Here at Chip and PIN machines I like to keep up to date with the latest payment technologies. The biggest story in 2013 in terms of payments was crypto currency Bitcoin. It has garnered press attention, is now accepted by some well know web companies such as Zynga, you can even buy a pint in London using Bitcoin. Here are 10 facts to get you up to speed.
1. Bitcoin is a peer-to-peer currency which does not rely on a central organisation such as a bank.
2. There are currently 12.5 million bitcoins in circulation with a block of 25 being created every 10 minutes. The maximum number of bitcoins there will ever be is 21 million, this is written into the code.
3. Bitcoin was invented in 2008 by an anonymous person going by the psedonym Satoshi Nakamoto. An expert in economics, mathematics, cryptography and a sound programmer Nakamoto is still unknown and is thought to possess around 1M bitcoins worth around $1BN at todays market values.
4. 1 bitcoin can be divided into 1 million sub units called satoshis.
5. In August 2013 a federal judge ruled Bitcoin to be a real currency. A Texan businessman ran a ponzi scheme involving Bitcoin and tried to get plead innocence on the basis it wasn’t a real currency. The judge ruled it was so he could be tried in court.
6. The world’s largest Bitcoin wallet is owned by the FBI. In September 2013 the FBI shut down illegal online market place Silk Road. They siezed the assests of the operator which included 144,000 bitcoins worth around $100M. Though the inventor of Bitcoin has more coins the FBI has the single largest wallet.
7. Bitcoins are mined using specialized computer hardware known as a Bitcoin mining rig. Bitcoins are created when special software solves extremely difficult mathematical equations.
8. Bitcoin is just one of many crypto currencies. A crypto currency is a digital medium of exchange which uses cryptography. As of Dec 2013 there were over 100 crypto currencies, some of the better known ones being Bitcoin, Litecoin, Dogecoin. All are based on a version of the original Bitcoin code.
9. The key to Bitcoin is the block chain which is a public database of Bitcoin transactions. One of the big problems digital currencies have faced in the past is that of double spending. With Bitcoin every transaction is recorded on the block chain making double spending impossible.
10. Bitcoin transactions are not anonymous. Each transaction is recorded on the blockchain including the users Bitcoin address.