Satoshi Nakamoto is the pseudonym of bitcoin's creator. There have been no 100% confirmed cases of successfully identifying Satoshi, though some have claimed to be him (if Satoshi is, in fact, a "he"), and others have been accused of being the "real" Satoshi. In addition to the gender of Satoshi, it is unclear whether Satoshi is even a single person, or a group of people.
Until 2010, Satoshi collaborated with an initially small community via mailing lists. Though the team was open-sourced, Satoshi took care never to reveal anything personal, cementing the ambiguity surrounding Satoshi's identity. Eventually, Satoshi faded from the community.
It is widely accepted that "Satoshi Nakamoto" is a pseudonym; not only has the gender or face of the true Satoshi Nakamoto never been successfully confirmed, but it is unclear whether Satoshi Nakamoto is a single person, or more than one. Furthermore, Nakamoto's paper on bitcoin appears to refer to the author as "we" a number of times.
Though the bitcoin and blockchain development team was open-sourced, Satoshi took care never to reveal anything personal, cementing the ambiguity surrounding their identity. On April 23 2011, Satoshi sent one final communication to the team, stating simply that Satoshi had "moved on to other things."
Gavin Andresen, a professor at the University of Massachusetts who worked closely with Satoshi, remarked that he had a constant sense that Satoshi was wary of giving out even the subtlest details about their personal identity in the 2014 documentary, "The Rise and Rise of Bitcoin." In the documentary, he said of Satoshi, “He was so worried about people finding out who he was…I don’t know why. My last email to him was telling him I’d agreed to go visit the folks over at the CIA [laughs]. Whether that had something to do with him deciding to cut off…he had been pulling away before then.”
Although many have been accused of being the true Satoshi Nakamoto, none of such accusations have ever been confirmed. Some popular theories posit that Satoshi's true identity is either Hal Finney, Nick Szabo or Wei Dai - the latter two of whom are credited with inventing concepts that served as precursors to bitcoin. The former, Hal Finney, is the first-ever recipient of a bitcoin transaction, which he allegedly received from Satoshi personally. He had also met with both Szabo and Wei Dai during the development of bitcoin.
One Southern California man named Dorian Satoshi Nakamoto was alleged by an article in Newsweek to be the true identity of bitcoin's mysterious founder in 2014, but he denied having anything to do with bitcoin, claiming he hadn't even heard of bitcoin until about 3 weeks before the allegations began. In the midst of the resulting media frenzy, Satoshi Nakamoto's long-dormant bitcoin foundation account briefly returned to life to publicly post the sentence, "I am not Dorian Nakamoto." This was met with mixed reception, some saying that it proved Dorian Nakamoto's lack of affiliation with bitcoin, while others, such as David Chen, pointed out, "isn't that what Dorian Nakamoto WOULD say (if he was the real Satoshi Nakamoto)?"
In May of 2016, an Australian entrepreneur named Craig Wright publicly identified himself as the bitcoin creator Satoshi Nakamoto and offered as proof that he had digitally signed messages using cryptographic keys created during the early days of bitcoin's development and linked to blocks of bitcoins known to have been mined by Nakamoto. However, The Economist and others were skeptical. None the less, in 2018 Wright was sued for $10 billion by the family of his deceased former colleague, David Klieman, for wrongfully obtaining a massive amount of bitcoin from Klieman following his death in 2013.
Bitcoin (BTC) is a digital asset (or cryptocurrency) and payment system run by a decentralized peer-to-peer network of computers. Bitcoin was created in 2009 by a programmer or group of programmers under the pseudonym Satoshi Nakamoto.
Bitcoin is the world's first cryptocurrency. It is essentially a software program that slowly releases new bitcoins into a network of computers running the software. These "coins" are awarded to computers that successfully verify transactions made between users before the rest of the network. This process is referred to as "mining" bitcoin. The program is designed such that coins become more and more difficult to mine as time passes. As of February 2018, approximately 80% of all bitcoins have been mined. The limit of 21 million bitcoins is expected to be reached around 2140.
The underlying technology for bitcoin is the "blockchain," also known as distributed ledger technology. This uses complex mathematical algorithms in place of third-party financial institutions like banks or government agencies to verify transactions made with bitcoin. Bitcoin is therefore independent, as it is not issued by any government or central authority, and transactions using bitcoin are anonymous. It is theoretically not impossible to "crack" the blockchain; however, this technology was deliberately designed to be "computationally impractical to reverse," so it is very, very unlikely that one attempting to do so would succeed, at least in theory.
