View source for Design of bitcoin

{{Main article|Bitcoin}}
[[File:Secp256k1.png|thumb|Graph of the elliptic curve named secp256k1 in [[real coordinate space]]]]
Bitcoin is based on an [[elliptic curve]] called "''secp256k1''" and encrypted with the [[ECDSA]] algorithm. The equation for the Bitcoin secp256k1 curve is <math>y</math><sup>2</sup>=<math>x</math><sup>3</sup>+7.<ref>{{cite journal |last1=Houria |first1=Azine |last2=Mohamed Abdelkader |first2=Bencherif |last3=Abderezzak |first3=Guessoum |title=A comparison between the secp256r1 and the koblitz secp256k1 bitcoin curves |journal=Indonesian Journal of Electrical Engineering and Computer Science |date=2019-03-01 |volume=13 |issue=3 |pages=910 |doi=10.11591/ijeecs.v13.i3.pp910-918}}</ref> Bitcoin has a proposed Bitcoin Improvement Proposal (BIP) that would add support for [[Schnorr signature]]s.<ref name="BP A Look">{{Cite book |last1=Van Hijfte |first1=Stijn |title=Blockchain Platforms: A Look at the Underbelly of Distributed Platforms |publisher=Morgan & Claypool Publishers |year=2020 |isbn=9781681738925}}</ref>{{rp|101}}

===Units and divisibility===
The [[unit of account]] of the bitcoin system is a ''bitcoin''. [[Ticker symbol]]s used to represent bitcoin are BTC{{efn|name=BTCcode|{{as of | 2014}}, BTC is a commonly used code. It does not conform to [[ISO 4217]] as BT is the country code of Bhutan, and ISO 4217 requires the first letter used in global commodities to be 'X'.}} and XBT.{{efn|name=XBTcode|{{as of | 2014}}, XBT, a code that conforms to ISO 4217 though is not officially part of it, is used by [[Bloomberg L.P.]],<ref>{{Cite news |last=Romain Dillet |date=9 August 2013 |title=Bitcoin Ticker Available On Bloomberg Terminal For Employees |work=[[TechCrunch]] |url=https://techcrunch.com/2013/08/09/bitcoin-ticker-available-on-bloomberg-terminal/ |url-status=live |access-date=2 November 2014 |archive-url=https://web.archive.org/web/20141101232825/http://techcrunch.com/2013/08/09/bitcoin-ticker-available-on-bloomberg-terminal/ |archive-date=1 November 2014}}</ref> [[CNNMoney]],<ref>{{Cite news |title=Bitcoin Composite Quote (XBT) |work=CNN Money |publisher=CNN |url=https://money.cnn.com/quote/quote.html?symb=XBT |url-status=live |access-date=2 November 2014 |archive-url=https://web.archive.org/web/20141027100208/https://money.cnn.com/quote/quote.html?symb=xbt |archive-date=27 October 2014}}</ref> and [[xe.com]].<ref>{{Cite web |title=XBT – Bitcoin |url=http://www.xe.com/currency/xbt-bitcoin |url-status=live |archive-url=https://web.archive.org/web/20141102111801/http://www.xe.com/currency/xbt-bitcoin |archive-date=2 November 2014 |access-date=2 November 2014 |publisher=xe.com}}</ref>}}<ref name="btcregs">{{Cite web |date=January 2014 |title=Regulation of Bitcoin in Selected Jurisdictions |url=https://www.loc.gov/law/help/bitcoin-survey/regulation-of-bitcoin.pdf |url-status=live |archive-url=https://web.archive.org/web/20141014012832/http://www.loc.gov/law/help/bitcoin-survey/regulation-of-bitcoin.pdf |archive-date=14 October 2014 |access-date=26 August 2014 |publisher=The Law Library of Congress, Global Legal Research Center}}</ref>{{rp|2}} Its [[Unicode]] character is ₿. Small amounts of bitcoin used as alternative units are millibitcoin (mBTC), and ''satoshi'' (sat). Named in homage to bitcoin's creator, a ''satoshi'' is the smallest amount within bitcoin representing {{frac|1|{{val|100000000}}}} bitcoins, one hundred millionth of a bitcoin. A millibitcoin equals {{frac|1|1000}} bitcoins; one thousandth of a bitcoin or 100,000 ''satoshis''.<ref>{{Cite news |last1=Katie Pisa |last2=Natasha Maguder |date=9 July 2014 |title=Bitcoin your way to a double espresso |work=cnn.com |publisher=CNN |url=http://edition.cnn.com/2014/06/18/business/bitcoin-your-way-to-a-double-espresso/ |url-status=live |access-date=23 April 2015 |archive-url=https://web.archive.org/web/20150618072429/http://edition.cnn.com/2014/06/18/business/bitcoin-your-way-to-a-double-espresso/ |archive-date=18 June 2015 |name-list-style=amp}}</ref>

===Blockchain===
[[File:Bitcoin Block Data.png|thumb|Data structure of blocks in the ledger.]]
{{multiple image
|image1=BTC number of transactions per month.svg
|caption1=Number of bitcoin transactions per month, semilogarithmic plot<ref name="Blockchair.com">{{Cite web |title=Blockchair |url=https://blockchair.com |url-status=live |archive-url=https://web.archive.org/web/20191013042308/https://blockchair.com/ |archive-date=13 October 2019 |access-date=13 October 2019 |website=Blockchair.com}}</ref>
|image2=Utxo-count.svg
|caption2=Number of [[unspent transaction output]]s<ref name="Blockchain.info" />
}}
{{Broader|Blockchain}}

The bitcoin [[blockchain]] is a public [[ledger]] that records bitcoin transactions.{{r|econbc}} It is implemented as a chain of ''blocks'', each block containing a hash of the previous block up to the genesis block{{efn|The genesis block is the block number 0. The timestamp of the block is 2009-01-03 18:15:05. This block is unlike all other blocks in that it does not have a previous block to reference.}} of the chain. A [[computer network|network]] of communicating nodes running bitcoin software maintains the blockchain.<ref name="JEP" />{{rp|215–219}} Transactions of the form ''payer X sends Y bitcoins to payee Z'' are [[Broadcasting (networking)|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.<ref name="f_c2">{{Cite news |last=Sparkes, Matthew |date=9 June 2014 |title=The coming digital anarchy |work=The Daily Telegraph |location=London |url=https://www.telegraph.co.uk/technology/news/10881213/The-coming-digital-anarchy.html |url-status=live |access-date=7 January 2015 |archive-url=https://web.archive.org/web/20150123190900/http://www.telegraph.co.uk/technology/news/10881213/The-coming-digital-anarchy.html |archive-date=23 January 2015}}</ref> 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 [[Banknote|bills]] or [[promissory note]]s that exist apart from it, but the blockchain is the only place that bitcoins can be said to exist in the form of [[unspent outputs of transactions]].<ref name="Antonopoulos2014" />{{rp|ch. 5}}

