BITCOIN:The New Age Digital CURRENCY. Will Global FINANCIAL Institutions Accept It
It’s even gotten the attention of economic heavyweight Paul Krugman, who has said it’s like a reimplementation of the gold standard.
Bitcoin (sign: BTC) is a decentralized digital currency based on an open-source, peer-to-peer internet protocol. It was introduced by a pseudonymous developer named Satoshi Nakamoto in 2009.
Bitcoins can be exchanged through a computer or smartphone locally or internationally without an intermediate financial institution. In trade, one bitcoin is subdivided into 100 million smaller units called satoshis, defined by eight decimal points.
Bitcoin is not managed like typical currencies: it has no central bank or central organization. Instead, it relies on an internet-based peer-to-peer network. The money supply is automated and given to servers or “bitcoin miners” that confirm bitcoin transactions as they add them to a decentralized and archived transaction log approximately every 10 minutes.
The log is authenticated by end-users through hashed ECDSA digital signatures (similar to a username and password) and confirmed by intense calculations of varying difficulty, performed by dedicated servers called bitcoin miners. Each 10-minute portion or “block” of the transaction log has an assigned money supply that is awarded to the miners once a “block” is confirmed. The amount per block depends on how long the network has been running and how much in transaction fees has been paid. Currently, 25 new bitcoins are generated with every 10-minute block. This will be halved to 12.5 BTC during the year 2017 and halved continuously every 4 years after until a hard limit of 21 million bitcoins is reached during the year 2140.
Bitcoin is the most widely used alternative currency and accepted by various merchants and services internationally. As of March 2013, the monetary base of bitcoin is valued at over $1 billion USD. The large fluctuation in the dollar value of a bitcoin has evoked criticism of bitcoin’s economic suitability as a currency.
Bitcoins can be sent and received through various websites and apps. They interface with bitcoins stored locally or with a service. They use a system of ECDSA digital signatures to make and verify transactions.
List of bitcoin wallets
Armory http://bitcoinarmory.com Bitcoin-Qt Coinbase Electrum Flexcoin Multibit
My Wallet https://blockchain.info/wallet Proprietary Web application w/ encrypted hosting
Users obtain new bitcoin addresses as necessary; these are stored in a wallet file with links to cryptographic passwords or “private keys” that enable access to and transfer of bitcoins. A file or “wallet” containing bitcoin addresses is usually encrypted with an additional password.
The network’s software confirms transactions when it records them in the transaction log or “blockchain” stored across the peer-to-peer network every 10-minutes. Confirmation of future transaction records makes the ones before it increasingly permanent. After six confirmed records or “blocks” (usually one hour), a transaction is usually considered confirmed beyond reasonable doubt.
Initiators of a bitcoin transaction may voluntarily pay a transaction fee for the confirmation of these records. Any fees are collected by the operators of bitcoin servers — often called nodes or “bitcoin miners”. However, transaction fees may not cover the cost of electrical power required to operate a bitcoin miner. As a result the network server operators often rely on “mined” bitcoins as their only significant revenue.[19
Various vendors offer banknotes and coins denominated in bitcoins; a bitcoin private key is sold as part of a coin or banknote. Usually, a seal has to be broken to access the key, while the receiving address remains visible on the outside so that the balance can be verified.