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Bitcoins have become linked to online criminal behavior and so-called [[cybercriminal]]s. The BBC has stated that bitcoins are used to obfuscate online transactions, and bitcoins are often seized when dark web black markets are shut by authorities.<ref>{{cite web | url=http://www.bbc.co.uk/news/technology-26158012 | title=Five arrested in Utopia dark net marketplace crackdown | publisher=BBC | work=bbc.co.uk | date=12 February 2014 | accessdate=13 February 2014 | author=Kelion, Leo}}</ref> |
Bitcoins have become linked to online criminal behavior and so-called [[cybercriminal]]s. The BBC has stated that bitcoins are used to obfuscate online transactions, and bitcoins are often seized when dark web black markets are shut by authorities.<ref>{{cite web | url=http://www.bbc.co.uk/news/technology-26158012 | title=Five arrested in Utopia dark net marketplace crackdown | publisher=BBC | work=bbc.co.uk | date=12 February 2014 | accessdate=13 February 2014 | author=Kelion, Leo}}</ref> |
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Criminal activity involving Bitcoin has largely centered around theft of the currency, the use of [[botnet]]s for mining, and the illicit use of bitcoins in exchange for illegal items or services. Certain nation states may feel that its use in circumventing [[capital control]]s is also undesirable.<ref name=capcont/> While some governments have taken a hands-off approach, others have moved to regulate Bitcoin and similar, private currencies. Critics have accused Bitcoin of being a [[Ponzi scheme]] |
Criminal activity involving Bitcoin has largely centered around theft of the currency, the use of [[botnet]]s for mining, and the illicit use of bitcoins in exchange for illegal items or services. Certain nation states may feel that its use in circumventing [[capital control]]s is also undesirable.<ref name=capcont/> While some governments have taken a hands-off approach, others have moved to regulate Bitcoin and similar, private currencies. Critics have accused Bitcoin of being a [[Ponzi scheme]].<ref name=USSenatebitcoin>{{cite web |url=http://www.theregister.co.uk/2011/06/08/bitcoin_under_attack/ |title=US senators draw a bead on Bitcoin |last1=Chirgwin |first1=Richard |date=8 June 2011 |publisher=The Register |accessdate=14 November 2012 |deadurl=no}}</ref> The accusations are contradicted by both Bitcoin supporters<ref name=LSP>{{cite web |url=http://libertarianstandard.com/2013/12/01/ponzi-logic-debunking-gary-north/ |title=Ponzi Logic: Debunking Gary North |last=Tucker |first=Jeffrey |date=1 December 2013 |publisher=The Libertarian Standard |accessdate=12 Feb 2014}}</ref> and incumbents stating that "bitcoins are not illegal in and of themselves".<ref name="wiredlegit" /> A case study report<ref name="ecbreport">{{cite web | url=http://www.ecb.europa.eu/pub/pdf/other/virtualcurrencyschemes201210en.pdf | title=Virtual Currency Schemes | publisher=[[European Central Bank]] | date=October 2012 | accessdate=4 December 2012}}</ref> by the [[European Central Bank]] observes that the Bitcoin currency system shares some characteristics with Ponzi schemes, but also has characteristics that are distinct from the common aspects of such schemes. |
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===Black markets=== |
===Black markets=== |
Revision as of 11:37, 14 February 2014
Unit | |
---|---|
Symbol | BTC, XBT,[1] , ฿[2][note 1] |
Denominations | |
Subunit | |
10−8 | satoshi[3] |
Demographics | |
Date of introduction | 3 January 2009 |
User(s) | Worldwide |
Valuation | |
Money Supply | 25 bitcoins per block (approximately every ten minutes)[4] |
Source | Number of bitcoins in circulation |
Bitcoin is a peer-to-peer payment system and digital currency introduced as open source software in 2009 by pseudonymous developer Satoshi Nakamoto. It is a cryptocurrency, so-called because it uses cryptography to control the creation and transfer of money.[5] Conventionally, "Bitcoin" capitalized refers to the technology and network whereas lowercase "bitcoins" refers to the currency itself.[6]
Bitcoins are created by a process called mining, in which participants verify and record payments in exchange for transaction fees and newly minted bitcoins.[7] 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.[8]
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.[9] The US is considered Bitcoin-friendly compared to other governments, however.[10] In China, new rules restrict bitcoin exchange for local currency,[11] the European Banking Authority has warned that Bitcoin lacks consumer protections,[12] 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.[13] Bitcoins can be stolen, and chargebacks are impossible.[14]
Commercial use of Bitcoin, illicit or otherwise, is currently small compared to its use by speculators, which has fueled price volatility.[15] 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.[16]
Transactions
Users send payments by broadcasting digitally signed messages to the network. Transactions do not explicitly identify the payer and payee by name. Instead, a transaction transfers ownership from one Bitcoin address to another. Approximately every ten minutes a bundle of transactions, called a "block", is confirmed to a public transaction record called the block chain. This confirmation process, known as "mining", carries a reward of 25 bitcoins per block added to the block chain.[17] Acting as an incentive for individuals and groups to maintain the integrity of the Bitcoin system by allowing their computers to be used to confirm transactions, the 25 bitcoins reward is also the way in which new bitcoins enter circulation.