Individual blocks, public addresses and transactions within blocks can be examined using a blockchain explorer.{{cn|date=April 2021}}

===Supply===
[[File:Total-bitcoins.svg|thumb|Total bitcoins in circulation.<ref name="Blockchain.info" />]]

The successful miner finding the new block is allowed by the rest of the network to reward themselves with newly created bitcoins and transaction fees.<ref name="bloombergvance111413">{{Cite magazine |last=Ashlee Vance |date=14 November 2013 |title=2014 Outlook: Bitcoin Mining Chips, a High-Tech Arms Race |url=http://www.businessweek.com/articles/2013-11-14/2014-outlook-bitcoin-mining-chips-a-high-tech-arms-race |url-status=live |magazine=Businessweek |archive-url=https://web.archive.org/web/20131121225123/http://www.businessweek.com/articles/2013-11-14/2014-outlook-bitcoin-mining-chips-a-high-tech-arms-race |archive-date=21 November 2013 |access-date=24 November 2013}}</ref> {{as of|2020|05|11}}, the reward amounted to 6.25 newly created bitcoins per block added to the blockchain, plus any transaction fees from payments processed by the block.<ref name=CNBCHalving>{{cite news |last1=Browne |first1=Ryan |title=Bitcoin investors are bracing for a key technical event — here's what you need to know |url=https://www.cnbc.com/2020/05/11/bitcoin-halving-heres-what-you-need-to-know.html |work=CNBC |date=2020-05-11 |language=en}}</ref> To mine half of the supply of bitcoins took four years but the remainder will take another 120 years, because of an artificial process called "bitcoin halving" according to which miners are compensated by fewer BTC as time goes on.<ref name=CNBCHalving></ref> To claim the reward, a special transaction called a ''coinbase'' is included with the processed payments.<ref name="Antonopoulos2014" />{{rp|ch. 8}} All bitcoins in existence have been created in such coinbase transactions. The [[bitcoin protocol]] specifies that the reward for adding a block will be halved every 210,000 blocks (approximately every four years). Eventually, the reward will decrease to zero, and the limit of 21 million bitcoins{{efn|The exact number is 20,999,999.9769 bitcoins.{{r|Antonopoulos2014|page=ch. 8}}}} will be reached {{circa}} 2140; the record keeping will then be rewarded solely by transaction fees.<ref name="KWY">{{Cite web |last1=Ritchie S. King |last2=Sam Williams |last3=David Yanofsky |date=17 December 2013 |title=By reading this article, you're mining bitcoins |url=http://qz.com/154877/by-reading-this-page-you-are-mining-bitcoins/ |url-status=live |archive-url=https://web.archive.org/web/20131217221429/http://qz.com/154877/by-reading-this-page-you-are-mining-bitcoins/ |archive-date=17 December 2013 |access-date=17 December 2013 |website=qz.com |publisher=Atlantic Media Co}}</ref>

In other words, Nakamoto set a [[monetary policy]] based on [[artificial scarcity]] at bitcoin's inception that the total number of bitcoins could never exceed 21&nbsp;million. New bitcoins are created roughly every ten minutes and the rate at which they are generated drops by half about every four years until all will be in [[Circulation (currency)|circulation]].<ref>{{Cite news |last=Shin |first=Laura |date=24 May 2016 |title=Bitcoin Production Will Drop By Half In July, How Will That Affect The Price? |work=Forbes |url=https://www.forbes.com/sites/laurashin/2016/05/24/bitcoin-production-will-drop-by-half-in-july-how-will-that-affect-the-price/ |url-status=live |access-date=13 July 2016 |archive-url=https://web.archive.org/web/20160524141916/http://www.forbes.com/sites/laurashin/2016/05/24/bitcoin-production-will-drop-by-half-in-july-how-will-that-affect-the-price/ |archive-date=24 May 2016}}</ref>

===Transactions===
{{See also|Bitcoin network}}

Transactions are defined using a [[Forth (programming language)|Forth]]-like scripting language.{{r|Antonopoulos2014|p=ch. 5}} Transactions consist of one or more ''inputs'' and one or more ''outputs''. When a user sends bitcoins, the user designates each address and the amount of bitcoin being sent to that address in an output. To prevent double spending, each input must refer to a previous unspent output in the blockchain.<ref name="EconOfBTC">{{Cite web |last1=Joshua A. Kroll |last2=Ian C. Davey |last3=Edward W. Felten |date=11–12 June 2013 |title=The Economics of Bitcoin Mining, or Bitcoin in the Presence of Adversaries |url=http://www.econinfosec.org/archive/weis2013/papers/KrollDaveyFeltenWEIS2013.pdf |url-status=live |archive-url=https://web.archive.org/web/20160509053819/http://www.econinfosec.org/archive/weis2013/papers/KrollDaveyFeltenWEIS2013.pdf |archive-date=9 May 2016 |access-date=26 April 2016 |website=The Twelfth Workshop on the Economics of Information Security (WEIS 2013) |quote=A transaction fee is like a tip or gratuity left for the miner.}}</ref> The use of multiple inputs corresponds to the use of multiple coins in a cash transaction. Since transactions can have multiple outputs, users can send bitcoins to multiple recipients in one transaction. As in a cash transaction, the sum of inputs (coins used to pay) can exceed the intended sum of payments. In such a case, an additional output is used, returning the change back to the payer.<ref name="EconOfBTC" /> Any input ''satoshis'' not accounted for in the transaction outputs become the transaction fee.<ref name="EconOfBTC" />

Though transaction fees are optional, miners can choose which transactions to process and prioritize those that pay higher fees.<ref name="EconOfBTC" /> Miners may choose transactions based on the fee paid relative to their storage size, not the absolute amount of money paid as a fee. These fees are generally measured in ''satoshis per byte (sat/b)''. The size of transactions is dependent on the number of inputs used to create the transaction, and the number of outputs.<ref name="Antonopoulos2014" />{{rp|ch. 8}}

The blocks in the blockchain were originally limited to 32 [[megabyte]]s in size. The block size limit of one [[megabyte]] was introduced by Satoshi Nakamoto in 2010. Eventually the block size limit of one megabyte created [[Bitcoin scalability problem|problems]] for transaction processing, such as increasing transaction fees and delayed processing of transactions.<ref>{{Cite news |last=Orcutt |first=Mike |date=19 May 2015 |title=Leaderless Bitcoin Struggles to Make Its Most Crucial Decision |work=MIT Technology Review |url=https://www.technologyreview.com/s/537486/leaderless-bitcoin-struggles-to-make-its-most-crucial-decision/ |url-status=live |access-date=22 June 2017 |archive-url=https://wayback.archive-it.org/all/20171018075515/https://www.technologyreview.com/s/537486/leaderless-bitcoin-struggles-to-make-its-most-crucial-decision/ |archive-date=18 October 2017}}</ref> [[Andreas Antonopoulos]] has stated [[Lightning Network]] is a potential scaling solution and referred to lightning as a second layer routing network.<ref name="Antonopoulos2014">{{Cite book |last=Antonopoulos, Andreas M. |title=Mastering Bitcoin: Unlocking Digital Crypto-Currencies |date=April 2014 |publisher=O'Reilly Media |isbn=978-1-4493-7404-4 |author-link=Andreas Antonopoulos}}</ref>{{rp|ch. 8}}

