhao
July 29, 2021
The Block
The hashing power securing the world's two largest blockchains is slowly recovering, as some Chinese miners have redeployed overseas.
Rhiana Whitson
July 28, 2021
www.abc.net.au
The Australian share market is tipped to open higher after a mixed day on Wall Street where tech stocks led the gains. Bitcoin trades above $US40,000.
Tony Zerucha
July 28, 2021
Crowdfund Insider
Click HERE to find out ⭐ Pierce to Revive Mt. Gox, Bitcoin Survives Recent Drags. | Crowdfund Insider: Global Fintech News, including Crowdfunding, Blockchain and more.
Frank Chaparro
July 28, 2021
The Block
NYDIG's Head of Bank Solutions Patrick Sells chats with The Block's Frank Chaparro during the latest episode of The Scoop podcast.
Maisha Frost
July 27, 2021
Express.co.uk
A new sugar rush is underway stirred by UK producer Bonraw Foods as it challenges the refined, white market with sustainable natural sweeteners that cut calories and go easy on teeth as well as the earth.
JD Alois
July 28, 2021
Crowdfund Insider
Click HERE to find out ⭐ Bitcoin Rewards Firm Lolli Raises $10 Million Series A. | Crowdfund Insider: Global Fintech News, including Crowdfunding, Blockchain and more.
Yogita Khatri
July 28, 2021
The Block
Crypto firm Lolli, which provides free bitcoin to its users as a reward for shopping, has raised $10 million in a Series A funding round.
Geoff Ho
July 28, 2021
Express.co.uk
The UK economy will bounce back from the pandemic at the fastest rate among the developed nations, outpacing the eurozone, a report suggests.The International Monetary Fund (IMF) said it expected UK economic output to explode by seven per cent this year - a pace it thinks will be matched only by the United States.
Kaisha Langton
July 28, 2021
Express.co.uk
BITCOIN is the leading cryptocurrency in the digital coin market, but what is the latest on its price given the turbulence of the market?
Reuters
July 28, 2021
@bsindia
Traders drew confidence from recent positive comments about the cryptocurrency by high-profile investors
Zee News
July 28, 2021
Zee News
Bitcoin broke above $40,000 on Wednesday and headed for another attempt at breaking from its monthslong range as short sellers bailed out and traders drew confidence from recent positive comments about the cryptocurrency by high-profile investors.
July 28, 2021
Moneycontrol
Bitcoin's price is currently $36,982.76 and its dominance is currently 48.35 percent, an increase of 0.54 percent over the day.
Bloomberg
July 27, 2021
@bsindia
More than $950 million of crypto shorts were liquidated on Monday
Tony Zerucha
July 27, 2021
Crowdfund Insider
Click HERE to find out ⭐ Bitcoin Whales Buying the Dip. | Crowdfund Insider: Global Fintech News, including Crowdfunding, Blockchain and more.
TEMIE LALEYE
July 27, 2021
Express.co.uk
RISHI SUNAK is said to be planning to introduce a new digital currency 'Britcoin' to change the way money is spent in the UK.
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References

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