Software
Bitcoin wallet software, sometimes called a Bitcoin client, allows a user to transact bitcoins. At its most basic, a wallet program generates and stores private keys and communicates with peers on the Bitcoin network. The first was released in 2009 by Satoshi Nakamoto as open source code.[18] The so-called "Satoshi client" can be used as a desktop wallet for regular payments or as a server utility for merchants and other payment services. Bitcoin-Qt is sometimes referred to as the reference client because it serves to define the Bitcoin protocol and acts as a standard for other implementations.[18]
When making a purchase with a mobile device, the use of QR codes to simplify transactions is ubiquitous.
There are also now several server software implementations of the Bitcoin protocol. So-called "full" nodes on the network validate transactions and blocks they receive and relay them to connected peers.[18]
Wallets
Bitcoin uses public-key cryptography, in which pairs of cryptographic keys, one public and one private, are generated.[20] A collection of keys is called a wallet. Note that sometimes this term is used to mean the software itself in the sense of digital wallet. A Bitcoin transaction transfers ownership to a new address, an alphanumeric string of the form random letters and numbers derived from public keys by application of a hash function and encoding scheme. The corresponding private keys act as a safeguard; a valid payment message from an address must contain the associated public key and a digital signature proving possession of the associated private key. Because anyone with a private key can spend all of the bitcoins sent to the corresponding address, the essence of Bitcoin security is protection of private keys.
Theft of bitcoins has occurred on numerous occasions,[21] and the practical day-to-day security of Bitcoin wallets remains an on-going concern.[22] Risk of theft can be reduced by generating keys offline on an uncompromised computer and saving them on external storage or paper printouts.[23]
Various vendors produce physical bitcoins, collectibles that store a private key on paper, metal,[24] wood,[25] or plastic. Images of physical bitcoins are ubiquitous in media coverage of Bitcoin. There are also specialized digital products known as "Hardware Wallets", designed to store bitcoins securely on a physical device.[26]
Block chain
Integral to Bitcoin is a public database and sequential record of all transactions, known as the block chain, that records current bitcoin ownership as well as at all points in the past. By keeping a record of all transactions, the block chain prevents a problem particular to digital money, double-spending.[17]
Mining
Those who maintain the block chain, by running Bitcoin client software, are called miners and are rewarded with newly created bitcoins as well as transaction fees. Payment processing work done by miners verifies each transaction as valid and adds it to the block chain.[27] Bitcoin payment processing fees are optional and generally substantially lower than those of credit cards or money transfers.[28] Currently, doing the work of payment processing is rewarded with newly created bitcoins, 25 per block. To claim the reward, the miner includes in the block a special transaction called the "coinbase" that assigns the reward bitcoins to an address of the miners choosing. All bitcoins in circulation can be traced back to such coinbase transactions. The block reward will be halved to 12.5 bitcoins in 2017 and again approximately every four years thereafter. By 2140, there will be approximately 21 million bitcoins in existence and transaction processing will be solely incentivized by transaction fees.[29] Today, transactions that pay a fee may be processed more quickly than those that don't.[30]
The most efficient mining hardware makes use of application-specific integrated circuits.[31] These custom designed integrated circuits allow for much faster mining, and lower power consumption, when compared to general purpose microprocessors, such as x86 processors.
Buying and selling bitcoins
Bitcoin can be bought and sold for many different currencies from individuals and from companies. The fastest way to obtain bitcoins is to purchase them in person for cash.[32] Participants in online exchanges offer bitcoin buy and sell bids.[33] Other companies buy or sell bitcoin in bulk on exchanges and offer their customers the option to buy or sell bitcoin at market price.[34] Fees vary by transaction volume and services provided.[citation needed] Bitcoin ATMs allow cash-for-bitcoins transactions to be made.[35]
Using an online exchange to obtain bitcoins does entail some risk. These exchanges regularly fail, taking client bitcoins with them.[36] In addition, since bitcoin transactions are irreversible, sellers of bitcoins must take extra measures to ensure receipt of traditional funds from the buyer.
