Bitcoin is a worldwide cryptocurrency and digital payment system called the first decentralized digital currency, since the system works without a central repository or single administrator.It was invented by an unknown programmer, or a group of programmers, under the name Satoshi Nakamoto and 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 a blockchain.
Besides being created as a reward for mining, bitcoin 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 also be held as an investment. According to research produced by Cambridge University in 2017, there are 2.9 to 5.8 million unique users using a cryptocurrency wallet, most of them using bitcoin.On 1 August 2017 bitcoin split into two derivative digital currencies, the classic bitcoin (BTC) and the Bitcoin Cash (BCH).
The word bitcoin occurred in the white paper that defined bitcoin published on 31 October 2008. It is a compound of the words bit and coin.The white paper frequently uses the shorter coin.
There is no uniform convention for bitcoin capitalization. Some sources use Bitcoin, capitalized, to refer to the technology and network and bitcoin, lowercase, to refer to the unit of account. The Wall Street Journal. The Chronicle of Higher Education, and the Oxford English Dictionary advocate use of lowercase bitcoin in all cases, a convention which this article follows.
The unit of account of the bitcoin system is bitcoin. As of 2014, symbols used to represent bitcoin are BTC,[note 1] XBT,[note 2] and ₿ (U+20BF, BitcoinSign.svg).[note 3:2 Small amounts of bitcoin used as alternative units are millibitcoin (mBTC), microbitcoin (µBTC, sometimes referred to as bit), and satoshi. Named in homage to bitcoin's creator, a satoshi is the smallest amount within bitcoin representing 0.00000001 bitcoin, one hundred millionth of a bitcoin. A millibitcoin equals to 0.001 bitcoin, one thousandth of a bitcoin. One microbitcoin equals to 0.000001 bitcoin, one millionth of a bitcoin.
For a broader coverage related to this topic, see Blockchain.
Number of unspent transaction outputs
The blockchain is a public ledger that records bitcoin transactions. A novel solution accomplishes this without any trusted central authority: the maintenance of the blockchain is performed by a network of communicating nodes running bitcoin software.Transactions of the form payer X sends Y bitcoins to payee Z are broadcast to this network using readily available software applications.Network nodes can validate transactions, add them to their copy of the ledger, and then broadcast these ledger additions to other nodes. The blockchain is a distributed database – to achieve independent verification of the chain of ownership of any and every bitcoin amount, each network node stores its own copy of the blockchain. Approximately six times per hour, a new group of accepted transactions, a block, is created, added to the blockchain, and quickly published to all nodes.
Paying a transaction fee is optional. Miners can choose which transactions to process and prioritize those that pay higher fees. Fees are based on the storage size of the transaction generated, which in turn is dependent on the number of inputs used to create the transaction. Furthermore, priority is given to older unspent inputs.
Semi-log plot of relative mining difficulty.[note 4
Mining is a record-keeping service.[note 5] Miners keep the blockchain consistent, complete, and unalterable by repeatedly verifying and collecting newly broadcast transactions into a new group of transactions called a block Each block contains a cryptographic hash of the previous block using the SHA-256 hashing algorithm,:ch. 7 which links it to the previous block, thus giving the blockchain its name.
Electrum bitcoin wallet.
On 1 August 2017 bitcoin split into two derivative digital currencies, the classic bitcoin (BTC) and the Bitcoin Cash BCH.20
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