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Blockchain is a type of distributed ledger. It consists of a series of blocks, or time-stamped clusters of data that can be viewed publicly. It provides a totally transparent way to write and store information that can be viewed by anyone with an Internet connection.[1][2]


Blockchain is a relatively new technology that stores and verifies information, such as information related to transactions made with cryptocurrency. Unlike fiat currency, which uses centralized authorities such as banks or government organizations to verify the passage of different amounts of currency between individual accounts, blockchain is decentralized. There exists not a single entity or person who holds total power over editing the blockchain. Instead, it relies on a massive, digital, worldwide community of individual computers, or "nodes", to verify and maintain records of transactions.[3][4]

Blockchain was originally developed by Satoshi Nakamoto and a team of developers in order to create a peer-to-peer system of managing and verifying all transactions made with bitcoin. This technology uses complex mathematical algorithms in place of third-party financial institutions like banks or government agencies to verify possession of, and transactions made with, cryptocurrencies such as bitcoin.[5][6]

Unlike a simple password-protected centralized system, the blockchain stores only enough information to verify the cryptographically-generated code, or hash, of the transaction's genesis and destination. This does not include the identity of the person who manipulated the transaction's source or destination, or where the computers used to do so are located - only a hash that is not tied to any kind of personal identifier or IP address. This information is distributed across millions of individual nodes worldwide. It does not include enough information that, if hackers accessed the database containing the data for stored past transactions, the user accounts on that database would be immediately compromised, because there is no easy way to pinpoint the identity of the people involved in the transaction from these data alone. This allows users to remain totally anonymous.[7]

Because the blockchain does not exist in any centralized entity or authority, "hacking" the blockchain means figuring out how to do so retroactively, which means cracking an extremely difficult cryptographic math problem for each block one wishes to alter. Even then, by changing the data in a blockchain, one invariably changes the hash on that block, making it immediately apparent to the entire network that this block has been changed, as the hash on that block no longer resembles the hash on the millions of copies of that block stored on nodes across the globe. In order to circumvent this, a hacker would have to somehow alter the block in the same exact way on every single node in the network. While technically not impossible, it is extremely unlikely that any individual or group would be able to accomplish this; the computational power alone that would be required to do so is immense, and the anonymity of users makes locating and hijacking a sufficient number of nodes highly unlikely to succeed with current technology. Researchers have speculated that the technology to do this may be possible, but will not be developed for around another ten years.[8] In other words, it's easy to go from the data contained in a block to its hash - it's nearly impossible to go from a hash to the block's data. This "consensus mechanism" creates an entirely new way of managing data - because blocks are cryptographically secure, third parties are not required to verify the data contained therein.[9]


Projects such as Hyperledger, Bakkt, and GMEX represent efforts by enterprise-level businesses, traditional financial institutions, and governments to investigate and experiment with blockchain adoption.[10][11][12] While these projects are significant, many who are not already blockchain developers, promoters, or enthusiasts still lack confidence in the technology. A survey conducted by PricewaterhouseCoopers (PwC) in April and May 2018 revealed that, according to its responders (mostly business executives with roles relating to technology), the biggest barriers to adoption are regulatory uncertainty, lack of trust among users (ironically this is what blockchain was built to achieve), and the ability to bring networks together.[13] According to a Barclays analysis conducted around the same time, some technology analysts believe blockchain in its current form is incapable of living up to the capabilities its proponents insist it can. This analysis primarily focused on bitcoin's blockchain.[14]

The state of some existing, enterprise-level blockchain projects have likely not positively impacted such a widespread lack of confidence among potential institutional investors. In August 2018, former employees of Project Infinity, a blockchain project launched in May 2017 by NEX Group, reported that the project had seen "significant" layoffs, including the project's entire London team. One former staffer even said the project, which had cost about $31.7 million, had been "canned." To date, this is the most expensive distributed ledger project to have ended in such a way.[15] Despite such disheartening news, there have been signs of increased institutional adoption in some blockchain-based projects. Ripple reported in Q2 of 2018 that, although XRP sales and XRP's overall market cap had seen a sharp decrease, its customer base increased during the same period. According to employees at Ripple, the increase of customers represents a positive turn for XRP in terms of adoption, because the decrease in price can be attributed to existing investors holding on to the XRP they have already purchased, expecting its value to increase.[16][17]