As of December 2017, the total value of all bitcoin tokens outstanding was estimated to be around $326.5 billion. To date (Feb. 2018), this is the highest total value bitcoin has ever reached.
Since the value of bitcoin surged in late 2013, it began to attract the attention of major media outlets as well as regulatory authorities. This led to the creation of new cryptocurrency regulation in the case of some countries (such as the U.S., Canada, and Russia), and outright bans in others (China, South Korea).
As of December 2017, about 40 percent of bitcoin was held by around 1,000 users. Holders of such large amounts of bitcoin are often called "whales." 
With the volatility of bitcoin prices and values, hysteria is not uncommon among the bitcoin community. As a result, the term "hodl" was popularized as a colloquial way of saying "Hold On for Dear Life", or simply "don't sell." 
Some of the more prominent bitcoin exchange entities are listed below:
In 2017, the Chicago Mercantile Exchange and the Cboe Futures Exchange (CFE) self-certified new contracts for bitcoin futures products, and the Cantor Exchange self-certified a new contract for bitcoin binary options. The Commodities Futures Trading Commission oversees trading in the crypto-futures markets. In 2014, the CFTC declared virtual currencies to be a “commodity” subject to oversight under its authority under the Commodity Exchange Act (CEA).
The CFE launched trading in Cboe bitcoin futures on December 10, 2017 under the ticker symbol "XBT". The CME launched its own bitcoin futures contract a week later (Dec. 17) under the ticker "BTC." The Cboe settles its futures against a daily price auction from Gemini, while the CME uses its own bitcoin reference rate which tracks several cryptocurrency exchanges.
Bitcoin was invented by a programmer or programmers using the name Satoshi Nakamoto. In 2008, Satoshi published a whitepaper entitled, "Bitcoin: A Peer-to-Peer Electronic Cash System" on the Cryptography Mailing List Metzdowd.com. In this paper, Satoshi proposed an alternative to traditional fiat currency in favor of "a purely peer-to-peer version of electronic cash [that] would allow online payments to be sent directly from one party to another without going through a financial institution." In 2009, Satoshi released the first bitcoin software client, as well as the first mined bitcoins, marking the launch of bitcoin.
The very first blockchain component, or "Genesis Block," was recorded on January 3, 2009. This coincided with the release of the original software client. The first recorded cryptocurrency transaction occurred nine days later, on January 12, 2009.
For the first several years after its creation, bitcoin held limited appeal. By 2011, multiple prominent Internet-based institutions began accepting donations through Bitcoin, including WikiLeaks, FreeNet, the Internet Archive, and the Free Software Fondation. By 2012, the Orlando-based bitcoin payment processing company BitPay announced that over 1,000 merchants had signed up for its service within the previous year. In 2013 the value of the virtual currency exploded, with prices moving from $13 to over $1200. By 2017, a number of extremely high-profile companies, including Microsoft, Expedia, Subway, and Newegg.com had begun accepting Bitcoin payments.
On January 27, 2014, BitInstant founder Charlie Shrem was arrested at JFK International airport returning from a conference in Amsterdam. His company, which allowed users to digitally exchange bitcoins for fiat currency, had knowingly transferred money for criminals trading on the Silk Road website. Although Shrem had been aware of this, and sent an email to the user telling them, "you better stop," Shrem did not inform Federal authorities. This led to BitInstant closing its doors for good, and Shrem sentenced to two years in prison. Shrem became the first high-profile cryptocurrency luminary to be convicted on felony charges.
CME Group, in collaboration with Crypto Facilities Ltd., a digital assets trading platform, launched CME CF Bitcoin Reference Rate (BRR) and CME CF Bitcoin Real Time Index (BRTI) on November 14, 2016. BRR provides a final settlement price in U.S. dollars at 4 PM London time on each trading day, and RTI gives users real-time access to bitcoin prices.
In March of 2017 Bitcoin's price plunged briefly and then recovered after the SEC refused to grant an exemption that would have let the Winklevoss Bitcoin Trust ETF trade on the Bats BZX Exchange.
