Bitcoin

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Introduction

According to Wikipedia “Bitcoin is a peer-to-peer payment system and digital currency introduced as open source software in 2009 by developer Satoshi Nakamoto. It is a cryptocurrency, so-called because it uses cryptography to control the creation and transfer of money. Conventionally, the capitalized word "Bitcoin" refers to the technology and network, whereas lowercase "bitcoin" refers to the currency itself” (retrieved March 12 2014). Satoshi Nakamoto is a pseudonym and may refer to a group of people.

Digital currency like Bitcoins may in the future be used for educational micro-payment (e.g. buy a resource, follow a class, buy a batch for some completed class), since transaction costs are very low and do not require any credit card or banking account.

Bicoins can be obtained in several ways. The easiest is though so-called digital currency exchanges (Wikipedia). You also can get payments, use machines (in some countries), etc. The Market value of one Bitcoin has been as high as $1000. On March 13 2014 it was around $650. Bitcoins can be used in very small parts (fractional coins).

There exist several other digital currencies (Wikipedia), e.g. Litecoin or Peercoin

Definitions

Bitcoin wiki (retrieved March 12 2014), defines Bitcoin as {{an experimental, decentralized digital currency that enables instant payments to anyone, anywhere in the world. Bitcoin uses peer-to-peer technology to operate with no central authority: managing transactions and issuing money are carried out collectively by the network.}}

Popular BitCoin wallet defines Bitcoin “as a decentralized P2P electronic cash system without a central server or trusted parties. Users hold the crypto keys to their own money and transact directly with each other, with the help of the network to check for double-spending.” (3/2014).

CoinDesk (3/2014) provides the following definition: “Bitcoin is a form of digital currency, created and held electronically. No one controls it. Bitcoins aren’t printed, like dollars or euros – they’re produced by lots of people running computers all around the world, using software that solves mathematical problems. It’s the first example of a growing category of money known as cryptocurrency.”

How it works

Bitcoins are created digitally by a long mining process using computers in a distributed network. The difficulty of the mining process is increased every two weeks. About 21 Mio Bitcoins will be created by 2140.

The same network then also processes transactions. Every 10 minutes a block of transactions is executed. I.e. it always will take about 10 minutes to process it.

Bitcoin transactions are sent to and from electronic bitcoin wallets.

Read more in:

Who accepts bitcoins ?

The list of businesses (offline and online) is rather small, but growing. But many (e.g. Amazon) do accept vouchers and the vouchers can be obtained by third party businesses.

  • Consult: Trade (Bitcoin Wiki)
In education (March 2014)

Software

Bitcoin users do need so-called wallet software that allows to exchange Bitcoins.

See the list of bitcoin wallets at bitcoin.org or Getting Started at WeUseCoins.com.

Client software (wallets)

Please, consider the links below as example, there is absolutely zero recommendation. As of 2019, most wallets accepts several types of cryptocurrencies.

Desktops
  • MultiBit is a light-weight client for Windows, Mac and Linux.
  • Armory. Advanced client for Win/Mac/Linux. Allows off-line story. This client also requires BitCoin QT (below).
  • Bitcoin QT wallet software. Full-featured thick client that downloads the entire block chain, using code from the original Bitcoin. It can be used both for regular payments and as server utility for merchants. When you first install it, it may take a day to synchronize about 12-20GB of blockchain data to your hard drive.
    • Appropriate for computers that are always connected. Needed to run the Armory client.
    • manul on Bitcoin wiki.
Android
  • Coinomi (Android/IOS/Windows/Linux/MacOS)

Links

Short introductions

(see also various web sites, below)

Serious introductions

Why would you use it for payments ?

Exchanges

Here are two lists:

Organizations and Web sites

Global
  • Bitcoin Wiki. Probably the best overall technical information source.
Local

Bibliography

  • Barber, S., Boyen, X., Shi, E., & Uzun, E. (2012). Bitter to better—how to make bitcoin a better currency. In Financial Cryptography and Data Security (pp. 399-414). Springer Berlin Heidelberg. (Access restricted)
  • Bergstra, J. A., & de Leeuw, K. (2013). Bitcoin and beyond: exclusively informational monies. arXiv preprint arXiv:1304.4758. http://arxiv.org/abs/1304.4758
  • Bergstra, J. A., & de Leeuw, K. (2013). Questions related to Bitcoin and other Informational Money. arXiv preprint arXiv:1305.5956. http://arxiv.org/abs/1305.5956
  • Brito, J., & Castillo, A. (2013). Bitcoin: A Primer for Policymakers. Mercatus Center: Geroge Mason University. http://mercatus. org/sites/default/files/Brito_BitcoinPrimer_ embargoed. pdf.
  • Eyal, I., & Sirer, E. G. (2013). Majority is not enough: Bitcoin mining is vulnerable. arXiv preprint arXiv:1311.0243. PDF Preprint
  • Grinberg, R. (2011). Bitcoin: An Innovative Alternative Digital Currency. Hastings Science & Technology Law Journal, 4, 160-208. HTML
  • Plassaras, N. A. (2013). Regulating Digital Currencies: Bringing Bitcoin within the Reach of the IMF. Chicago Journal of International Law, 14(1). (Access restricted)
  • Velde, F. (2013). Bitcoin: a primer. Chicago Fed Letter, (Dec). PDF
  • Wallace, B. (2011). The rise and fall of Bitcoin. Wired Magazine. reprint
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