===Ownership===
[[File:Bitcoin Transaction Visual.svg|thumb|Simplified chain of ownership as illustrated in the bitcoin whitepaper. In practice, a transaction can have more than one input and more than one output.<ref name="EconOfBTC" />]]

In the blockchain, bitcoins are registered to bitcoin addresses. Creating a bitcoin address requires nothing more than picking a random valid private key and computing the corresponding bitcoin address. This computation can be done in a split second. But the reverse, computing the private key of a given bitcoin address, is practically unfeasible.<ref name="Antonopoulos2014" />{{rp|ch. 4}} Users can tell others or make public a bitcoin address without compromising its corresponding private key. Moreover, the number of valid private keys is so vast that it is extremely unlikely someone will compute a key-pair that is already in use and has funds. The vast number of valid private keys makes it unfeasible that brute force could be used to compromise a private key. To be able to spend their bitcoins, the owner must know the corresponding [[private key]] and [[digital signature|digitally sign]] the transaction. The network verifies the signature using the [[public key]]; the private key is never revealed.<ref name="Antonopoulos2014" />{{rp|ch. 5}}

If the private key is lost, the [[bitcoin network]] will not recognize any other evidence of ownership;<ref name="JEP" /> the coins are then unusable, and effectively lost. For example, in 2013 one user claimed to have lost 7,500 bitcoins, worth $7.5 million at the time, when he accidentally discarded a hard drive containing his private key.<ref>{{Cite news |date=29 November 2013 |title=Man Throws Away 7,500 Bitcoins, Now Worth $7.5 Million |work=CBS DC |url=http://washington.cbslocal.com/2013/11/29/man-throws-away-7500-bitcoins-now-worth-7-5-million/ |url-status=live |access-date=23 January 2014 |archive-url=https://web.archive.org/web/20140115062630/http://washington.cbslocal.com/2013/11/29/man-throws-away-7500-bitcoins-now-worth-7-5-million/ |archive-date=15 January 2014}}</ref> About 20% of all bitcoins are believed to be lost -they would have had a market value of about $20 billion at July 2018 prices.<ref name="wsjlost">{{Cite news |last=Krause |first=Elliott |date=5 July 2018 |title=A Fifth of All Bitcoin Is Missing. These Crypto Hunters Can Help |work=The Wall Street Journal |url=https://www.wsj.com/articles/a-fifth-of-all-bitcoin-is-missing-these-crypto-hunters-can-help-1530798731 |url-status=live |access-date=8 July 2018 |archive-url=https://web.archive.org/web/20180709010939/https://www.wsj.com/articles/a-fifth-of-all-bitcoin-is-missing-these-crypto-hunters-can-help-1530798731 |archive-date=9 July 2018}}</ref>

To ensure the security of bitcoins, the private key must be kept secret.<ref name="Antonopoulos2014" />{{rp|ch. 10}} If the private key is revealed to a third party, e.g. through a [[data breach]], the third party can use it to [[Cryptocurrency and security#Bitcoin|steal any associated bitcoins]].<ref>{{Cite news |last=Jeffries |first=Adrianne |date=19 December 2013 |title=How to steal Bitcoin in three easy steps |work=The Verge |url=https://www.theverge.com/2013/12/19/5183356/how-to-steal-bitcoin-in-three-easy-steps |url-status=live |access-date=17 January 2014 |archive-url=https://web.archive.org/web/20190727141228/https://www.theverge.com/2013/12/19/5183356/how-to-steal-bitcoin-in-three-easy-steps |archive-date=27 July 2019}}</ref> {{Asof|2017|12}}, around 980,000 bitcoins have been stolen from [[cryptocurrency exchange]]s.<ref name="harney">{{Cite news |last1=Harney |first1=Alexandra |last2=Stecklow |first2=Steve |date=16 November 2017 |title=Twice burned - How Mt. Gox's bitcoin customers could lose again |language=en |work=Reuters |url=https://www.reuters.com/investigates/special-report/bitcoin-gox/ |url-status=live |access-date=6 September 2018 |archive-url=https://web.archive.org/web/20190829052101/https://www.reuters.com/investigates/special-report/bitcoin-gox/ |archive-date=29 August 2019}}</ref>

Regarding ownership distribution, as of 16 March 2018, 0.5% of bitcoin wallets own 87% of all bitcoins ever mined.<ref>{{Cite news |last=Martindale |first=Jon |date=16 March 2018 |title=Who owns all the Bitcoin? A few billionaire whales in a small pond |work=Digital Trends |url=https://www.digitaltrends.com/computing/who-owns-all-the-bitcoin/ |url-status=live |access-date=1 July 2019 |archive-url=https://web.archive.org/web/20190630234800/https://www.digitaltrends.com/computing/who-owns-all-the-bitcoin/ |archive-date=30 June 2019}}</ref>

===Mining===
{{See also|Bitcoin network#Mining}}

{{multiple image
|total_width=480
|image1=Minage de crypto-monnaie (2).jpg
|caption1=Early bitcoin miners used [[graphics processing unit|GPUs]] for mining, as they were better suited to the [[proof-of-work]] algorithm than [[central processing unit|CPUs]].<ref>{{Cite web |title=Bitcoin mania is hurting PC gamers by pushing up GPU prices |date=30 January 2018 |url=https://www.theverge.com/2018/1/30/16949550/bitcoin-graphics-cards-pc-prices-surge |url-status=live |archive-url=https://web.archive.org/web/20180202070911/https://www.theverge.com/2018/1/30/16949550/bitcoin-graphics-cards-pc-prices-surge |archive-date=2 February 2018 |access-date=2 February 2018}}</ref>
|image2=USB Erupter.jpg
|caption2=Later amateurs mined bitcoins with specialized [[Field-programmable gate array|FPGA]] and [[Application-specific integrated circuit|ASIC]] chips. The chips pictured have become obsolete due to increasing difficulty.
|image3=Cryptocurrency Mining Farm.jpg
|caption3=Today, bitcoin mining companies dedicate facilities to housing and operating large amounts of high-performance mining hardware.<ref>{{Cite web |date=26 January 2018 |title=Cryptocurrency mining operation launched by Iron Bridge Resources |url=http://www.worldoil.com/news/2018/1/26/cryptocurrency-mining-operation-launched-by-iron-bridge-resources |url-status=live |archive-url=https://web.archive.org/web/20180130091353/http://www.worldoil.com/news/2018/1/26/cryptocurrency-mining-operation-launched-by-iron-bridge-resources |archive-date=30 January 2018 |website=World Oil}}</ref>
}}
[[File:History of Bitcoin difficulty.svg|thumb|[[Semi-log plot]] of relative mining difficulty{{efn|Relative mining difficulty is defined as the ratio of the difficulty target on 9 January 2009 to the current difficulty target.}}<ref name="Blockchain.info">{{Cite web |title=Charts |url=https://blockchain.info/charts |url-status=live |archive-url=https://web.archive.org/web/20141103020741/http://blockchain.info/charts |archive-date=3 November 2014 |access-date=2 November 2014 |publisher=[[Blockchain.info]]}}</ref>]]