According to a research report from Forrester published in November 2018, many companies have begun substituting the word "blockchain" for "DLT" (distributed ledger technology). The study said this was due to the over-hyping of blockchain technology, as well the fact that many projects touting their use of "blockchain technology" actually lack key characteristics of a blockchain.[18][19]

In May 2019, the Régie de l’énergie (Hydro Quebec) announced that it would allocate 300 MW of electricity to blockchain companies operating in the province. To qualify, companies engaging in cryptocurrency mining would have to show that they are creating jobs, paying their employees fairly, investing in the province and offsetting heat.[20] The same month, PepsiCo released the results of a blockchain trial called "Project Proton," which sought to test the applicability of blockchain technology to the company's supply chain reconciliation efficiency, or its ability to verify the validity of information from two different sources. The trial saw a 28 percent efficiency increase.[21]

Later that month, Germany's cetnral bank, Deutsche Bundesbank, announced the results of a trial project it had run using blockchain technology with Deutsche Boerse to settle securities and cash. According to the president of the Bundesbank, the settlements took longer and were more expensive compared to traditional settlement processes. The project was launched in 2016 and concluded in late 2018.[22][23]

Other Applications

Though it was originally developed to serve as a distributed ledger for bitcoin, blockchain technology may have other applications as well. It is, theoretically, a widely-adaptable concept; experimental startup companies all over the world have begun utilizing it for everything from supply chain management to ride sharing to birth and death certificate archiving and real estate registry.[24][25][26][27]


The blockchain is a public, distributed, decentralized string of interconnected data clusters, called "blocks", tied to a single, original "genesis block." The "genesis block" is a cluster of data built to attach information such as cryptocurrency transactions to itself. Figuratively speaking, the genesis block is like the anchor for the rest of the blockchain.[28] Each block contains data as well as two computer-generated, cryptographic codes, or hashes: its own hash, and the hash of the block that came before it. Functionally, a hash is like a digital fingerprint - it is unique, and is used to identify a specific block.[29]

Each time a new block is made through the transaction of a specific cryptocurrency, the data from that transaction - including the amount transferred from one node, or user, to another; the digital identification information of both nodes, and other cryptographically-generated data - are encoded into a new "block," or timestamped bundle of digital records. This block is the product of multiple computers/nodes calculating complex mathematical formulae of varying size, solving them, verifying the results with the other nodes, and encoding the results in a fixed size. Each node receives a copy of the block, so the entire network can verify that the transaction happened (a block may contain data for more than one transaction, so one block does not necessarily equate to one transaction).[30] Each block contains data that is used to keep track of how much digital currency users have stored on multiple computers in a closed network, hence the term "distributed ledger."[31] This is the proof-of-work function that allows cryptocurrency to function as a medium of trade, despite having no tangible form.[32]

Each block contains the hash pertaining to the one that came before it, which creates a chain of blocks, or "blockchain."[33] This process - the process of "solving" blocks, verifying the solutions and adding them to the blockchain - is referred to as "mining" cryptocurrency.