Lack of anonymity
The block chain provides a certain level of anonymity; it identifies receivers by Bitcoin addresses, not individuals' names. Tracking the flow of bitcoins can give clues as to who owns them, however.[37] And while Bitcoin uses cryptography, it does not do so to protect the identities of its users. In addition, Bitcoin intermediaries, such as exchanges, are required by law in many jurisdictions to collect personal customer data.[38]
History
First mentioned in a 2008 paper published under the pseudonym Satoshi Nakamoto, Bitcoin became operational in early 2009 with the release of the first open source client or wallet, Bitcoin-Qt, and the issuance of the first bitcoins. The currency had early technical problems such as a 2009 exploit that allowed the creation of unlimited bitcoins.[39]
Historically, Bitcoin-Qt was the sole software that could facilitate bitcoins transactions, and it initially also supported mining. (This feature was later removed because specialized mining software is more efficient.[18]) Since its 2009 release, it has been maintained and enhanced by a group of core developers and other contributors.
By May 2011 interest in Bitcoin was growing as were concerns. A report by Jason Calacanis included statements such as "Bitcoin may be the most dangerous technological project since the internet itself." [40]
The price of bitcoins has fluctuated wildly since its inception, going through various cycles of appreciation, which have been referred to by some as bubbles.[41] In 2011 the value of one bitcoin rapidly rose from about US$0.30 to US$32 before falling back down to US$2.[42]
Following increased media attention in the latter half of 2012 and the 2012-2013 Cypriot Financial Crisis, the bitcoin price[43] began to rise again in early 2013 reaching a peak of US$266 on April 10 before crashing to around US$50 [44]
In March 2013 a technical glitch caused a fork in the block chain with one half of the network adding blocks to one version of the chain, and the other half adding to another. For six hours there were effectively two Bitcoin networks operating at the same time, each with its own version of the transaction history. The core developers called for a temporary halt to transactions, sparking a sharp sell-off. Normality was restored when the majority of the network downgraded to version 0.7 of the Bitcoin software from the flawed version 0.8.[39]
In 2013, some mainstream services began accepting it as a form of payment.[45] Certain non-profit or advocacy groups such as the Electronic Frontier Foundation[46] also began accepting bitcoin donations.
2013 also saw the first interventions by law enforcement. Assets belonging to the Mt.Gox exchange were seized, and the Silk Road marketplace website was shut down.[47]
During November 2013, the China-based Bitcoin exchange BTC China overtook Japan-based Mt.Gox and Europe-based Bitstamp to become the largest Bitcoin trading exchange by trade volume.[48] On 19 November 2013, the value of a bitcoin on the Mt.Gox exchange soared to a peak of US$900 following a United States Senate committee hearing, at which the committee was informed that virtual currencies were a legitimate financial service.[49] On the same day, one bitcoin traded for over RMB¥6780 (US$1100) in China.[50] With roughly 12 million bitcoins in existence as of November 2013,[51] the new price increased the market cap for Bitcoin to at least US$7.2 billion.[52]
By November 23, 2013, the total market capitalisation of all bitcoins in existence exceeded US$10 billion for the first time.[53]
On December 5, 2013, the People's Bank of China announced it was prohibiting Chinese financial institutions from using bitcoins.[11] Following the introduction of these new rules, the value of bitcoin dropped[54] and Chinese internet giant Baidu reversed its policy of accepting bitcoins for certain services.[55] Starting in October 2013, Baidu had been allowing clients of website security services to pay with bitcoins.[56] Buying real-world goods with any virtual currency has been illegal in China since at least 2009.[57]
In January 2014, two were arrested in the US on charges of money-laundering using bitcoins. Charlie Shrem, the head of defunct Bitcoin exchange BitInstant and a vice chairman of the Bitcoin Foundation, allegedly allowed Robert Faiella, also arrested, to purchase large quantities of bitcoins that were subsequently used to buy illegal drugs on black market websites.[58] In the US, Bitcoin exchanges are regulated as money services businesses and as such are obligated to report any activity symptomatic of money laundering.
Economics
Bitcoin has garnered comments and attention from economists and journalists, as well as investors and speculators. Others who mistrust their national currency have seen Bitcoin as a safe haven from inflation and a way to circumvent capital controls.[citation needed] The Bitcoin market currently suffers from volatility, which limits the utility of bitcoins to act as a currency. This has not prevented their being used as a medium of exchange, however.[59]
Volatility
At present, the Bitcoin exchange rate is extremely volatile, which has led to questions about its ability to function as a currency.[59] The Bitcoin Foundation contends that this is due to insufficient liquidity and claims volatility will lessen if its popularity continues to increase.[60] Volatility has little effect on the utility of Bitcoin as a payment processing system.[61] (That is to say, volatility damages the ability of Bitcoin to be a store of value but does not hamper its functioning as a medium of exchange.)