''Mining'' is a record-keeping service done through the use of computer [[processing power]].{{efn|It is misleading to think that there is an analogy between gold mining and bitcoin mining. The fact is that gold miners are rewarded for producing gold, while bitcoin miners are not rewarded for producing bitcoins; they are rewarded for their record-keeping services.<ref name="Andolfatto2014-03">{{Cite web |last=Andolfatto, David |date=31 March 2014 |title=Bitcoin and Beyond: The Possibilities and Pitfalls of Virtual Currencies |url=http://www.stlouisfed.org/dialogue-with-the-fed/assets/Bitcoin-3-31-14.pdf |url-status=live |archive-url=https://web.archive.org/web/20140409044505/http://www.stlouisfed.org/dialogue-with-the-fed/assets/Bitcoin-3-31-14.pdf |archive-date=9 April 2014 |access-date=16 April 2014 |website=Dialogue with the Fed |publisher=Federal Reserve Bank of St. Louis}}</ref>}} Miners keep the blockchain consistent, complete, and unalterable by repeatedly grouping newly broadcast transactions into a ''block'', which is then broadcast to the network and verified by recipient nodes.<ref name="econbc">{{Cite news |date=31 October 2015 |title=The great chain of being sure about things |work=The Economist |publisher=The Economist Newspaper Limited |url=https://www.economist.com/news/briefing/21677228-technology-behind-bitcoin-lets-people-who-do-not-know-or-trust-each-other-build-dependable |url-status=live |access-date=3 July 2016 |archive-url=https://web.archive.org/web/20160703000844/http://www.economist.com/news/briefing/21677228-technology-behind-bitcoin-lets-people-who-do-not-know-or-trust-each-other-build-dependable |archive-date=3 July 2016}}</ref> Each block contains a [[SHA-256]] [[cryptographic hash]] of the previous block,<ref name="econbc" /> thus linking it to the previous block and giving the blockchain its name.<ref name="Antonopoulos2014" />{{rp|ch. 7}}<ref name="econbc" />

To be accepted by the rest of the network, a new block must contain a ''[[Proof-of-work system#Bitcoin-type proof of work|proof-of-work]]'' (PoW).<ref name="econbc" /> The system used is based on [[Adam Back]]'s 1997 anti-[[email spam|spam]] scheme, [[Hashcash]].<ref>{{cite journal |last1=Sherman |first1=Alan |last2=Javani |first2=Farid |last3=Golaszewski |first3=Enis |date=25 March 2019 |title=On the Origins and Variations of Blockchain Technologies |journal=IEEE Security and Policy |volume=17 |issue=1 |pages=72–77 |arxiv=1810.06130 |doi=10.1109/MSEC.2019.2893730 |s2cid=53114747}}</ref>{{failed verification|reason=the source confirms that the white paper cites Back's article, not the formulation used here|date=July 2019}} The PoW requires miners to find a number called a ''[[cryptographic nonce|nonce]]'', such that when the block content is [[cryptographic hash|hashed]] along with the nonce, the result is numerically smaller than the network's difficulty target.<ref name="Antonopoulos2014" />{{rp|ch. 8}} This proof is easy for any node in the network to verify, but extremely time-consuming to generate, as for a secure cryptographic hash, miners must try many different nonce values (usually the sequence of tested values is the ascending natural numbers: 0, 1, 2, 3, ...<ref name="Antonopoulos2014" />{{rp|ch. 8}}) before meeting the difficulty target.

Every 2,016 blocks (approximately 14 days at roughly 10 min per block), the difficulty target is adjusted based on the network's recent performance, with the aim of keeping the average time between new blocks at ten minutes. In this way the system automatically adapts to the total amount of mining power on the network.<ref name="Antonopoulos2014" />{{rp|ch. 8}} Between 1 March 2014 and 1 March 2015, the average number of nonces miners had to try before creating a new block increased from 16.4 quintillion to 200.5 quintillion.<ref name="diffhistory">{{Cite web |title=Difficulty History |url=https://blockchain.info/charts/difficulty?timespan=all&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address= |url-status=live |archive-url=https://web.archive.org/web/20150408212548/https://blockchain.info/charts/difficulty?timespan=all&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address= |archive-date=8 April 2015 |access-date=26 March 2015 |publisher=Blockchain.info |type=The ratio of all hashes over valid hashes is D x 4,295,032,833, where D is the published "Difficulty" figure.}}</ref>

The proof-of-work system, alongside the chaining of blocks, makes modifications of the blockchain extremely hard, as an attacker must modify all subsequent blocks in order for the modifications of one block to be accepted.<ref>{{Cite news |last=Hampton |first=Nikolai |date=5 September 2016 |title=Understanding the blockchain hype: Why much of it is nothing more than snake oil and spin |work=Computerworld |publisher=IDG |url=http://www.computerworld.com.au/article/606253/understanding-blockchain-hype-why-much-it-nothing-more-than-snake-oil-spin/ |url-status=live |access-date=5 September 2016 |archive-url=https://web.archive.org/web/20160906171838/http://www.computerworld.com.au/article/606253/understanding-blockchain-hype-why-much-it-nothing-more-than-snake-oil-spin/ |archive-date=6 September 2016}}</ref> As new blocks are mined all the time, the difficulty of modifying a block increases as time passes and the number of subsequent blocks (also called ''confirmations'' of the given block) increases.<ref name="econbc" />

Computing power is often bundled together by a [[Mining pool]] to reduce variance in miner income. Individual mining rigs often have to wait for long periods to confirm a block of transactions and receive payment. In a pool, all participating miners get paid every time a participating server solves a block. This payment depends on the amount of work an individual miner contributed to help find that block.<ref name="Techcrunch12">{{Cite web |last=Biggs |first=John |date=8 April 2013 |title=How To Mine Bitcoins |url=https://techcrunch.com/2013/04/08/how-to-mine-bitcoins/ |url-status=live |archive-url=https://web.archive.org/web/20170706132517/https://techcrunch.com/2013/04/08/how-to-mine-bitcoins/ |archive-date=6 July 2017 |publisher=Techcrunch}}</ref>