Editing the Blockchain

The method by which the blockchain is edited depends on the data contained in the block. In the case of bitcoin, for example, the editing process begins with a transaction. If Person X wishes to transfer, for example, one half-share of a bitcoin, or 50,000,000 Satoshi (the smallest unit of measurement for shares of a bitcoin)[34][35] to Person Y, first they both have to have bitcoin wallets, or software that accesses the blockchain without identifying the user to the system (such as GDAX). The transaction begins with Person X requesting that the blockchain be edited to reflect a decrease in their wallet by 50,000,000 Satoshi, and an increase by 50,000,000 Satoshi in the wallet of Person Y. Next, this change is examined by various computers, or "nodes" in the network, to make sure that Person X actually has that much cryptocurrency to transfer to Person Y, that the request to transfer did indeed occur, and that the rest of the network agrees.[36]

Because the data in each block is distributed, as opposed to being tied to a central source, data in each block cannot be altered retroactively unless the entire network does so cooperatively.[37]


Mining cryptocurrency is the process by which nodes within a blockchain network calculate the validity of cryptocurrency transactions and, upon verifying their validity, add another block to the blockchain. Each time a new block is generated, it includes the solution to the mathematical function generated using the cryptocurrency transaction. This works similar to a password, securing the block from outside attempts to alter the data contained within it.[38] This process can take a tremendous amount of processing power, even with the effort of doing so being distributed across a huge network of computers.[39]


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  8. Quantum Computers Could Jack Your Crypto Private Key in 10 Years, Researchers Say. Coindesk date=February 23, 2018.
  9. the great chain of being sure about things. The Economistdate=February 21, 2018.
  10. Linux Foundation's Hyperledger Fabric 1.0 Ready For Production. Forbes.
  11. New Starbucks partnership with Microsoft allows customers to pay for Frappuccinos with bitcoin. CNBC.
  12. UK government supports GMEX to create new trading exchange in Mauritius. Business Banking Review.
  13. Survey finds a surprising barrier to blockchain adoption. MarketWatch.
  14. Can blockchain technology live up to the hype? Barclays analysts say no. MarketWatch.
  15. $31 Million NEX Project Could Be Biggest Casualty of Blockchain Cuts. Coindesk.
  16. Ripple Report: XRP Sales Dropped 56% in Q2, But Customer Base Grew. Coindesk.
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  18. Time to Ditch the Word 'Blockchain', Report Says. Fortune.
  19. Predictions 2019: Distributed Ledger Technology. Forrester.
  20. Hydro Quebec Establishes Standards Cryptocurrency Miners Must Meet to Qualify for More Power. Crowdfund Insider.
  21. PepsiCo Blockchain Trial Brings 28% Boost in Supply Chain Efficiency. Coindesk.
  22. Blockchain officially confirmed as slower and more expensive. Financial Times.
  23. Blockchain Settlement Was Slow, Costly in Trial, Weidmann Says. Bloomberg.
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Bitcoin (BTC) is a digital asset (or cryptocurrency) and payment system run by a huge, global, decentralized peer-to-peer network of computers. Bitcoin was created in 2009 by a programmer or group of programmers under the pseudonym Satoshi Nakamoto.[1]


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.[2] As of February 2018, approximately 80% of all bitcoins have been mined.[3] The limit of 21 million bitcoins is expected to be reached around 2140.[4]

The underlying technology for bitcoin is the "blockchain," a type of distributed ledger technology. This technology uses complex mathematical algorithms in place of third-party financial institutions like banks or government agencies to verify transactions made with bitcoin or other digital tokens. Because bitcoin is not issued by any government or central authority, it is considered independent, and transactions using bitcoin are anonymous.[5] It is theoretically not impossible to "crack" the blockchain; however, the 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.[6]

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.[7]

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).[8][9][10][11][12]

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."[13]

With the volatility of bitcoin prices and values, hysteria and evangelism are not uncommon among the bitcoin community. The term "HODL" was popularized as a colloquial way of saying "Hold On for Dear Life", or simply "don't sell."[14]

The great bitcoin bubble

In mid-December 2017, bitcoin's price hit a high of nearly $20,000 per BTC. Over the course of 2018, its price slowly but steadily declined. In September, Galaxy Digital's Michael Novogratz declared bitcoin had hit its new "bottom" at just over $6,400 per coin; the price of bitcoin remained relatively stable until mid-November when bitcoin saw an additional price decrease of almost 50 percent. By mid-December 2018, bitcoin's price had decreased by more than 80 percent compared to the highest price in December 2017. Some declared this to be the popping of the bitcoin "bubble."[15][16]