Currently, Bitcoin does see use as a currency,[62] and as of November 2013, there were about 1,000 brick and mortar businesses willing to accept payment in bitcoins.[63] In addition, there are more than 35,000 bitcoin-accepting merchants online.[64]
Forbes contributor Timothy B. Lee states that Bitcoin volatility is linked to uncertainty about its long-term value.[65]
Alternative to national currencies
Bitcoin detractors as well as its supporters have suggested that Bitcoin is gaining popularity in countries with problem-plagued national currencies as it can be used to circumvent inflation, capital controls, and international sanctions. For example, Bitcoins are used by some Argentinians as an alternative to the official currency,[66] at this time stymied by inflation and strict capital controls.[38] In addition, some Iranians use bitcoins to evade currency sanctions.[67]
Financial journalists and analysts have suggested that there was a link between higher Bitcoin usage in Spain and the 2012-2013 Cypriot financial crisis.[68]
Others believe that mistrust in traditional financial institutions and central banks fostered by the Financial crisis of 2007–08 has helped bolster Bitcoin popularity.
Speculation and bubbles
Bitcoins are often traded as an investment[69] by speculators who expect widening popularity along with increases in value.[70] The European Banking Authority has warned that the risks of engaging in such speculation go beyond the possibility that the value of bitcoins drops.[71] Vulnerability to hacking and theft makes their use as an investment questionable, especially for unsophisticated investors.[72]
Partially as a result of such speculation,[citation needed] the value of bitcoin has been volatile with repeated rapid rises and collapses. Many have named Bitcoin a speculative bubble including former Federal Reserve Chairman Alan Greenspan[73] and Economist John Quiggin.[74] Two lead software developers of Bitcoin, Gavin Andresen and Mike Hearn, have warned that bubbles may occur.[75] Financial journalist Felix Salmon correctly predicted the bursting of one such Bitcoin bubble in April 2013.[76] Nick Colas, a market strategist for ConvergEx Group, is among those who reject the existance of bubbles and see Bitcoin's quick rise in price as nothing more than normal economic forces at work.[77]
Bitcoins have attracted the attention of some Wall Street types with Peter Thiel's Founders Fund investing US$3 million and the Winklevoss twins making a US$1.5 million personal investment[78] as well as attempting to launch a Bitcoin ETF.[15] A separate organization offers futures contracts against multiple currencies.[79]
Money supply
Growth of the Bitcoin money supply is predefined by the Bitcoin protocol,[29] and in this way inflation is kept in check. Currently there are over twelve million bitcoins in circulation with an approximate creation rate of 25 bitcoins every ten minutes. The total supply is capped at 21 million,[29] and every few years or so the creation rate is halved. This means new bitcoins will continue to be released for more than a hundred years.
Bitcoin valuation
Bitcoin has been under scrutiny by financial journalists, notable economists, financial analysts, investors and researchers trying to determine its possible future value.
Economist and Professor John Quiggin evaluating bitcoin as a financial asset forecast that "bitcoins will attain their true value of zero sooner or later, but it is impossible to say when."
Bank of America published the analysis of its FX and Rate Strategist David Woo forecasting a maximum fair value of bitcoin of $1,300 and a maximum market capitalization of $15 billion.
Reception
Economists have had a mixed reaction to Bitcoin. Some have responded positively, including François R. Velde, a senior economist at the Federal Reserve in Chicago, who described it as "an elegant solution to the problem of creating a digital currency."[80] Others have been critical. Economists Paul Krugman and Brad DeLong have found fault with Bitcoin for numerous reasons including that bitcoins are not a reliable store of value and that there is no floor on their value.[81] Economist and professor John Quiggin has called Bitcoin "the final refutation of the efficient market hypothesis".[74]
Bitcoin has been criticized for its lack of anonymity by the free software movement activists including Richard Stallman, who called for reformed development.[82]
PayPal President David A. Marcus calls Bitcoin a "great place to put assets" but claims it won't be a currency until price volatility is reduced.[83]
Magistrate Judge Amos Maazant of the Eastern District of Texas federal court classified bitcoins as currency.[84] Others have been more reluctant to accept Bitcoin as a fully fledged currency. A German court found it to be a unit of account. The Finnish Government[85] and journalist Lizette Chapman[86] classify bitcoins as a commodity. Some have gone further still. Journalist Luis Woodhill referred to bitcoins a "digital collectible".[87]
Acceptance by merchants
Large, established firms that accept bitcoins include Overstock.com,[88] the Sacramento Kings,[89] TigerDirect,[90] and Zynga.[91] In November 2013, Richard Branson announced that Virgin Galactic would accept Bitcoin as a method of payment.[92] In November 2013, the University of Nicosia became the first accredited university in the world to accept it as a method of payment for tuition and fees.[93]
Merchant processors such as BitPay and Coinbase have had a huge influence over the acceptance of bitcoin. Overstock[94] is working with Coinbase. The Sacramento Kings,[95] Tiger Direct,[96] Clearly Canadian[97] and Zynga[98] all work with Bitpay.
