Bitcoins

Bitcoins are a decentralized digital currency and payment system that operates without a central authority. Created in 2009 by an unknown programmer or group under the name Satoshi Nakamoto, the system enables peer-to-peer transfers of value using a digital ledger.

Technology and operations: Transactions are recorded on a public blockchain. Users hold private keys in digital wallets; transactions are broadcast and confirmed by miners who expend energy to solve cryptographic puzzles and add new blocks. This Proof-of-Work process secures the network and issues new bitcoins as block rewards. The average time between blocks is about 10 minutes. The system has a globally fixed supply cap of 21 million bitcoins, with the reward halving approximately every four years, reducing new issuance.

Usage and economics: Bitcoins can be used for payments, remittances, and as a speculative asset. Addresses are pseudonymous rather than tied to real-world identities, though transactions can be traced on the blockchain. They are traded on exchanges and held in various wallets; security depends on private key management.

Governance and development: Bitcoin is open-source software maintained by a decentralized community. Changes to the protocol are introduced via Bitcoin Improvement Proposals and require broad consensus among developers, users, and miners; there is no central governing body.

Risks and regulation: Security risks include loss of private keys and exchange hacks, while the network could be exposed to large-scale attacks isolated from the main chain. Price volatility remains high. Critics point to its energy use. Regulation varies by jurisdiction, focusing on consumer protections and anti-money laundering.

Impact: As the first widely adopted cryptocurrency, Bitcoins popularized blockchain technology and inspired thousands of other digital currencies. It remains the largest by market capitalization and liquidity, though adoption and acceptance vary by region and merchant.