By the summer of 2019, bitcoin began making a comeback. Bitcoin hit a new yearly high of $13,563.76 on June 27, 2019, before settling down around $11,500 on June 28. Many speculated that these huge gains were due to increased trading activity by institutional investors; Arthur Hayes, CEO of BitMEX, told Forbes earlier that week that daily trading volumes on his bitcoin margin trading platform surpassed $11 billion and were rapidly approaching $12 billion. Others speculated that the gains could be explained by Indian traders’ increased activity following the government’s recent proposed blanket ban on cryptocurrencies despite rising demand in the country. Whatever the reason, bitcoin’s price increased more than 300 percent since the start of the year.[17][18]


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.[19][20][21]

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.[22][23][24] 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.[25][26]

The Blockchain

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.[27][28][29] 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.[30]


Transactions between bitcoin users are made with bitcoin wallets over bitcoin exchanges. Some popular exchanges include Coinbase (GDAX), Kraken, and Bitfinex.[31][32] There are, however, several exchanges around the world, including several that operate on a national level.[33]

On May 6, 2019 Bluewallet, a bitcoin wallet provider, launched wallet software allowing users to send bitcoin payments over the Lightning Network using Apple Watches. The software is available for download in the Apple iTunes Store. Nuno Coehlo, Head of product development for Bluewallet, noted that both the implementation of bitcoin payments in a smart watch as well as the lightning network are both highly expermimental. Coelho told CoinDesk, “It’s a very early stage industry so we’re trying to figure out how to build this stuff properly.”[34]


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.[35] 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.[36] By March 1st of 2018, that average had plummeted to $2.37.[37]

Fees are often calculated using algorithmic software built into a cryptocurrency exchange, but they can also be entered manually.[38] 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.[39]


One of the major functions of bitcoin is its ability to allow users to transact with one another with greater privacy than can be conferred (legally) by the traditional financial system.

At the Bitcoin 2019 conference in June 2019, Edward Snowden - a former NSA operative known for whistleblowing his former employer's mass surveillance efforts - spoke about how bitcoin allowed him to pay journalists in 2013 while on the run from the U.S. government. He said that "lack of privacy is an existential threat to bitcoin," and that privacy is "the only protection users have from political change." He also said that it is imperative for cryptocurrency exchanges not to give out client data, fearing that if one exchange did so, many others would follow.[40]

Bitcoin Exchanges

Some of the more prominent bitcoin exchange entities are listed below:[41]

Bitcoin Derivatives

In 2016, the Chicago Mercantile Exchange (CME) launched bitcoin price indexes for the first time, seeking to bring institutional-grade resources to the bitcoin trading markets.[43]

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.

LedgerX, a trading and clearing platform for digital assets, received approval for its platform from the CFTC in July of 2017 and began listing physically settled one- to six-month options contracts for bitcoin in October 2017. Other digital currency contracts such as Ethereum options are expected to follow.

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 settled its futures against a daily price auction from Gemini, while the CME uses its own bitcoin reference rate which tracks several cryptocurrency exchanges.[44]

On October 3, 2018, ErisX announced its formation as the successor to Eris Exchange, a designated contract market that listed interest rate swap futures products. The company said it planned to trade and clear cryptocurrency futures contracts at some point. The exchange also said that it would offer spot trading. According to ErisX, its investors include DRW Venture Capital, Valor Equity Partners, TD Ameritrade, Virtu Financial, NEX Opportunities, Cboe Global Markets, CTC Group Investments, Digital Currency Group, Nico Trading, Pantera Capital, Third Stone Partners, CMT Digital, Susquehanna International Group, XR Trading, C2 Capital Management and ED&F Man Capital Markets Inc.[45]