Legal issues and status
Bitcoins have become linked to online criminal behavior and so-called cybercriminals. The BBC has stated that bitcoins are used to obfuscate online transactions, and bitcoins are often seized when dark web black markets are shut by authorities.[99]
Criminal activity involving Bitcoin has largely centered around theft of the currency, the use of botnets for mining, and the illicit use of bitcoins in exchange for illegal items or services. Certain nation states may feel that its use in circumventing capital controls is also undesirable.[10] While some governments have taken a hands-off approach, others have moved to regulate Bitcoin and similar, private currencies. Critics have accused Bitcoin of being a Ponzi scheme.[100] The accusations are contradicted by both Bitcoin supporters[101] and incumbents stating that "bitcoins are not illegal in and of themselves".[102] A case study report[103] by the European Central Bank observes that the Bitcoin currency system shares some characteristics with Ponzi schemes, but also has characteristics that are distinct from the common aspects of such schemes.
Black markets
Several news outlets have asserted that the popularity of Bitcoin hinges on the ability to use them to purchase illegal substances.[104] In 2013 The Guardian reported that the currency was primarily used to purchase illegal drugs and for online gambling,[105] and The Huffington Post stated that "online gambling accounts for a huge portion of Bitcoin activity."[106] C. 2013 legitimate transactions were thought to be far less than the number involved in the purchase of drugs,[107] and roughly one half of all transactions made using Bitcoin were bets placed at a single online gaming website.[108] In 2012, an academic from the Carnegie Mellon CyLab and the Information Networking Institute estimated that 4.5 to 9% of all bitcoins transacted were for purchases of drugs at a single online market, Silk Road.[109] As the majority of the Bitcoin transactions were at this time speculative in nature, this academic asserts that drugs constituted a much larger percentage of the products and services bought using the currency, however.[109] Silk Road was later shut down by US law enforcement.
Some feel online black markets may be run as scams to steal bitcoins from shoppers. The Bitcoin community branded one defunct site, Sheep Marketplace, as such when it prevented withdrawals and shut down after an alleged bitcoins theft.[110]
The Huffington Post stated in 2013 that online gun dealers use Bitcoin to sell arms without background checks.[111]
Criminal activity
Bitcoin's association with criminal activities has historically hindered the currency from attaining widespread, mainstream use and has attracted the attention of financial regulators, legislative bodies, and law enforcement.[112] The Washington Post had labeled it "the currency of choice for seedy online activities,"[113] and CNN has called Bitcoin a "shady online currency [that is] starting to gain legitimacy in certain parts of the world."[114] Its links to criminal activities have prompted scrutiny from the FBI, US Senate, and the State of New York. The FBI stated in a 2012 report that "bitcoins will likely continue to attract cyber-criminals who view it as a means to move or steal funds".[115]
Steven Strauss, a Harvard public policy professor, has suggested that due to its close association with illegal purchases, governments could outlaw Bitcoin, which was also mentioned in 2013 SEC filing made by a Bitcoin investment vehicle.[116] Bitcoins are not currently illegal in the US, however. FBI Special Agent Christopher Tarbell has stated that "bitcoins are not illegal in and of themselves and have known legitimate uses".[102]
Legal status
Many governments have made announcements regarding Bitcoin, and these decisions also likely affect treatment of other cryptocurrencies as well.
Some, including Australia, Canada,[117] Finland, and Germany, have simply made it clear that normal earned income rules apply to Bitcoin.[118] Other states reject the label of currency but will collect taxes on Bitcoin transactions, such as Norway.[119] (Germany may technically fall into this latter category as it refers to Bitcoin as a unit of account,[120] which is one of several roles fully fledged currencies play.)
Still more have issued statements that assert Bitcoin is not regulated in their jurisdictions, such as Singapore and Poland.[citation needed] Denmark is among those that, as of 2013, have stated future regulations may be imposed.[119]
In the United States, the Financial Crimes Enforcement Network has established regulatory guidelines for currencies such as Bitcoin, classifying certain firms engaged in the exchange and mining of Bitcoins as money services businesses.[121] New York state has considered the possibility of regulating Bitcoin.[122]
Money laundering
Some regulatory and law enforcement authorities, including the European Banking Authority and the FBI, feel Bitcoin may be used for illicit money laundering purposes.[123] In early 2014, an operator of a US Bitcoin exchange was arrested for money laundering.[58]
Some say one obstacle to bitcoins becoming widely used to launder money is that all transactions are public.[124] During a US Senate hearing in 2013, Jennifer Shasky Calvery, director of the Treasury Department's Financial Crimes Enforcement Network stated, "cash is probably still the best medium for money laundering."[125]
Unauthorized mining
In June 2011, Symantec warned about the possibility of botnets engaging in covert mining of bitcoins.[126] Some malware used the parallel processing capabilities of GPUs built into many modern video cards.[127] In mid-August 2011, Bitcoin mining botnets were detected again,[128] and less than three months later, Bitcoin mining trojans infecting Mac OS X were also discovered.[129] In April 2013, electronic sports organization E-Sports Entertainment was accused of hijacking 14,000 computers to mine bitcoins; the case was settled in November with the organization fined US$1 million if it breaks the law within the following ten years or $325,000 if it does not.[130]
Thefts
Theft of bitcoins means someone completed an unauthorized transfer of bitcoins out of the authorized user's wallet. Protection of the bitcoin wallet means protecting the private key used to unlock the wallet. Thefts happen when a thief gains access to the private keys in the bitcoin wallet.[131] Most large-scale thefts occur at payment processors, exchanges, or online wallet services that store the private keys of many bitcoin users. The thief hacks an online wallet service by finding a bug in that website or spreading malware to computers holding the private keys.[132][133] When they have control of the website or its database, they gain access to many users' private keys and can thereby steal those users' bitcoins.
