Bitcoin
Bitcoin is a virtual currency that surged in popularity in 2013. Bitcoin are mined by computers solving complex financial puzzles. Bitcoin production is limited to 21 million and at the end of 2013 there was an estimated 12 million Bitcoin in circulation.
Bank of America Merrill Lynch strategists, David Wo, explains Bitcoin this way:
Bitcoin is a digital currency designed by Satoshi Nakamoto, a pseudonym, in January 2009. Bitcoin allows users to send payments within a decentralized, peer-to-peer network, and is unique in that it does not require a central clearing house or financial institution clearing transactions. Users must have an internet connection and Bitcoin software to make payments to another public account/address.
Satoshi is the smallest unit of Bitcoin; 1 Bitcoin contains 100 million Satoshi. By design, the supply of Bitcoins cannot exceed 21 million Bitcoins (2,100 trillion Satoshi). The total amount of Bitcoin in circulation will increase predictably, based on its underlying code, until reaching the cap in 2140. The current supply is 12 million Bitcoins or 57% of the eventual total (Chart 2). A public history of all transactions is continuously updated and verified by "miners" who gather batches of new transactions into blocks and attach these blocks to the end of the "Blockchai"n. This public history forms a ledger of transactions where every single Satoshi is tracked from its first owner to the present owner. Having the full history publicly available guarantees that a buyer actually owns the number of Bitcoins he or she wants to spend, preventing fraud.
Bitcoin supply is increased with every new block of transactions added to the public history (i.e. Blockchain). The verification of new transactions by miners is relatively easy and many transactions can be easily compressed in a single block. However, there is a computational task for each block of a high degree of difficulty designed to constrain the increase in the money supply, no matter how slow or fast the overall mining network is. If no external transactions are outstanding, a block with a single transaction to pay the miner would be produced. Indeed, the first several thousand blocks simply paid the miner and contained no other transactions (presently blocks contain a record of hundreds of transactions). This way the initial seed currency was distributed to miners who bore the speculative risk in the Bitcoin's success.
As a rough analogy, suppose competing journalists (miners) are asked to document the national news on each given day for the National Archives. The journalist is asked to write down the events (transactions) in a book (block) and the Archive will eventually buy one such book for a fixed fee. To determine which of the books the Archive will buy the archive has an additional requirement for journalists that the book contains the fingerprints of 10 people whose birthday was on that particular day. Note that the list of people isn't related to the national news (transactions) but is simply meant to control the supply of books coming out per day. As more journalists collaborate to find people, the Archive increases the number of fingerprints required.
Exchanges allow the conversion between real-world fiat currencies and Bitcoin. The participation in exchanges requires consumers to take on credit risk by transferring Bitcoins from a personal account to a third-party's account, which is similar to entrusting real-life cash to depository institutions. However, unlike banks, Bitcoin third-party accounts are not regulated nor do they provide FDIC protection. While personal accounts are easy to secure, start-up exchanges in overseas jurisdictions with online digital wallets are often targeted by hackers. Exchanges also have some risk of the operator absconding with the money before the currency conversion is completed. Major exchanges ordered by volume are BTC China (CNY), OkCoin (CNY), Mt.Gox (USD, EUR, GBP, JPY, AUD), FXBTC (CNY), Bitstamp (USD), Bter (CNY), BTC-E (USD), BTCTrade (CNY), VirtEx (CAD).
Bitcoin as a medium of exchange, distinct from speculative transactions on exchanges, initially gained popularity with companies involved within the Bitcoin ecosystem. For example, miners can purchase specialized chips with Bitcoins. To facilitate transactions, payment processors such as Bitpay provide software to merchants, and absorb FX volatility risk by guaranteeing exchange rates and sending daily bank payments. Since April 2013 significant investment was made into start-ups that develop and promote Bitcoin as a means of exchange for merchants (as opposed to speculation investment on the exchange). For example, CoinLab has received seed money to incubate other Bitcoin start-ups like mining companies and exchanges. The most notable company to accept Bitcoins may be Baidu, a major Chinese portal, which began accepting Bitcoin for its online security services in October 2013.
The rapid rise in BTC prices (292% a year) has generated a comparable exponential growth in mining revenue, which in turn has attracted large capital investment. Indeed, the number of computations has grown 521% a year, requiring expensive, heavy-duty Bitcoin-mining chips. The competition for revenues has taken away the low-hanging fruit and each dollar mined is now hundred times "deeper". Electricity costs are also going up as miners use more computers.
View Older Stories View More Recent Stories
-
NextGen Digital Announces Private Placement of Special Warrants Convertible into Secured Digital Asset-Backed Notes
-
YieldMax® ETFs Announces Distributions on ULTY, TSLY, LFGY, CRSH, YMAX, and Others
-
Bitget Lists Tanssi (TANSSI) for Spot Trading with 8,878,000 in Token Rewards
-
Pakistan central bank to launch pilot for digital currency, says governor
-
Bitcoin Solaris Mobile Mining Debuts on LBank with Revolutionary App
-
Form D American Bitcoin Corp.