===Wallets===
{{Broader|Cryptocurrency wallet}}
{{multiple image
| total_width = 416
| image1 = Screenshot of Bitcoin-qt-0.5.2.png
| caption1 = Bitcoin Core, a full client
| image2 = Electrum Bitcoin Wallet.png
| caption2 = Electrum, a lightweight client
| align = 
| direction = 
| alt1 = 
}}

The first wallet program, simply named ''Bitcoin'', and sometimes referred to as the ''Satoshi client'', was released in 2009 by Satoshi Nakamoto as [[open-source software]]. In version 0.5 the client moved from the [[wxWidgets]] user interface toolkit to [[Qt (software)|Qt]], and the whole bundle was referred to as ''Bitcoin-Qt''.<ref name="Bitcoin Clients">{{Cite thesis |last=Skudnov |first=Rostislav |title=Bitcoin Clients |publisher=[[Turku University of Applied Sciences]] |url=http://publications.theseus.fi/bitstream/handle/10024/47166/Skudnov_Rostislav.pdf?sequence=1 |type=Bachelor's Thesis |year=2012 |access-date=16 January 2014 |url-status=live |archive-url=https://web.archive.org/web/20140118104507/http://publications.theseus.fi/bitstream/handle/10024/47166/Skudnov_Rostislav.pdf?sequence=1 |archive-date=18 January 2014}}</ref> After the release of version 0.9, the software bundle was renamed ''Bitcoin Core'' to distinguish itself from the underlying network.<ref>{{Cite web |title=Bitcoin Core version 0.9.0 released |url=https://bitcoin.org/en/release/v0.9.0 |url-status=live |archive-url=https://web.archive.org/web/20150227213613/https://bitcoin.org/en/release/v0.9.0 |archive-date=27 February 2015 |access-date=8 January 2015 |website=bitcoin.org}}</ref><ref>{{Cite news |last=Metz |first=Cade |date=19 August 2015 |title=The Bitcoin Schism Shows the Genius of Open Source |work=Wired |publisher=Condé Nast |url=https://www.wired.com/2015/08/bitcoin-schism-shows-genius-open-source/ |url-status=live |access-date=3 July 2016 |archive-url=https://web.archive.org/web/20160630230101/http://www.wired.com/2015/08/bitcoin-schism-shows-genius-open-source |archive-date=30 June 2016}}</ref> Bitcoin Core is, perhaps, the best known implementation or client. Alternative clients ([[fork (software development)|forks]] of Bitcoin Core) exist, such as [[Bitcoin XT]], [[Bitcoin Unlimited]],<ref name="breakingup">{{Cite news |last=Vigna |first=Paul |date=17 January 2016 |title=Is Bitcoin Breaking Up? |work=The Wall Street Journal |url=https://www.wsj.com/articles/is-bitcoin-breaking-up-1453044493 |url-status=live |access-date=8 November 2016 |archive-url=https://web.archive.org/web/20160820144312/http://www.wsj.com/articles/is-bitcoin-breaking-up-1453044493 |archive-date=20 August 2016}}</ref> and Parity Bitcoin.<ref>{{Cite news |last=Allison |first=Ian |date=28 April 2017 |title=Ethereum co-founder Dr Gavin Wood and company release Parity Bitcoin |work=International Business Times |url=http://www.ibtimes.co.uk/ethereum-co-founder-dr-gavin-wood-company-release-parity-bitcoin-1619025 |url-status=live |access-date=28 April 2017 |archive-url=https://web.archive.org/web/20170428032027/http://www.ibtimes.co.uk/ethereum-co-founder-dr-gavin-wood-company-release-parity-bitcoin-1619025 |archive-date=28 April 2017}}</ref>

A wallet stores the information necessary to transact bitcoins. While wallets are often described as a place to hold<ref>{{Cite web |last1=Adam Serwer |last2=Dana Liebelson |date=10 April 2013 |title=Bitcoin, Explained |url=https://www.motherjones.com/politics/2013/04/what-is-bitcoin-explained |url-status=live |archive-url=https://web.archive.org/web/20140427022315/https://www.motherjones.com/politics/2013/04/what-is-bitcoin-explained |archive-date=27 April 2014 |access-date=26 April 2014 |website=motherjones.com |publisher=Mother Jones |name-list-style=amp}}</ref> or store bitcoins, due to the nature of the system, bitcoins are inseparable from the blockchain transaction ledger. A wallet is more correctly defined as something that "stores the digital credentials for your bitcoin holdings" and allows one to access (and spend) them.{{r|Antonopoulos2014|p=ch. 1, glossary}} Bitcoin uses [[public-key cryptography]], in which two cryptographic keys, one public and one private, are generated.<ref name="Economist113013Pressure">{{Cite news |date=30 November 2013 |title=Bitcoin: Bitcoin under pressure |work=The Economist |url=https://www.economist.com/news/technology-quarterly/21590766-virtual-currency-it-mathematically-elegant-increasingly-popular-and-highly |url-status=live |access-date=30 November 2013 |archive-url=https://web.archive.org/web/20131130032403/http://www.economist.com/news/technology-quarterly/21590766-virtual-currency-it-mathematically-elegant-increasingly-popular-and-highly |archive-date=30 November 2013}}</ref> At its most basic, a wallet is a collection of these keys.

There are several modes which wallets can operate in. They have an inverse relationship with regards to trustlessness and computational requirements.
* ''Full clients'' verify transactions directly by downloading a full copy of the blockchain (over 150&nbsp;GB {{as of|2018|January|lc=y}}).<ref>{{Cite web |title=Blockchain Size |url=https://blockchain.info/charts/blocks-size |url-status=live |archive-url=https://web.archive.org/web/20170527050820/https://blockchain.info/charts/blocks-size |archive-date=27 May 2017 |access-date=16 January 2018 |website=Blockchain.info}}</ref> They are the most secure and reliable way of using the network, as trust in external parties is not required. Full clients check the validity of mined blocks, preventing them from transacting on a chain that breaks or alters network rules.{{r|Antonopoulos2014|p=ch. 1}} Because of its size and complexity, downloading and verifying the entire blockchain is not suitable for all computing devices.
* ''Lightweight clients'' consult full nodes to send and receive transactions without requiring a local copy of the entire blockchain (see ''[[Bitcoin network#Payment verification|simplified payment verification]]'' – ''SPV''). This makes lightweight clients much faster to set up and allows them to be used on low-power, low-bandwidth devices such as smartphones. When using a lightweight wallet, however, the user must trust full nodes, as it can report faulty values back to the user. Lightweight clients follow the longest blockchain and do not ensure it is valid, requiring trust in full nodes.<ref name="LBC">{{Cite web |last1=Gervais |first1=Arthur |last2=O. Karame |first2=Ghassan |last3=Gruber |first3=Damian |last4=Capkun |first4=Srdjan |title=On the Privacy Provisions of Bloom Filters in Lightweight Bitcoin Clients |url=https://eprint.iacr.org/2014/763.pdf |url-status=live |archive-url=https://web.archive.org/web/20161005045518/https://eprint.iacr.org/2014/763.pdf |archive-date=5 October 2016 |access-date=3 September 2016}}</ref>