In March 2019, Cboe made a surprise decision to delist its bitcoin futures contract, with the final settlement of the contract on June 19, 2019. It had steadily lost market share to CME Group and open interest volume at CME was almost six times higher than Cboe's contract. CME posted record volumes in its bitcoin futures contract in 2019.[46]

In February 2019, the CME Group announced that in the first quarter of 2019, it set a new record for total bitcoin futures contracts traded. The record high for total contracts traded in Q1 of 2019 was 18,338 contracts as of February 19th, the equivalent of 91,960 BTC or $360 million based on the price of bitcoin at the time. The previous record was set on November 20, 2018.[47] On April 4, 2018, the CME Group Tweeted that the firm had experienced a "record trading day" on bitcoin futures; according to a chart accompanying the Tweet, 22,542 bitcoin futures had traded on April 4 alone, which is equivalent to 112,710 bitcoins.[48][49]

ErisX announced on April 30, 2019, that it had closed another $20 million in funding from investors and that it was launching its spot market as well as related clearing services that day. Bitcoin was one of the initial cryptocurrencies that could be traded with its new services, as well as Bitcoin Cash, Litecoin, and Ethereum traded against the U.S. dollar and against each other. In an interview with CoinDesk, Chief Strategy Officer Matt Trudeau said that ErisX continues to build out its technology, raise funds, and apply for futures and futures clearing licenses.[50]

The CME Group saw a record high number of bitcoin futures contracts traded, as well as the highest number of customer accounts trading bitcoin futures in its history in May 2019. The company released a statement saying, "the number of unique accounts continues to grow showing that the marketplace is increasingly using BTC futures to hedge bitcoin risk and/or access exposure."[51] This trend would continue into the Summer of 2019; on June 17, the CME Group's open interest for bitcoin futures grew by a record 643 contracts in a day, reaching an all-time high of 5,311 contracts. Based on bitcoin's price at the time, this equated to over $250 million worth of contracts.[52] Coinciding with this, the price of bitcoin reached $9,300, its highest point since May 2018.[53] Around the same time, the Japanese Consumer Affairs Association (CAA) released a report saying that an increase in queries to Japanese exchanges related to bitcoin trading indicated increased interest in cryptocurrency trading.[54]


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 in the traditional financial system do. Originally, the United States Securities and Exchange Commission (SEC) released an Investor Alert document that described bitcoin as a "ponzi scheme" in 2013.[55] 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.[56]

The IRS treats Bitcoin 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.[57]


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.[58]

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."[59]

In May 2014 the U.S. Federal Election Commission voted to allow political committees to accept bitcoin donations.[60]

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.[61]

Bitcoin as a commodity

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.[62][63]

In September 2014 the CFTC permitted TeraExchange, a swap execution facility, to certify to the commission that its bitcoin swap complied with the requirements of the Commodity Exchange Act, a statement which implied that bitcoin is a commodity under the CFTC's authority.[64] That December, Chairman Tim Massad stated his view during Congressional testimony that bitcoin was a commodity and acknowledged that the CFTC defined the term "commodity" broadly.[65] In 2015 the CFTC settled a complaint against a company called Coinflip for providing, during 2014, a marketplace called Derivbit, which listed bitcoin options without being registered as a swap execution facility - the only permissible venue for commodity options trading.[66] The CFTC settled its case against Bitfinex, wherein the CFTC accused Bitfinex of trading off-exchange Bitcoin futures and failing to register as a futures commission merchant, in June 2016.[67] The view that bitcoin can be regulated as a commodity received support on March 6, 2018 when U.S. District Judge Jack Weinstein ordered that the CFTC could sue Patrick McDonnell and his company, CabbageTech, for fraud under the Commodity Exchange Act. CabbageTech solicited funds from investors for providing cryptocurrency advisory services, which the CFTC alleged were never forthcoming. [68]


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, a consumer protection website owned and operated by the United States federal government.[69]

As with regular brokers and investment professionals, consumers can use the CFTC's website to look up investment professionals to see if they are registered and accredited by the CFTC.[70]