-
DIGITALX SECURES $20.7 MILLION STRATEGIC INVESTMENT TO EXPAND BITCOIN-FOCUSED STRATEGY
-
BlockchainCloudMining Launches New Short-Term Contracts to Help Investors Capitalize on Crypto Market Volatility
-
KULR Reaches 750 PH/s in Bitcoin Mining Operations with Latest Deployment, Aims for 1.25 EH/s by Late Summer
-
Stocks climb as Nvidia hits $4-trillion valuation; euro inches lower
-
XRP, BTC and LTC mining capabilities, HASH extension unlocks zero-hardware crypto passive income for everyone
-
Calamos Announces Upside Cap Rates with Defined Downside Protection for Bitcoin Protection ETFs
-
DRML Miner Unveils Zero-Fee Cloud Mining to Supercharge Bitcoin & Litecoin Profits
-
DRML Miner Unveils Zero-Fee Cloud Mining to Supercharge Bitcoin & Litecoin Profits
-
NR7 Miner Debuts Renewable-Powered Cloud Mining Platform With Real-Time Blockchain Verification
-
GoldenMining Unveils Free Bitcoin Cloud Mining Access for New Users
-
GMO Miner Launches Easy Dogecoin Cloud Mining in 2025
-
As Political Turmoil Hits Markets, InvroMining Launches New User Incentive Program
-
XRP Boom 2025: Daily Cloud Mining Contracts Now Live with DRML Miner
-
BSTR Miner Unveils Quantum-Enhanced Cloud Bitcoin Mining App: Real-Time Asset Switching Redefines Crypto Accessibility
-
RI Mining Launches AI-Driven Cloud Mining App, Allowing Everyone to Easily Earn Cryptocurrency Income
-
Balance proudly supports Bow Valley Credit Union’s launch of the Bitcoin Gateway
-
Bow Valley Credit Union Launches Canada’s First Bitcoin Gateway
-
Metaplanet’s $108M Bitcoin Purchase Signals Bigger Crypto Ambitions, Ultrabrokers Expert Reports
-
FIND MINING, the world’s most trusted cloud mining brand, announces the launch of a revolutionary new application
-
Everyone is mining: OKALIO launches OKALIOMining, offering $10 sign-up bonus and fixed returns
-
BAY Miner Leads the Charge: AI-Driven ESG Cloud Mining Redefines Passive Crypto Income with New Solana (SOL) Capabilities
-
PaladinMining Launches Automated Cloud Mining Platform for Seamless Crypto Participation
-
OSR Holdings plans $50 million security token offering for second half 2025
-
OSR Holdings Announces Strategic Roadmap for Tokenization Under Reg D Framework in Partnership with BCM Europe AG
-
VNBTC Launches Free Cloud Mining Platform: Mine Bitcoin, Litecoin, and Dogecoin on Your Phone at Zero Cost
-
The world's leading cloud mining brand: BJMining launches a new cloud mining guide
-
The world's leading cloud mining brand: BJMining launches a new cloud mining guide
-
No KYC. 100x Leverage. $50 Welcome Bonus. Crypto Futures Trading Made Easy on BexBack.
-
GoldenMining Launches Enhanced AI-Powered Cloud Mining Platform as Crypto Infrastructure Advances
-
Supply Problem Emerges as Exchanges Hold Just 15% of Available BTC
-
BlockchainCloudMining Launches New Short-Term Contracts to Help Investors Capitalize on Crypto Market Volatility
-
The new guide of BJMining, the world's leading cloud mining brand, is here!
-
The new guide of BJMining, the world's leading cloud mining brand, is here!
-
ReserveOne, backed by crypto heavyweights, set to raise over $1 billion in Nasdaq listing
-
Trump Media seeks SEC approval for blue-chip crypto ETF
-
Bitcoin Acquisitions Booming as Companies Tap into Coinbase Credit Facilities Opportunity
-
Glass Lewis backs WonderFi-Robinhood deal, recommends FOR vote
-
Trump Media files for cryptocurrency ETF with SEC
-
Trump Media Files Registration Statement for Crypto Blue Chip ETF
-
Leading Independent Proxy Advisory Firm Glass Lewis Recommends WonderFi Shareholders Vote FOR the Proposed Transaction with Robinhood
-
Ripplecoin Mining launches automated cloud mining platform to help investors of mainstream crypto assets such as BTC, ETH, DOGE, XRP, etc. achieve daily returns
-
Analysis of the impact of Project2025's technology policy on cryptocurrencies, will DEAL Mining be the most reliable safe haven?
-
Analysis of the impact of Project2025's technology policy on cryptocurrencies, will DEAL Mining be the most reliable safe haven?
-
Genius Group increases Bitcoin holdings to 148 Bitcoin