Third-party internet services called ''online wallets'' offer similar functionality but may be easier to use. In this case, credentials to access funds are stored with the online wallet provider rather than on the user's hardware.<ref>{{Cite news |last=Bill Barhydt |date=4 June 2014 |title=3 reasons Wall Street can't stay away from bitcoin |publisher=NBCUniversal |url=https://www.cnbc.com/id/101711220 |url-status=live |access-date=2 April 2015 |archive-url=https://web.archive.org/web/20150403052101/https://www.cnbc.com/id/101711220 |archive-date=3 April 2015}}</ref> As a result, the user must have complete trust in the online wallet provider. A malicious provider or a breach in server security may cause entrusted bitcoins to be stolen. An example of such a security breach occurred with Mt. Gox in 2011.<ref name="mtgoxdetails">{{Cite web |date=4 March 2014 |title=MtGox gives bankruptcy details |url=https://www.bbc.com/news/technology-26420932 |url-status=live |archive-url=https://web.archive.org/web/20140312001338/http://www.bbc.com/news/technology-26420932 |archive-date=12 March 2014 |access-date=13 March 2014 |website=bbc.com |publisher=BBC}}</ref>

{{multiple image
|total_width=416
|perrow=2
|image1=Bitcoin paper wallet generated at bitaddress.jpg
|caption1=A paper wallet with a [[banknote]]-like design. Both the private key and the address are visible in [[human-readable medium|text form]] and as [[2D barcode]]s.
|image2=Sample Bitcoin paper wallet.png
|caption2=A paper wallet with the address visible for adding or checking stored funds. The part of the page containing the private key is folded over and sealed.
|image3=Casascius_coin.jpg
|caption3=A brass [[token coin|token]] with a private key hidden beneath a [[tamper-evident technology#Seals and signatures|tamper-evident]] [[security hologram]]. A part of the address is visible through a transparent part of the hologram.
|image4=10elqpi.jpg
|caption4=A hardware wallet [[peripheral]] which processes bitcoin payments without exposing any credentials to the computer.
}}
Physical wallets store the credentials necessary to spend bitcoins offline and can be as simple as a paper printout of the private key:{{r|Antonopoulos2014|page=ch. 10}} a ''paper wallet'' or more advanced such as a ''hardware wallet''. A paper wallet is created with a keypair generated on a [[Air gap (networking)|computer with no internet connection]]; the private key is written or printed onto the paper{{efn|The private key can be printed as a [[human-readable medium|series of letters and numbers]], a [[passphrase|seed phrase]], or a [[2D barcode]]. Usually, the public key or bitcoin address is also printed, so that a holder of a paper wallet can check or add funds without exposing the private key to a device.}} and then erased from the computer. The paper wallet can then be stored in a safe physical location for later retrieval. Bitcoins stored using a paper wallet are said to be in ''cold storage''.<ref name="befuddled">{{Cite book |last1=Barski |first1=Conrad |title=Bitcoin for the Befuddled |last2=Wilmer |first2=Chris |publisher=[[No Starch Press]] |year=2015 |isbn=978-1-59327-573-0}}</ref>{{rp|39}}

[[Cameron Winklevoss|Cameron]] and [[Tyler Winklevoss]], the founders of the [[Gemini (company)|Gemini Trust Co.]] exchange, reported that they had cut their paper wallets into pieces and stored them in envelopes distributed to safe deposit boxes across the United States.<ref>{{Cite web |last=Popper |first=Nathaniel |date=19 December 2017 |title=How the Winklevoss Twins Found Vindication in a Bitcoin Fortune |url=https://www.nytimes.com/2017/12/19/technology/bitcoin-winklevoss-twins.html |url-status=live |archive-url=https://web.archive.org/web/20190620045721/https://www.nytimes.com/2017/12/19/technology/bitcoin-winklevoss-twins.html |archive-date=20 June 2019 |access-date=19 June 2019 |website=The New York Times}}</ref> Through this system, the theft of one envelope would neither allow the thief to steal any bitcoins nor deprive the rightful owners of their access to them.<ref name="alexander">{{Cite web |last=Alexander |first=Doug |date=15 February 2019 |title=Quadriga's late founder used to store clients' Bitcoin passwords on paper so they wouldn't get lost |url=https://business.financialpost.com/technology/blockchain/quadrigas-late-founder-used-to-store-clients-bitcoin-passwords-on-paper-so-they-wouldnt-get-lost |url-status=live |archive-url=https://web.archive.org/web/20190620035814/https://business.financialpost.com/technology/blockchain/quadrigas-late-founder-used-to-store-clients-bitcoin-passwords-on-paper-so-they-wouldnt-get-lost |archive-date=20 June 2019 |access-date=19 June 2019 |website=Bloomberg News |publisher=Financial Post}}</ref>

Physical wallets can also take the form of metal [[token coin]]s<ref name="theverge">{{Cite web |last=Staff |first=Verge |date=13 December 2013 |title=Casascius, maker of shiny physical bitcoins, shut down by Treasury Department |url=https://www.theverge.com/2013/12/13/5207256/casascius-maker-of-shiny-physical-bitcoins-shut-down-by-treasury |url-status=live |archive-url=https://web.archive.org/web/20140110010445/http://www.theverge.com/2013/12/13/5207256/casascius-maker-of-shiny-physical-bitcoins-shut-down-by-treasury |archive-date=10 January 2014 |access-date=10 January 2014 |website=The Verge}}</ref> with a private key accessible under a [[security hologram]] in a recess struck on the [[obverse and reverse|reverse side]].<ref name="Ahonen2016">{{Cite book |last1=Ahonen |first1=Elias |title=Encyclopedia of Physical Bitcoins and Crypto-Currencies |last2=Rippon |first2=Matthew J. |last3=Kesselman |first3=Howard |date=15 April 2016 |isbn=978-0-9950-8990-7}}</ref>{{rp|38}} The security hologram [[tamper-evident technology|self-destructs when removed]] from the token, showing that the private key has been accessed.<ref>{{Cite web |last=Mack |first=Eric |date=25 October 2011 |title=Are physical Bitcoins legal? |url=https://www.cnet.com/news/are-physical-bitcoins-legal/ |url-status=live |archive-url=https://web.archive.org/web/20190626215256/https://www.cnet.com/news/are-physical-bitcoins-legal/ |archive-date=26 June 2019 |access-date=19 May 2019 |website=[[CNET]]}}</ref> Originally, these tokens were struck in brass and other [[base metal]]s, but later used [[precious metal]]s as bitcoin grew in value and popularity.{{r|Ahonen2016|page=80}} Coins with stored face value as high as ₿1000 have been struck in gold.{{r|Ahonen2016|page=102–104}} The [[British Museum]]'s [[British Museum Department of Coins and Medals|coin collection]] includes four specimens from the earliest series{{r|Ahonen2016|page=83}} of funded bitcoin tokens; one is currently on display in the museum's money gallery.<ref>{{Cite web |last=British Museum |author-link=British Museum |year=2012 |title=Bitcoin token with digital code for bitcoin currency |url=https://www.britishmuseum.org/research/collection_online/collection_object_details.aspx?objectId=3451294&partId=1&people=185966&peoA=185966-3-9&page=1 |access-date=17 May 2019}}</ref> In 2013, a [[Utah]]n manufacturer of these tokens was ordered by the [[Financial Crimes Enforcement Network]] (FinCEN) to register as a [[money services business]] before producing any more funded bitcoin tokens.<ref name="theverge" />{{r|Ahonen2016|page=80}}

