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introduction to bitcoin
Bitcoin is a peer-to-peer payment system introduced as open source software in 2009 by developer Satoshi Nakamoto. The digital currency created and used in the system is also called bitcoin and is alternatively referred to as a virtual currency, electronic money, or cryptocurrency. The bitcoin system is not controlled by a single entity, like a central bank, which has led the US Treasury to call bitcoin a decentralized currency.

Bitcoins are created as a reward for payment processing work in which users who offer their computing power verify and record payments into a public ledger. Called mining, individuals engage in this activity in exchange for transaction fees and newly minted bitcoins. Besides mining, bitcoins can be obtained in exchange for other currencies, products, and services. Users can buy, send, and receive bitcoins electronically for a nominal fee using wallet software on a personal computer, mobile device, or a web application.

Bitcoin as a form of payment for products and services has seen growth, and merchants have an incentive to accept the currency because transaction fees are lower than the 2–3% typically imposed by credit card processors. The European Banking Authority has warned that bitcoin lacks consumer protections. Bitcoins can be stolen and chargebacks are impossible. Commercial use of bitcoin is currently small compared to its use by speculators, which has fueled price volatility.

Bitcoin has been a subject of scrutiny amid concerns that it can be used for illegal activities. In October 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 have restricted bitcoin exchange for local
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