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Bitcoin: Past, Present, and Future Analysis

Obitcoin A Comprehensive Analysis What is a bitcoin? Bitcoins can be thought of as entries in a ledger. When ownership changes hands, the transaction is recorded in the appropriate Bitcoin mining is the process of computing the transactions from operators all over the world, with no one individual or group having control. The information in the blockchain is kept up-to-date and public so anyone can blockchain for that bitcoin - check if the transfer is from the bitcoin is never physically transferred anywhere. the rightful owner. The concept of the bitcoin has been likened to a very old currency, the large limestone disks known as rai stones used as currency on the Pacific island of Yap. ---* The rai stones are so large and heavy that they are not practically moved. Instead, the owners of the stones are recorded through oral history so the history of ownership is known for each stone, even though the stone never moves. Origin of the Bitcoin August 15th, 2008 Neal Kin, Vladimir Oksman and Charles Bry file for an encryption patent application that would later come to be used for bitcoins August 18th, 2008 is anonymously registered as a domain name October 31st, 2008 A paper outlining a peer-to-peer electronic cash system is published under the mysterious name Satoshi Nakamoto, who was never identified January 3rd, 2009 The first block is mined October 5th, 2009 The first exchange rate is established, valuing US $1 = 1,309.03 BTC New Liberty Standard created the equation by calculating the cost of electricity to run a computer that generates bitcoins May 22nd, 2010 The first real-world transaction using bitcoins takes place when programmer Laszlo Hanyecz pays 10,000 BTC (valued at $25 at the time) for a pizza on the Bitcoin Forum Major Highlights 2011 2012 2013 $ = $ = € BITCOIN MAGAZINE launches May 2013 – FIRST BİTCOIN ATM debuts in San Diego, CA BITCOIN REACHED PARITY with U.S. dollar and Euro FBI A LARGE BITCOIN THEFT reported 25,000 BTC stolen worth $375,000 at the time November 2013 – BITCOIN surpasses $1,000 USD $1,000 USD = 1 BTC FBI PRODUCES REPORT - BITCOIN VIRTUAL CURRENCY: Unique Features Present Distinct Challenges for Deterring Illicit Activity FIRST BITCOIN CONFERENCE and World Expo held in New York, NY BITCOIN SAVINGS and TRUST INVESTIGATED for running bitcoin Ponzi scheme December 2013 - Largest heist makes off with 96,000 BTC from ONLINE BLACK MARKET Regulation of the Bitcoin Regulation of this new currency is ever-evolving and as of yet policies are nonexistent, ambiguous or inadequate for dealing with virtual currencies United States January 26th, 2014 A U.S. federal judge ruled that bitcoins are a legal form of exchange. This ruling follows the U.S. Treasury's support of bitcoin as a currency and allows the SEC to regulate bitcoin as a security under the Securities Exchange Act. February 16th, 2014 The New York Department of Financial Services (NYDFS) conducted regulatory hearings on virtual currencies in the hopes of creating a regulatory framework to lend credibility and ease uncertainty over virtual currencies. March 25th, 2014 The IRS issued a notice that it will treat bitcoin and other virtual currencies like property rather than like currency. • Investors who purchase virtual currencies would have a capital gain or loss versus a foreign currency gain or loss. • Payments received in virtual currency will be considered income, determined by the fair market value of the virtual currency on the date it was received. Worldwide 54 countries are considered PERMISSIVE 7 COUNTRIES are considered CONTENTIOUS 2 COUNTRIES are considered HOSTILE They have policies, laws, or regulations that allow the use of the bitcoin, including the U.S. Iceland forbids domestic entities There are some specific limitations: China, India, Jordan, Kazakhstan, Mexico, Russia, Thailand from buying bitcoins, making it illegal to purchase bitcoins with Icelandic krona Vietnam bans financial institutions from using bitcoins Problems with Bitcoins Theft , Fraud & Money Laundering THEFT is still as much of an issue for financial institutions and MONEY LAUNDERING may be easier with other currencies given the open nature of bitcoin blockchains, but that didn't stop Charlie Shrem from being arrested for money laundering some major thefts have included the loss of tens of thousands of bitcoins - some of which are now considered permanently removed from circulation FRAUD is also still possible, such as with the Bitcoin Savings and Trust Ponzi scheme Used for Illicit Purchases estimated Silk Road, an anonymous online black market for drugs and narcotics solely using bitcoins was created. $1.9 million 2011 SOLD EVERY MONTH ON THE SILK ROAD Other similar marketplaces have since cropped up. Volatile Nature & Plagued with Problems Majority Rule On March 11th, 2014, Mt. Gox, the long time dominant trade exchange for bitcoins since 2010, filed for bankruptcy in the U.S. If in the future a significant change is needed, it will require a near consensus among users in order to effectively make the change Mt. Gox has admitted to losing $490 million OF THEIR CUSTOMERS' BITCOINS Future of the Bitcoin The future is largely uncertain due to the volatile nature of the bitcoin and evolving regulations, but the exchange rate of the bitcoin is expected to stabilize over time, especially once the final bitcoin is generated and the marketplace deals with a finite amount of currency. Should quantum computing (such as the D-Wave system) be confirmed as truly quantum and ever come into use for bitcoin mining, the cryptography used would need to be updated to use post-quantum algorithms. If nothing else, even if the bitcoin fails, it has launched significant financial innovation and will be the inspiration for future decentralized and/or virtual currencies. Sources currency-could-become-internet-money-hidden-flipside STETSON UNIVERSITY will

Bitcoin: Past, Present, and Future Analysis

shared by andrewdeen on May 28
With so much attention surrounding the cryptocurrency, many people may be aware of the bitcoin revolution as it took hold of the Internet a few years ago. However, while they may have heard about how ...




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