Another type of physical wallet called a ''hardware wallet'' keeps credentials offline while facilitating transactions.<ref>{{Cite news |last=Roberts |first=Daniel |date=15 December 2017 |title=How to send bitcoin to a hardware wallet |work=Yahoo Finance |url=https://finance.yahoo.com/news/send-bitcoin-hardware-wallet-140141385.html |url-status=live |access-date=17 February 2018 |archive-url=https://web.archive.org/web/20180217142235/https://finance.yahoo.com/news/send-bitcoin-hardware-wallet-140141385.html |archive-date=17 February 2018}}</ref> The hardware wallet acts as a computer [[peripheral]] and signs transactions as requested by the user, who must press a button on the wallet to confirm that they intended to make the transaction. Hardware wallets never expose their private keys, keeping bitcoins in cold storage even when used with computers that may be compromised by malware.{{r|befuddled|page=42–45}}

===Decentralization===
Bitcoin is decentralized thus:
* Bitcoin does not have a central authority.
* There is no central server; the bitcoin network is peer-to-peer.{{r|NY2011}}
* There is no central storage; the bitcoin ledger is distributed.<ref name="DLT">{{Cite news |last=Meola |first=Andrew |date=5 October 2017 |title=How distributed ledger technology will change the way the world works |work=Business Insider |url=https://www.businessinsider.com/blockchain-distributed-ledgers-2017-10 |url-status=live |access-date=26 July 2018 |archive-url=https://web.archive.org/web/20180427142806/http://www.businessinsider.com/blockchain-distributed-ledgers-2017-10 |archive-date=27 April 2018}}</ref>
* The ledger is public; anybody can store it on their computer.{{r|Antonopoulos2014|page=ch. 1}}
* There is no single administrator; the ledger is maintained by a network of equally privileged miners.{{r|Antonopoulos2014|page=ch. 1}}
* Anybody can become a miner.{{r|Antonopoulos2014|page=ch. 1}}
* The additions to the ledger are maintained through competition. Until a new block is added to the ledger, it is not known which miner will create the block.{{r|Antonopoulos2014|page=ch. 1}}
* The issuance of bitcoins is decentralized. They are issued as a reward for the creation of a new block.{{r|bloombergvance111413}}
* Anybody can create a new bitcoin address (a bitcoin counterpart of a bank account) without needing any approval.{{r|Antonopoulos2014|page=ch. 1}}
* Anybody can send a transaction to the network without needing any approval; the network merely confirms that the transaction is legitimate.<ref name="primer">{{Cite web |last1=Jerry Brito |last2=Andrea Castillo |year=2013 |title=Bitcoin: A Primer for Policymakers |url=http://mercatus.org/sites/default/files/Brito_BitcoinPrimer.pdf |url-status=live |archive-url=https://web.archive.org/web/20130921060724/http://mercatus.org/sites/default/files/Brito_BitcoinPrimer.pdf |archive-date=21 September 2013 |access-date=22 October 2013 |website=Mercatus Center |publisher=[[George Mason University]] |name-list-style=amp}}</ref>{{rp|32}}

Conversely, researchers have pointed out at a "trend towards centralization". Although bitcoin can be sent directly from user to user, in practice intermediaries are widely used.{{r|JEP|page=220–222}} Bitcoin miners join large [[mining pool]]s to minimize the variance of their income.<ref name="JEP">{{Cite journal |last1=Rainer Böhme |last2=Nicolas Christin |last3=Benjamin Edelman |last4=Tyler Moore |year=2015 |title=Bitcoin: Economics, Technology, and Governance |journal=[[Journal of Economic Perspectives]] |volume=29 |issue=2 |pages=213–238 |doi=10.1257/jep.29.2.213 |doi-access=free}}</ref>{{rp|215, 219–222}}<ref name="ieeesurvey">{{Cite journal |last1=Tschorsch |first1=Florian |last2=Scheuermann |first2=Björn |year=2016 |title=Bitcoin and Beyond: A Technical Survey on Decentralized Digital Currencies |journal=IEEE Communications Surveys & Tutorials |volume=18 |issue=3 |pages=2084–2123 |doi=10.1109/comst.2016.2535718 |s2cid=5115101}}</ref>{{rp|3}}<ref>{{Cite book |last1=Beikverdi |first1=A. |title=Trend of centralization in Bitcoin's distributed network |last2=Song |first2=J. |date=June 2015 |work=2015 IEEE/ACIS 16th International Conference on Software Engineering, Artificial Intelligence, Networking and Parallel/Distributed Computing (SNPD) |isbn=978-1-4799-8676-7 |pages=1–6 |doi=10.1109/SNPD.2015.7176229 |s2cid=15516195}}</ref> Because transactions on the network are confirmed by miners, decentralization of the network requires that no single miner or mining pool obtains 51% of the hashing power, which would allow them to [[double-spending|double-spend]] coins, prevent certain transactions from being verified and prevent other miners from earning income.<ref name=":0" /> {{as of|2013}} just six mining pools controlled 75% of overall bitcoin hashing power.<ref name=":0" /> In 2014 mining pool [[Ghash.io]] obtained 51% hashing power which raised significant controversies about the safety of the network. The pool has voluntarily capped their hashing power at 39.99% and requested other pools to act responsibly for the benefit of the whole network.<ref>{{Cite news |last=Wilhelm |first=Alex |title=Popular Bitcoin Mining Pool Promises To Restrict Its Compute Power To Prevent Feared '51%' Fiasco |work=TechCrunch |url=https://techcrunch.com/2014/07/16/popular-bitcoin-mining-pool-promises-to-restrict-its-compute-power-to-prevent-feared-51-fiasco/ |url-status=live |access-date=25 January 2018 |archive-url=https://web.archive.org/web/20171205042008/https://techcrunch.com/2014/07/16/popular-bitcoin-mining-pool-promises-to-restrict-its-compute-power-to-prevent-feared-51-fiasco/ |archive-date=5 December 2017}}</ref> Around the year 2017, over 70% of the hashing power and 90% of transactions were operating from China.<ref>{{Cite web |last=Chan |first=Edwin |title=China Plans to Ban Cryptocurrency Mining in Renewed Clampdown |url=https://www.bloomberg.com/news/articles/2019-04-09/china-plans-to-ban-cryptocurrency-mining-in-renewed-clampdown |url-status=live |archive-url=https://web.archive.org/web/20191218152525/https://www.bloomberg.com/news/articles/2019-04-09/china-plans-to-ban-cryptocurrency-mining-in-renewed-clampdown |archive-date=18 December 2019 |access-date=10 April 2019 |website=www.bloomberg.com |quote=While China was once home to about 70 percent of Bitcoin mining and 90 percent of trades, authorities have waged a nearly two-year campaign to shrink the crypto industry amid concerns over speculative bubbles, fraud and wasteful energy consumption.}}</ref>