Theft of bitcoins has happened on a regular basis. Generating and storing keys offline mitigates such risks, however.[34]
In addition to being stolen, bitcoins can be lost. One user lost 7,500 bitcoins, worth £4.0m at the time, when he inadvertently discarded a hard drive containing his private keys.[134]
In late November 2013, as many as 96,000 bitcoins were stolen from the online drug website Sheep Marketplace.[135] Users were able to track and trace the theft, although the thief made efforts to launder transactions through a process called "tumbling".[clarification needed][136] Although the coins were successfully traced, they have not yet been recovered.[137]
See also
Notes
References
- ^ Jon Matonis (17 September 2013). "Bitcoin gaining market-based legitimacy as XBT". Coindesk. Retrieved 14 December 2013.
- ^ Matonis, Jon (22 January 2013). "Bitcoin Casinos Release 2012 Earnings". Forbes. New York. Archived from the original on 16 February 2013.
Responsible for more than 50% of daily network volume on the Bitcoin blockchain, SatoshiDice reported first year earnings from wagering at an impressive ฿33,310.
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suggested) (help) - ^ "Cracking the Bitcoin: Digging Into a $131M USD Virtual Currency". Daily Tech. 12 June 2011. Archived from the original on 20 January 2013. Retrieved 30 September 2012.
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suggested) (help) - ^ Ron Dorit; Adi Shamir (2012). "Quantitative Analysis of the Full Bitcoin Transaction Graph" (PDF). Cryptology ePrint Archive. Retrieved 18 October 2012.
- ^ Steadman, Ian (11 May 2013). "Wary of Bitcoin? A guide to some other cryptocurrencies". Ars Technica. Retrieved 10 January 2014.
- ^ Bustillos, Maria (4/2/13). "The Bitcoin Boom". The New Yorker. Condé Nast. Retrieved 22 December 2013.
...there seems to be a consensus forming around Bitcoin, capitalized, for the system, the software, and the network it runs on, and bitcoin, lowercase, for the currency itself
{{cite web}}
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(help) - ^ Jerry Brito and Andrea Castillo (2013). "Bitcoin: A Primer for Policymakers" (PDF). Mercatus Center. George Mason University. p. 5. Retrieved 22 October 2013.
- ^ "How do I get Bitcoins? (For Beginners)". The Bitcoin Bulletin. 11 March 2011. Retrieved 13 December 2013.
- ^ "FBI Says It's Seized $28.5 Million In Bitcoins From Ross Ulbricht, Alleged Owner Of Silk Road". Forbes. Retrieved 24 November 2013.
- ^ a b Peterson, Andrea (27 January 2014). "This map shows which countries are friendly to Bitcoin". The Switch. The Washington Post. Retrieved 28 January 2014.
{{cite web}}
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(help) - ^ a b Kelion, Leo (18 December 2013). "Bitcoin sinks after China restricts yuan exchanges". bbc.com. BBC. Retrieved 20 December 2013.
- ^ Smith, Geoffery (12 December 2013). "European Banking Watchdog Warns on Bitcoin". WSJ.com. Dow Jones. Retrieved 20 December 2013.
- ^ Kiladze, Tim (11 February 2014). "Canada to regulate bitcoin in war on dirty money". The Globe and Mail. Retrieved 13 February 2014.
- ^ For theft, see Nathaniel Popper (5 December 2013). "In the Murky World of Bitcoin, Fraud Is Quicker Than the Law". The New York Times. Retrieved 12 December 2013.
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(help)- For lack of chargebacks, see Jerry Brito and Andrea Castillo (2013). "Bitcoin: A Primer for Policymakers" (PDF). Mercatus Center. George Mason University. p. 12. Retrieved 22 October 2013.