Bitcoin was named as the currency of choice for the Russian intelligence officers indicted by the U.S. Government for spying on the Democratic National Committee - including hacking into their computers - during the 2016 presidential campaign. The indictment indicated that in addition to using bitcoin for payments, the intelligence officers mined new bitcoin. Along with the other complaints against them, the officers were charged with money laundering connected to their bitcoin use.[71]

In October 2018 Nouriel Roubini, an economist and New York University professor famous for correctly predicting the popping of the U.S. housing bubble in 2007, called cryptocurrency and bitcoin "the mother or father of all scams and bubbles" while testifying at a congressional hearing on Capitol Hill. He said that everyone he knew that was actively involved in cryptocurrency trading was "financially illiterate," and "could not tell the difference between stocks and bonds."[72]

Pump-and-dump schemes

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[73]

"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.[74]


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[75] 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."[76] In 2009, Satoshi released the first bitcoin software client, as well as the first mined bitcoins, marking the launch of bitcoin.[77]

The very first blockchain component, or "Genesis Block," was recorded on January 3, 2009.[78] This coincided with the release of the original software client. The first recorded cryptocurrency transaction occurred nine days later, on January 12, 2009.[79][80]

On May 22, 2010, Florida resident Laszlo Hanyecz traded 10,000 BTC for two pizzas from a Papa John's franchise. This is widely believed to be the first instance in which bitcoin was directly used to purchase something tangible. Since then, this occasion has been celebrated every May 22nd by bitcoin enthusiasts as "Bitcoin Pizza Day."[81]

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,[82] FreeNet,[83] the Internet Archive,[84] and the Free Software Fondation.[85] 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.[86] By 2017, a number of extremely high-profile companies, including Microsoft, Expedia, Subway, and had begun accepting Bitcoin payments.[87]

The 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.[88][89]

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.[90]

In June 2017, the market cap for all cryptocurrencies surpassed $100 billion, due to a 300% increase that occurred in just over 2 months.[91]

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.[92] At time of writing (February 28, 2018), there are currently 2943 in-market cryptocurrencies worldwide, including bitcoin, Ethereum, and Ripple.[93]

In 2018, U.S. Federal investigators discovered that bitcoin was the currency of choice for the Russian hackers charged with influencing the 2016 U.S. Presidential election. The hackers allegedly used bitcoin to launder approximately $95,000 to pay companies such as the Romanian company in their efforts. This was done in order to avoid direct relationships with financial institutions by utilizing the anonymity of bitcoin's transactions.[94]

On Halloween 2018, the ten-year anniversary of bitcoin's whitepaper being published, bitcoin was trading at around $6,250 per coin.[95]


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.[96][97]

Mt. Gox

In 2014 Mt. Gox, one of the world's first-ever bitcoin exchanges, ceased operations indefinitely following a series of hacking attacks that caused its customers to lose millions of dollars worth of crypto. Mark Karpelès, the CEO of Mt. Gox, faced several lawsuits and criminal charges as a result. In 2016, a Russian hacker named Alexander Vinnik was arrested in Greece after numerous law enforcement agencies from the U.S., as well as independent investigators, traced some of the bitcoins stolen from Mt. Gox to a wallet owned by Vinnik. Vinnik was charged with helping criminals launder money through BTC-e, an exchange he allegedly ran.[98][99][100]

Bitcoin Cash hard fork

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.[101] 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.[102]