In June 2017, the market cap for all cryptocurrencies surpassed $100 billion, due to a 300% increase that occurred in just over 2 months.
Bitcoin made the most significant change in its 9-year history in July of 2017 when it split into two currencies after a splinter group launched a newer version of the currency with a different configuration. The two competing currencies are known as Bitcoin and Bitcoin Cash. The group behind Bitcoin Cash copied bitcoin’s software, added a couple of new features, and released it to the public. It will be an almost identical copy, and anybody who has a bitcoin balance can automatically hold the exact same amount of Bitcoin Cash. The main difference between the two is how fast they trade and how many trades can happen in a short amount of time.
At the same time, Cboe announced plans to launch bitcoin future contracts using data from Gemini Trust, the virtual currency exchange run by the Winklevoss twins. The bitcoin futures debuted at CBOE Dec. 10, rising from a price of $2,730 to $18,190 the morning of Dec. 11. The price of bitcoin itself surged to around $16,800.
In November 2017 it was reported that Nasdaq also plans to launch bitcoin futures in the first half of 2018. Separately, Cantor Exchange said it was seeking to launch bitcoin derivatives on its Cantor Futures Exchange LP, also in the first half of 2018.
Since bitcoin launched in 2009, thousands of cryptocurrencies have been created, many of which have since failed. In fact, a report by Chris Skinner in 2018 revealed that only 8% of ICOs that launch survive, and that 50% that had launched in 2017 had already failed. At time of writing (February 28, 2018), there are currently 2943 in-market cryptocurrencies worldwide, including bitcoin, Ethereum, and Ripple.
Bitcoin is, by design, not backed by any government or financial institution; this means that it is not insured or well-regulated, so those who suffer losses as a result of investing in bitcoin, such as victims of fraud or theft, do not have the options for recourse that investors as investors in the traditional financial system. Originally, the United States Securities and Exchange Commission released an Investor Alert document that described bitcoin as a "ponzi scheme" in 2013. As bitcoin and other cryptocurrencies have grown in popularity and steps toward greater regulation of the crypto space have been taken, the SEC's take on bitcoin has tentatively become more agreeable.
The IRS treats Bitcoin is treated as property, for taxation purposes. Employees paid in bitcoin or other cryptocurrencies must be reported by an employer on a Form W-2, and are subject to federal income tax withholding and payroll taxes.
United States federal law does not provide for direct, comprehensive oversight of underlying Bitcoin or virtual currency spot markets. As a result, U.S. regulation of virtual currencies has evolved into a multifaceted, multi-regulatory approach. State banking regulators, the Internal Revenue Service (IRS), the United States Treasury's Financial Crimes Enforcement Network (FinCEN), and the Securities and Exchange Commission (SEC) monitor bitcoin and cryptocurrency trading to enforce state money transfer, tax, anti-money laundering, and fraud protection laws.
On March 25, 2014 the Internal Revenue Service announced that bitcoin should be viewed and taxed as property and not as currency. This meant that employers who pay wages in bitcoins would have to report those wages like any other payment made with property, and that bitcoin income will be subject to federal income withholding and payroll taxes. The agency's official statement declared, “it does not have legal tender status in any jurisdiction."
In May 2014 the U.S. Federal Election Commission voted to allow political committees to accept bitcoin donations.
In March of 2017 the SEC refused to grant an exemption that would have let the Winklevoss Bitcoin Trust ETF trade on the Bats BZX Exchange.
Bitcoin is classified by the Commodity Futures Trading Commission (CFTC) as a commodity, under the Commodity Exchange Act (CEA). The CFTC enforces all bitcoin derivatives contacts in the U.S., as well as all fraud and manipulation protection laws.
Because much of the bitcoin and cryptocurrency trading that occurs happens via cash markets, the dark web, or other online methods which may not be totally secure or regulated, potential investors or traders of such should be highly vigilant of fraud. Buyers can verify whether a party offering bitcoin or other cryptocurrency options or futures services are registered with the CFTC using SmartCheck.gov, a consumer protection website owned and operated by the United States federal government.
As with regular brokers and investment professionals, consumers can use the CFTC's website Smartcheck.gov to look up investment professionals to see if they are registerd and accredited by the CFTC.
