It is a virtual currency that allows people to purchase online without any taxation or issues with exchanges from different countries. This freedom challenges the monetary and legal system of many countries. Still it brings about the new age of finances where money is officially just an intermediary idea and nothing physical.
Bitcoin uses peer-to-peer technology to operate with no central authority or banks; managing transactions and the issuing of bitcoins is carried out collectively by the network. Bitcoin is open-source; its design is public, nobody owns or controls Bitcoin and everyone can take part. Through many of its unique properties, Bitcoin allows exciting uses that could not be covered by any previous payment system.
Bitcoins are created by a process called mining, in which participants verify and record payments in exchange for transaction fees and newly minted bitcoins.Users send and receive bitcoins using wallet software on a personal computer, mobile device, or a web application. Bitcoins can be obtained by mining or in exchange for products, services, or other currencies.
Bitcoin has been a subject of scrutiny due to ties with illicit activity. In 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. The US is considered Bitcoin-friendly compared to other governments, however.In China, new rules restrict bitcoin exchange for local currency,the European Banking Authority has warned that Bitcoin lacks consumer protections,and the Canadian government announced that they intend track and regulate large virtual currency transactions as part of an update to laws on money laundering and terrorism prevention.Bitcoins can be stolen, and chargebacks are impossible.
Commercial use of Bitcoin, illicit or otherwise, is currently small compared to its use by speculators, which has fueled price volatility. Bitcoin as a form of payment for products and services has seen growth, however, and merchants have an incentive to accept the currency because transaction fees are lower than the 2–3% typically imposed by credit card processors.
Satoshi Nakamoto (中本哲史 Nakamoto Satoshi) is the pseudonymous person or group that designed and created the Bitcoin protocol and reference software, Bitcoin-Qt. In 2008, Nakamoto published a paper on The Cryptography Mailing list at metzdowd.com describing the Bitcoin digital currency. In 2009, he released the first Bitcoin software that launched the network and the first units of the Bitcoin currency.
Nakamoto continued to contribute to his Bitcoin software release with other developers until contact with his team and the community gradually began to fade in mid-2010. Near this time, he handed over control of the source code repository and alert key functions of the software to Gavin Andresen. Also around this same time, he handed over control of the Bitcoin.org domain and several other domains to various prominent members of the Bitcoin community.
Nakamoto is believed to be in possession of roughly one million bitcoins. At one point in December 2013, this was the equivalent of 1.1 billion US dollars.
Time to buy
While prices may be on the decline, people are still buying, just at a lesser price. Much like the housing bubble bursting in 2008, those already invested are seeing losses, but first-time buyers are getting in at lows that haven’t existed in months. Earlier today, at least one buyer was able to secure a price of $102/BTC on the second-largest bitcoin exchange, BTC-e. But that seems to be an anomaly as most exchange lows are around $550, and active trades are happening in the $600-$650 range.
Perhaps more important than price is the volume of trades. During the month of January, when prices remained stable, the volume of trades rarely peaked over 11,000 trades on Mt.Gox and BTC-e, and Bitstamp saw a few days that peaked around 20,000. However, in the last 24 hours, trade volume skyrocketed to an average of 50,000 on each of the three exchanges. This shows that people aren’t just sitting on this price drop; bitcoins are moving.