- ^ a b Grocer, Stephen (2 July 2013). "Beware the Risks of the Bitcoin: Winklevii Outline the Downside". Moneybeat. The Wall Street Journal. Retrieved 21 October 2013.
{{cite web}}
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(help) - ^ For growth in merchant numbers, see "BitPay Passes 10,000 Bitcoin-Accepting Merchants On Its Payment Processing Network". Techcrunch. Techcrunch.com. 16 September 2013. Retrieved 21 October 2013.
- For cheap payment processing costs, see Wingfield, Nick (30 October 2013). "Bitcoin Pursues the Mainstream". The New York Times. Retrieved 4 November 2013.
- ^ a b Wallace, Benjamin (23 November 2011). "The Rise and Fall of Bitcoin". Wired. Retrieved 4 November 2013.
- ^ a b c d Skudnov, Rostislav (2012). Bitcoin Clients (PDF) (Bachelor's Thesis). Turku University of Applied Sciences. Retrieved 16 January 2014.
- ^ Bustillos, Maria. "The Future of Bitcoin". The New Yorker. Retrieved 3 December 2013.
{{cite web}}
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(help) - ^ "Bitcoin: Bitcoin under pressure". The Economist. 30 November 2013. Retrieved 30 November 2013.
- ^ Moore, Tyler and Nicolas Christin (April 2013). "Beware the Middleman: Empirical Analysis of Bitcoin-Exchange Risk. In Proceedings of the 17th International Conference on Financial Cryptography and Data Security (FC'13)" (PDF).
{{cite journal}}
: Cite journal requires|journal=
(help) - ^ Rubens, Paul. "BBC News - Cybercrime shopping list study points to falling prices". Bbc.co.uk. Retrieved 17 December 2013.
- ^ Danny Bradbury (27 December 2013). "5 things to do with those Christmas bitcoins". Coindesk.com. Retrieved 14 January 2014.
- ^ Staff, Verge (13 December 2013). "Casascius, maker of shiny physical bitcoins, shut down by Treasury Department". The Verge. Retrieved 10 January 2014.
- ^ Daniel Cawrey (@danielcawrey) (20 December 2013). "Canadian Man Builds World's First Wooden Bitcoin Wallet". Coindesk.com. Retrieved 10 January 2014.
- ^ Joon Ian Wong (@joonian) (4 December 2013). "Trezor to Ship Physical Bitcoin Wallets in January". Coindesk.com. Retrieved 10 January 2014.
- ^ Ashlee Vance (14 November 2013). "2014 Outlook: Bitcoin Mining Chips, a High-Tech Arms Race". Businessweek. Retrieved 24 November 2013.
- ^ Wingfield, Nick (30 October 2013). "Bitcoin Pursues the Mainstream". The New York Times. Retrieved 4 November 2013.
- ^ a b c Ritchie S. King Sam Williams David Yanofsky (17 December 2013). "By reading this article, you're mining bitcoins". qz.com. Atlantic Media Co. Retrieved 17 December 2013.
- ^ Taylor, Daniel. "Important: Bitcoin users must decide on a new Transaction Fee". Reddit.
- ^ "MANIC MINERS: Ten Bitcoin generating machines". The Register. 20 January 2014. Retrieved 13 February 2014.
- ^ Lauren Orsini (23 October 2013). "Here's What Happened When I Bought Bitcoin In Person". Business Insider. Retrieved 4 February 2014.
- ^ "Bitcoin Markets (mtgoxUSD) - Bitcoin Charts". Quandl. Retrieved 20 November 2013.: 3
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- ^ To obtain 35,000 figure, 16,000 merchants signed up with Bitcoin payment processor Coinbase are added to 20,000 merchants signed to BitPay.
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suggested) (help) - ^ For Gavin Andresen, see "Bitcoin's History of Crushing Speculators". The Motley Fool. 4 April 2013. Retrieved 7 January 2014.
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(help) - ^ Davidson, Kavitha (16 January 2014). "How Many Bitcoins for a Courtside Seat?". bloomberg.com. Bloomberg LP. Retrieved 20 January 2014.
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(help) - ^ Rovell, Darren (01.16.14). "Sacramento Kings to accept Bitcoin". espn.com. ESPN. Retrieved 10 February 2014.
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(help) - ^ "Clearly Canadian Joins Bitcoin Community". finance.yahoo.com. Yahoo! Finance. 12.23.13. Retrieved 10 February 2104.
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and|date=
(help) - ^ Musil, Steven (01.04.2014). "Zynga begins testing Bitcoin payments for some online games: Game maker partners with BitPay to offer the cryptocurrency as a payment option for virtual goods". cnet.com. CNet. Retrieved 10 February 2014.
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(help) - ^ Kelion, Leo (12 February 2014). "Five arrested in Utopia dark net marketplace crackdown". bbc.co.uk. BBC. Retrieved 13 February 2014.
