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'''Bitcoin''' is a decentralized electronic currency system that is utilized through peer-to-peer networking. The network uses electronic signatures and other cryptographic proofs in order to conduct trades. Bitcoin has no centralized bank to make more bitcoin, so inflation and other devaluing of the currency would seemingly not be plausible. However the exchange rate between bitcoin and conventional currencies have fluctuated a large amount due to the amount of bitcoin held by speculators and a fear of government regulation and the lack of liquidity in the market for exchanging bitcoin for various conventional currency.

'''Bitcoin''' is a decentralized electronic currency system that is utilized through peer-to-peer networking. The network uses electronic signatures and other cryptographic proofs in order to conduct trades. Bitcoin has no centralized bank to make more bitcoin, so inflation and other devaluing of the currency would seemingly not be plausible. However the exchange rate between bitcoin and conventional currencies have fluctuated a large amount due to the amount of bitcoin held by speculators and a fear of government regulation and the lack of liquidity in the market for exchanging bitcoin for various conventional currency.

The bitcoin system was defined in a 2008 paper and then implemented in a set of open-source software issued in January 2009 by Satoshi Nakamoto, although third-party reviewers have questioned whether this is a ''nom de plume'' for one individual or a collective group of people.<ref>{{cite web|url=http://www.bitcoinfaststart.com/what-is-bitcoin/|title=What Is A Bitcoin And Is Bitcoin Money? - BitcoinFastStart.com|date=6 April 2014|accessdate=30 October 2014|quote=Bitcoin was introduced in January 2009 by someone named Satoshi Nakamoto. There has been much controversy since as to whether he is a real person, or a group of people, what his real name is and where he or they might live. There are reasons for this confusion. For example, the initial published research papers that the currency was founded upon have been analysed and there seem to be some grammatical differences between the use of American and English English, leading some people to suggest that Satoshi Nakamoto is actually a collective name for more than one person.}}</ref> All bitcoin transfers are recorded in a public ledger that uses cryptography to insure its autheticity and to prevent tampering.  This ledger will grow very long as more bitcoin transactions occur, so the ledger is divided into block with the blocks linked together to form a block-chain.  A large number of mathematical calculations are needed to maintain the block chain, so the bitcoin protocol provides a financial payment (in bitcoin) to the people who update the block-chain.  The process of updating the block-chain in exchange for a set amount of bitcoin is called "bitcoin mining."

The bitcoin system was defined in a 2008 paper and then implemented in a set of open-source software issued in January 2009 by Satoshi Nakamoto, although third-party reviewers have questioned whether this is a ''nom de plume'' for one individual or a collective group of people.<ref>{{cite web|url=http://www.bitcoinfaststart.com/what-is-bitcoin/|title=What Is A Bitcoin And Is Bitcoin Money?|date=6 April 2014|accessdate=30 October 2014|quote=Bitcoin was introduced in January 2009 by someone named Satoshi Nakamoto. There has been much controversy since as to whether he is a real person, or a group of people, what his real name is and where he or they might live. There are reasons for this confusion. For example, the initial published research papers that the currency was founded upon have been analysed and there seem to be some grammatical differences between the use of American and English English, leading some people to suggest that Satoshi Nakamoto is actually a collective name for more than one person.}}</ref> All bitcoin transfers are recorded in a public ledger that uses cryptography to insure its autheticity and to prevent tampering.  This ledger will grow very long as more bitcoin transactions occur, so the ledger is divided into block with the blocks linked together to form a block-chain.  A large number of mathematical calculations are needed to maintain the block chain, so the bitcoin protocol provides a financial payment (in bitcoin) to the people who update the block-chain.  The process of updating the block-chain in exchange for a set amount of bitcoin is called "bitcoin mining."

As with cash transactions, a bitcoin transaction is final and irrevocable.<ref>{{cite web|url=http://www.americanbanker.com/bankthink/the-last-straw-for-bitcoin-1059608-1.html|title=The Last Straw for Bitcoin|last=Straus|first=Ryan|date=5 June 2013|publisher=American Banker|accessdate=30 October 2014|quote=Yet those dealing in bitcoins are now themselves considered financial institutions. To survive, these businesses will have to do more than "de-anonymize" their operations. They will also have to cope with the loss of Bitcoin's most fundamental characteristic: irrevocability.}}</ref>  Although bitcoin transactions are linked to specific accounts, those accounts do not have to be identified with the real names of their owners.  So, bitcoin provides its users with more privacy than comes with using credit cards or electronic bank transfers.  In addition, the transaction costs for bitcoin transfers is much lower than the typical transaction cost of credit card purchases.

As with cash transactions, a bitcoin transaction is final and irrevocable.<ref>{{cite web|url=http://www.americanbanker.com/bankthink/the-last-straw-for-bitcoin-1059608-1.html|title=The Last Straw for Bitcoin|last=Straus|first=Ryan|date=5 June 2013|publisher=American Banker|accessdate=30 October 2014|quote=Yet those dealing in bitcoins are now themselves considered financial institutions. To survive, these businesses will have to do more than "de-anonymize" their operations. They will also have to cope with the loss of Bitcoin's most fundamental characteristic: irrevocability.}}</ref>  Although bitcoin transactions are linked to specific accounts, those accounts do not have to be identified with the real names of their owners.  So, bitcoin provides its users with more privacy than comes with using credit cards or electronic bank transfers.  In addition, the transaction costs for bitcoin transfers is much lower than the typical transaction cost of credit card purchases.