According to researchers, other parts of the ecosystem are also "controlled by a small set of entities", notably the maintenance of the client software, online wallets and simplified payment verification (SPV) clients.<ref name=":0">{{Cite web |last1=Gervais |first1=Arthur |last2=Karame |first2=Ghassan O. |last3=Capkun |first3=Vedran |last4=Capkun |first4=Srdjan |title=Is Bitcoin a Decentralized Currency? |url=https://www.infoq.com/articles/is-bitcoin-a-decentralized-currency/ |url-status=live |archive-url=https://web.archive.org/web/20161010042659/https://www.infoq.com/articles/is-bitcoin-a-decentralized-currency/ |archive-date=10 October 2016 |access-date=11 October 2016 |website=InfoQ |publisher=InfoQ & [[IEEE Computer Society]]}}</ref>

===Privacy and fungibility===
Bitcoin is [[pseudonym]]ous, meaning that funds are not tied to real-world entities but rather bitcoin addresses. Owners of bitcoin addresses are not explicitly identified, but all transactions on the blockchain are public. In addition, transactions can be linked to individuals and companies through "idioms of use" (e.g., transactions that spend coins from multiple inputs indicate that the inputs may have a common owner) and corroborating public transaction data with known information on owners of certain addresses.<ref>{{Cite web |last=Simonite, Tom |date=5 September 2013 |title=Mapping the Bitcoin Economy Could Reveal Users' Identities |url=https://www.technologyreview.com/2013/09/05/176558/mapping-the-bitcoin-economy-could-reveal-users-identities/ |access-date=2 April 2014 |website=MIT Technology Review}}</ref> Additionally, bitcoin exchanges, where bitcoins are traded for traditional currencies, may be required by law to collect personal information.<ref name="5facts">{{Cite news |last=Lee, Timothy |date=21 August 2013 |title=Five surprising facts about Bitcoin |work=The Washington Post |url=https://www.washingtonpost.com/blogs/the-switch/wp/2013/08/21/five-surprising-facts-about-bitcoin-2/ |url-status=live |access-date=2 April 2014 |archive-url=https://web.archive.org/web/20131012035053/http://www.washingtonpost.com/blogs/the-switch/wp/2013/08/21/five-surprising-facts-about-bitcoin-2/ |archive-date=12 October 2013}}</ref> To heighten financial privacy, a new bitcoin address can be generated for each transaction.<ref>{{Cite journal |last=McMillan, Robert |date=6 June 2013 |title=How Bitcoin lets you spy on careless companies |url=https://www.wired.com/2013/06/bitcoin-retai/ |url-status=live |archive-url=https://web.archive.org/web/20140209202222/http://www.wired.co.uk/news/archive/2013-06/06/bitcoin-retail |archive-date=9 February 2014 |access-date=3 April 2020 |journal=Wired |publisher=Conde Nast}}</ref>

Wallets and similar software technically handle all bitcoins as equivalent, establishing the basic level of [[fungibility]]. Researchers have pointed out that the history of each bitcoin is registered and publicly available in the blockchain ledger, and that some users may refuse to accept bitcoins coming from controversial transactions, which would harm bitcoin's fungibility.<ref>{{Cite web |last1=Ben-Sasson |first1=Eli |last2=Chiesa |first2=Alessandro |last3=Garman |first3=Christina |last4=Green |first4=Matthew |last5=Miers |first5=Ian |last6=Tromer |first6=Eran |last7=Virza |first7=Madars |date=2014 |title=Zerocash: Decentralized Anonymous Payments from Bitcoin |url=http://zerocash-project.org/media/pdf/zerocash-oakland2014.pdf |url-status=live |archive-url=https://web.archive.org/web/20141014012438/http://zerocash-project.org/media/pdf/zerocash-oakland2014.pdf |archive-date=14 October 2014 |access-date=31 October 2014 |website=2014 IEEE Symposium on Security and Privacy |publisher=IEEE computer society}}</ref> For example, in 2012, Mt. Gox froze accounts of users who deposited bitcoins that were known to have just been stolen.<ref>{{Cite conference |last1=Möser |first1=Malte |last2=Böhme |first2=Rainer |last3=Breuker |first3=Dominic |year=2013 |title=An Inquiry into Money Laundering Tools in the Bitcoin Ecosystem |url=https://maltemoeser.de/paper/money-laundering.pdf |conference=2013 APWG eCrime Researchers Summit |publisher=[[Institute of Electrical and Electronics Engineers|IEEE]] |isbn=978-1-4799-1158-5 |archive-url=https://web.archive.org/web/20180626110754/https://maltemoeser.de/paper/money-laundering.pdf |archive-date=26 June 2018 |access-date=19 June 2019 |url-status=live}}</ref>

==Notes==
{{Notelist|30em}}

==References==
{{Reflist|30em}}

==External links==
{{Commons category|Bitcoin}}
* [https://www.bitcoin.org/ Bitcoin.org website]
* {{Curlie|Science/Social_Sciences/Economics/Financial_Economics/Currency_and_Money/Alternative_Monetary_Systems/Cryptocurrencies/Bitcoin}}

{{Cryptocurrencies}}
{{Currency symbols}}
{{Authority control}}

[[Category:Bitcoin| ]]
[[Category:2009 software]]
[[Category:Application layer protocols]]
[[Category:Computer-related introductions in 2009]]
[[Category:Cryptocurrencies]]
[[Category:Currencies introduced in 2009]]
[[Category:Digital currencies]]
[[Category:Private currencies]]
[[Category:Currency symbols]]
[[Category:Elliptic curve cryptography]]