Bitcoin

Bitcoin (₿) is a decentralized digital currency that can be transferred on the peer-to-peer bitcoin network.[7] Bitcoin transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain. The cryptocurrency was invented in 2008 by an unknown person or group of people using the name Satoshi Nakamoto.[10] The currency began use in 2009,[11] when its implementation was released as open-source software.[6]: ch. 1 

Bitcoin has been described as an economic bubble by at least eight Nobel Memorial Prize in Economic Sciences recipients.[12]

The word bitcoin was defined in a white paper published on 31 October 2008.[4][13] It is a compound of the words bit and coin.[14] No uniform convention for bitcoin capitalization exists; some sources use Bitcoin, capitalized, to refer to the technology and network and bitcoin, lowercase, for the unit of account.[15] The Wall Street Journal,[16] The Chronicle of Higher Education,[17] and the Oxford English Dictionary[14] advocate the use of lowercase bitcoin in all cases. It is also not uncommon for cryptocurrency in general to be called "bitcoin" (in a similar sense to "Xerox" being used for any photocopier) by people unfamiliar with crypto, but such usage is discouraged.[citation needed]

A few local and national governments are officially using bitcoin in some capacity; El Salvador and the Central African Republic have adopted Bitcoin as legal tender, while Ukraine is accepting bitcoin donations to fund the resistance against the Russian invasion.

Bitcoin has been described as an economic bubble by at least eight recipients of the Nobel Memorial Prize in Economic Sciences.[19]

The environmental impact of bitcoin is worth noting.[20] Its proof-of-work algorithm for bitcoin mining is designed to be computationally difficult, which requires the consumption of increasing quantities of electricity, the generation of which has contributed to climate change.[21][22] According to the University of Cambridge, bitcoin has emitted an estimated 200 million metric tonnes of carbon dioxide since its launch, [23] or about 0.04% of all carbon dioxide released since 2009.[24]

However, bitcoin miners have an economic incentive to use the cheapest forms of energy.[25][26] Renewable energy is the cheapest form of energy over time,[27] so it is in a Bitcoin miner's economic interest to use the cheaper renewable energy when possible.[28] For instance, the UNESCO World Heritage Site, Virunga National Park, in eastern Congo, Africa pays for its operations, using a profitable Bitcoin mining operation powered by the Park's hydroelectric plant.[29] Oil and gas giant Exxon mines Bitcoin using the natural gas flared by oil mining operations to generate their electricity.[30] Mining Bitcoin this way makes use of an otherwise "monumental waste of a valuable natural resource".[31] Still other miners reduce their overall energy bill by using the heat generated by their computers to heat their homes,[32] or hot tubs.[33]

The bitcoin blockchain is a public ledger that records bitcoin transactions.[41] It is implemented as a chain of blocks, each block containing a cryptographic hash of the previous block up to the genesis block[c] in the chain. A network of communicating nodes running bitcoin software maintains the blockchain.[42]: 215–219  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. To achieve independent verification of the chain of ownership, each network node stores its own copy of the blockchain.[43] At varying intervals of time averaging to every 10 minutes, a new group of accepted transactions, called a block, is created, added to the blockchain, and quickly published to all nodes, without requiring central oversight. This allows bitcoin software to determine when a particular bitcoin was spent, which is needed to prevent double-spending. A conventional ledger records the transfers of actual bills or promissory notes that exist apart from it, but as a digital ledger, bitcoins only exist by virtue of the blockchain; they are represented by the unspent outputs of transactions.[7]: ch. 5 

Individual blocks, public addresses, and transactions within blocks can be examined using a blockchain explorer.[44]