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Bitcoin

Bitcoin is a digital currency that was introduced in 2009. The currency uses orthodox and non orthodox methods for monetary control and functions as an international decentralized peer to peer payment method. The currency was created by Satoshi Nakamoto after the big economic collapse in 2008 to detach the dependency of people and businesses in the “old” banking and currency systems. The Bitcoin is also categorized as a cryptocurrency because all the process from creation through transaction uses cryptography as means of security. The currency adopts concepts like scarcity and therefore there is a maximum of issued coins which is 21 million. The smallest fraction of the coin is .00000001 and is called satoshi (like its creator).

The distributed system applies in the issuance of new coin which is usually referred to as “mining”. Many computers solve mathematical programs that are based on hashing algorithms and whenever a problem is solved the “miner” gets a coin. This process will be stopped once the maximum of 21 million coins will be in circulation. The distributed network also enforces a first come first served policy in payments to avoid the “double spending” phenomena which is the use of the same coin several times. The currency is considered as a black market currency because there is no tracing for it and therefore it is widely used by crime organizations and illegal activities that vary from drugs to assassinations. The Bitcoin was also boosted by instability in many countries as the consumer confidence fell and people searched for an alternative. There are many regulators who warn from the use of the explosive volatile currency mainly due to lack of clear monetary policy and centralized management.



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