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(help) - ^ Smith, Gerry (15 April 2013). "How Bitcoin Sales Of Guns Could Undermine New Rules". huffingtonpost.com. TheHuffingtonPost.com, Inc. Retrieved 20 October 2013.
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: Unknown parameter|deadurl=
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suggested) (help). Gawker.- For attention by law enforcement and regulatory bodies, see Lavin, Tim (8 August 2013). "The SEC Shows Why Bitcoin Is Doomed". bloomberg.com. Bloomberg LP. Retrieved 20 October 2013.
- ^ Timothy B. Lee and Hayley Tsukayama (2 October 2013). "Authorities shut down Silk Road, the world's largest Bitcoin-based drug market". The Washington Post. Retrieved 21 October 2013.
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(help)- For Canada, see "Revenue Canada says BitCoins aren't tax exempt". cbc.ca. CBC. 26 April 2013. Retrieved 4 January 2014.
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- For Germany, see Kelesidou, Fani (30 December 2013). "What Does Bitcoin's Memorable Year Mean for the Future?". fool.com. The Motley Fool. Retrieved 4 January 2014.
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- ^ Vaishampayan, Saumya (19 August 2013). "Bitcoins are private money in Germany". Marketwatch. Archived from the original on 1 September 2013.
- ^ Lee, Timothy (20 March 2013). "US regulator Bitcoin Exchanges Must Comply With Money Laundering Laws". Arstechnica.
Bitcoin miners must also register if they trade in their earnings for dollars.
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: Unknown parameter|deadurl=
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suggested) (help) - ^ "Virtual Money Draws Notice of Regulators". The New York Times. 14 November 2013.
- ^ For FBI, see "Bitcoins Virtual Currency: Unique Features Present Challenges for Deterring Illicit Activity" (PDF). Cyber Intelligence Section and Criminal Intelligence Section. FBI. 24 April 2012. Retrieved 20 October 2013.
- For EBA, see "EBA Warning on Virtual Currencies" (PDF). European Banking Authority. Retrieved 13 December 2013.
- ^ Meiklejohn, Sarah; et al. (23 October 2013). "A Fistful of Bitcoins: Characterizing Payments Among Men with No Names" (PDF). Association for Computing Machinery (ACM).
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(help) Paper is explained by Kirk, Jeremy (28 August 2013). "Bitcoin offers privacy-as long as you don't cash out or spend it". PC World. - ^ Leger, Donna (18 November 2013). "Bitcoin: What is it? What should government do?". USA Today. Retrieved 24 November 2013.
- ^ Peter Coogan (17 June 2011). "Bitcoin Botnet Mining". Symantec.com. Retrieved 24 January 2012.
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: Unknown parameter|deadurl=
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suggested) (help) - ^ Goodin, Dan (16 August 2011). "Malware mints virtual currency using victim's GPU". The Register. Retrieved 10 January 2014.
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(help) - ^ "Infosecurity - Researcher discovers distributed bitcoin cracking trojan malware". Infosecurity-magazine.com. 19 August 2011. Retrieved 24 January 2012.
- ^ "Mac OS X Trojan steals processing power to produce Bitcoins - sophos, security, malware, Intego - Vulnerabilities - Security". Techworld. 1 November 2011. Retrieved 24 January 2012.
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(help) - ^ "E-Sports Entertainment settles Bitcoin botnet allegations". BBC News. 20 November 2013. Retrieved 24 November 2013.
- ^ Jeffries, Adrianne. "How to steal Bitcoin in three easy steps". The Verge. Retrieved 17 January 2014.
- ^ Scharr, Jill. "Bitcoin Heist: Millions Vanish from Online Black Market". Tom's Guide. Retrieved 17 January 2014.
- ^ Everett, David. "So how can you steal Bitcoins". Smartcard & Identity News. Retrieved 17 January 2014.
- ^ "Man Throws Away 7,500 Bitcoins, Now Worth $7.5 Million". CBS. Retrieved 23 January 2014.
- ^ Mike Wheatley. "Sheep Marketplace heist – $100M worth of Bitcoin believed stolen as site vanishes from the Deep Web". SiliconANGLE. Retrieved 10 January 2014.
- ^ "There's a £60m Bitcoin heist going down right now, and you can watch in real-time". Newstatesman.com. Retrieved 10 January 2014.
- ^ Staff, Verge (2 December 2013). "Online black market members hunt down $100 million in bitcoins, blame site owners for theft". The Verge. Retrieved 10 January 2014.
External links
- Website of the Bitcoin reference client
- Bitcoin wiki
- Bitcoin Forum
- History of Bitcoin Timeline
- Bitcoin: A Peer-to-Peer Electronic Cash System, the original paper on Bitcoin by Satoshi Nakamoto