Similar to "boiler room" fraud schemes, which aggressively pushed penny stocks on investors by misleading them about their potential future value, some individuals or organizations have used social media to mislead victims into investing their money in altcoins, or alternative cryptocurrencies. These "pump-and-dump" ICO scams use misinformation to trick large numbers of people into investing in a new digital asset with the promise of huge returns, then sell all of their shares once its price reaches a certain point, causing a significant price drop, leaving investors with essentially worthless digital tokens. Some use false news reports, testimony from fake "experts," and other unscrupulous means to accomplish their goals. The CFTC warns potential investors that they should be especially wary of very new cryptocurrencies, and that extensive research on a particular company or coin is imperative for potential investors. Fraudulent digital asset scams can be reported at Whistleblower.gov.
"IRS-approved" Digital Asset IRA's
Some frauds have advertised "IRS-approved" IRA funds and similar services involving digital assets. These typically rely on misinforming potential investors (for one thing, the IRS never endorses investments). Because self-directed IRA's can hold unregistered investments and are not taxed until withdrawn from an IRA account, they make for attractive, if false, potential investments to the unwary consumer.
Using the NSA-developed SHA-256 cryptographic hash function as a proof-of-work function, Satoshi Nakamoto and their team created a system that could run on almost any platform to carry out anonymous, secure transactions that are extremely difficult to forge.
Of course, this process is not by any means a simple one. When a bitcoin miner attempts to add a block to the blockchain, they are receiving a transaction sent out into the blockchain network by someone with a "bitcoin wallet", or account containing their owned bitcoins. The computer or computers (nodes) of said miner then set out to calculate the solution to the SHA-256 problem using the wallet owner's "public key", a cryptographically-generated set of letters and numbers of varying lengths not tied to their personal identity in any way. This is used to solve a complex mathematical problem - called a hash function - in order to produce a digital address that will serve as the transaction's destination. This math problem can't be solved with simple logic, however; because of the anonymity of users and their hashes, the hash must be guessed. This creates a sort of contest between bitcoin miners to see who can guess a correct hash first. The bitcoin network increases the difficulty of this task in proportion to how many miners there are in the network, in order to keep the time between blocks created in the blockchain constant, around 10 minutes or so.
Blockchain is, theoretically, a widely-adaptable concept. Experimental startup companies have begun utilizing it for everything from supply chain management to ride sharing to birth and death certificate archiving. It was originally developed by Satoshi Nakamoto in order to create a peer-to-peer system of managing and verifying all transactions made with bitcoin. The blockchain ensures that all records of transactions made with bitcoin are securely archived. This ensures that, since new "blocks" of data are added by the bitcoin software client (which is also the sole proprietor of newly-mined bitcions), the total number of bitcoins in circulation and the number of bitcoins possessed by each user is maintained accurately, while also maintaining total anonymity of all users.
Transactions between bitcoin users are made with bitcoin wallets over bitcoin exchanges. Some popular exchanges include Coinbase (GDAX), Kraken, and Bitfinex. There are, however, several exchanges around the world, including several that operate on a national level.
Executing a bitcoin transaction involves paying fees of varying size. These are meant to incentivize miners to prioritize transactions offering nonzero fee rates first. The miner who solves the transaction and adds the resulting block to the blockchain receives the fee, like a waiter receiving a tip at a restaurant. Though bitcoin fees are meant to be optional gratuities, the act of assigning fees to a transaction has become commonplace; as a result, users who do not utilize fees can expect to wait much longer for their transactions to be verified. The time it takes for a transaction to become verified also depends on the volume of users making requests to alter the blockchain; in mid-December of 2017, the average wait time for transaction verification was around 78 minutes, but on Sunday the 17th, the average was closer to 1,188 minutes. At this time, the average fee needed to make a bitcoin transaction was approximately $28. By March 1st of 2018, that average had plummeted to $2.37.
Fees are often calculated using algorithmic software built into a cryptocurrency exchange, but they can also be entered manually. The rates for fees and the manner in which they are collected varies depending on the exchange; for example, the transaction fees of Kraken involve taking into account a rebate disbursed to its user's wallets, depending on when they are processed and what the rates relative to market volume are at the time the transaction is made.
John Lothian News Special Report, December 2013
On December 7, 2013, John Lothian News published a special report, "A Bitcoin for Your Thoughts" featuring:
To view the report, click HERE.
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