Bitcoin is a type of digital currency that allows people to buy goods
and services and exchange money without involving banks, credit card
issuers or other third parties. Its origins have long been a mystery -
though an Australian man long rumoured to have ties to Bitcoin has come
forward claiming to be its creator.
Who is this man, and how does this system work?
Here's a brief look at Bitcoin:
How Bitcoins work
Bitcoin
is a digital currency that is not tied to a bank or government and
allows users to spend money anonymously. The coins are created by users
who "mine" them by lending computing power to verifying other users'
transactions. They receive Bitcoins in exchange.
The coins also
can be bought and sold on exchanges with US dollars and other
currencies. Their value has fluctuated over time. At its height in late
2013, a single Bitcoin was valued above $1,100 (roughly Rs. 73,000). On Monday, it was worth
about $445 (roughly Rs. 29,500).
Because the currency isn't formally regulated, its
legality is a bit fuzzy. The currency has also drawn the ire of many in
law enforcement and cyber-security because it's difficult to trace,
making it a currency of choice for hackers behind ransomware attacks.
But in September, New York state regulators approved their first license
for a company dealing in Bitcoin.
Why Bitcoins are popular
Bitcoins
are basically lines of computer code that are digitally signed each
time they travel from one owner to the next. Transactions can be made
anonymously, making the currency popular with libertarians as well as
tech enthusiasts, speculators - and criminals.
Should I trade in all my cash for Bitcoins?
That
would be a questionable decision. Many businesses such as blogging
platform WordPress and retailer Overstock have jumped on the Bitcoin bandwagon amid a flurry of media coverage. Leading Bitcoin payment
processor BitPay works with more than 60,000 businesses and
organizations, while the total number of Bitcoin transactions has
climbed to over 200,000 per day, more than double from a year ago,
according to Bitcoin wallet site blockchain.info.
Still, its
popularity is low compared with cash and cards, and many individuals and
businesses won't accept Bitcoins for payments.
How Bitcoins are kept secure
The
Bitcoin network works by harnessing individuals' greed for the
collective good. A network of tech-savvy users called miners keep the
system honest by pouring their computing power into a blockchain, a
global running tally of every Bitcoin transaction. The blockchain
prevents rogues from spending the same Bitcoin twice, and the miners are
rewarded for their efforts by being gifted with the occasional Bitcoin.
As long as miners keep the blockchain secure, counterfeiting shouldn't
be an issue.
How Bitcoin is vulnerable
Much of the
mischief surrounding Bitcoin occurs at the places where people store
their digital cash or exchange it for traditional currencies, like
dollars or euros. If an exchange has sloppy security, or if a person's
electronic wallet is compromised, then the money can easily be stolen.
The biggest scandal involved Japan-based Bitcoin exchange Mt. Gox, which
went offline in February 2014. Its CEO, Mark Karpeles, said tens of
thousands of Bitcoins worth several hundred million dollars were
unaccounted for. He was arrested on suspicion of inflating his cash
account in August.
How Bitcoin came to be
It's a
mystery. Bitcoin was launched in 2009 by a person or group of people
operating under the name Satoshi Nakamoto. Bitcoin was then adopted by a
small clutch of enthusiasts. Nakamoto dropped off the map as Bitcoin began to attract widespread attention. But proponents say that doesn't
matter: The currency obeys its own internal logic.
Who is the real Nakamoto?
There's
been plenty of speculation on Nakamoto's identity over the years. In
December, the technology magazine Wired and the website Gizmodo both
concluded that Australian computer scientist, inventor and academic
Craig Wright was probably the man behind the pseudonym. The reports
offered detailed circumstantial, but no hard proof, and hedged their
conclusions accordingly.
On Monday, Wright told BBC News, the
Economist and GQ that he is Nakamoto. (He also put out a press release.) Wright said he launched the currency in 2009 with the help of others.
Wright told the BBC that he decided to make his identity known to stop
the spread of "misinformation" about Bitcoin.
If Wright is the
founder, he is likely a very wealthy person. The person going by the
pseudonym Nakamoto is believed to have amassed about 1 million Bitcoins,
which would be worth about $450 million if converted to cash.
Crypto Price Today: Bitcoin Drops to $84,500 as Most Altcoins Decline21 March 2025
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