Bitcoin "toxic" culture debate

In May 2019, cryptocurrency users on Twitter became engaged in a broad debate about the nature of the bitcoin community. Specifically, the debate questioned whether the culture within the bitcoin community was "toxic" - that it encourages those involved with it to think and behave in ways that are overly cynical and non-constructive. Certain Ethereum developers even said that they had chosen to leave the bitcoin community and begin programming for Ethereum due to the toxicity of bitcoin's community. Blockstream's Marketing Director Neil Woodfine said over Twitter that bitcoin "deals with money" - specifically, "separating money from the state." He said that it involves managing people's livelihoods, but that the "vast majority" bitcoin's community has seen many fraudsters and scammers, and has grown to be "necessarily one of extreme skepticism, cynicism, rigorous review, and forthright language," and that bitcoin "is better for it." He also said that those who disagree with this stance are "not good under pressure," "too sensitive," and "lack conviction." While many praised his argument, some like the director of MIT's Digital Currency Initiative Neha Narula accused Woodfine of gaslighting critics of bitcoin's culture, saying, "Always question, never settle, and know that there are lots of us who try to debate, criticize, learn, and improve without being jerks." Chaincode developer John Newbery made similar criticisms, saying that bitcoin's culture is still developing, is not set in stone, and can and should be improved.[103][104]

John Lothian News Special Report, December 2013

On December 7, 2013, John Lothian News published a special report, "A Bitcoin for Your Thoughts" featuring:

  • a column from JLN publisher John Lothian about his thoughts on bitcoin,
  • a short primer on the aspects of bitcoin, by John Lothian News Chief Information Officer Jeff Bergstrom and
  • a selection of the best articles on bitcoin we found at the time of the report.

To view the report, click HERE.


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  48. CME Group reports “record trading day” on bitcoin futures. The Block.
  49. CME Bitcoin futures had a record trading day on April 4, hitting an all-time high volume of over 22.5K contracts (112.7K equivalent bitcoin), surpassing previous record of over 18.3K (64.3K equivalent bitcoin) on February 19. More #Bitcoin futures. $BTC_F. Twitter.
  50. ErisX Launches Crypto Spot Market on Heels of New $20 Million Raise. CoinDesk.
  51. CME bitcoin futures trading clocks in a number of new records in May. The Block.
  52. CME: Open Interest in Bitcoin Futures Contracts Hit All-Time High. Cointelegraph.
  53. Bitcoin Price Rally Stalls as Open Futures Hit Record Highs. Coindesk.
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  55. Ponzi Schemes Using Virtual Currencies. SEC.
  57. IRS Virtual Currency Guidance: Virtual Currency Is Treated as Property for U.S. Federal Tax Purposes; General Rules for Property Transactions Apply. IRS.
  58. CFTC Backgrounder on Oversight of and Approach to Virtual Currency Futures Markets. CFTC.
  59. IRS Says Bitcoin Should Be Considered Property, Not Currency. New York Times Dealbook.
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  62. Bitcoin Basics. CFTC.
  63. Customer Advisory: Understand the Risks of Virtual Currency Trading. CFTC.
  64. TeraExchange Rule Implementation Submission. CFTC.
  65. Crypto Land of Confusion. Futures Magazine.
  67. The Future of Virtual Currencies Under U.S. Derivatives Regulation. K&L Gates.
  68. Cryptocurrencies Like Bitcoin Are Commodities, Federal Judge Says. Here's Why That Matters. Fortune.
  69. Customer Advisory: Understand the Risks of Virtual Currency Trading. CFTC.
  70. CFTC Smart Check. CFTC.
  71. 12 Russian Agents Indicted in Mueller Investigation. New York Times.
  72. Bitcoin is the 'mother of all scams' and blockchain is most hyped tech ever, Roubini tells Congress. CNBC.
  73. Customer Advisory: Beware Virtual Pump-and-Dump Schemes. CFTC.
  74. Customer Advisory: Beware “IRS Approved” Virtual Currency IRAs. CFTC.
  75. Bitcoin P2P e-cash paper. The Mail Archive.
  76. Bitcoin: A Peer-to-Peer Electronic Cash System.
  77. Who is Satoshi Nakamoto?.
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  79. Blockchain. Blockchain.
  80. The First Bitcoin Transaction Happened Exactly 8 Years Ago. The Merkle.
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  82. WikiLeaks Asks For Anonymous Bitcoin Donations. Forbes.
  83. Donate: How Can I Donate?.
  84. A Message from Internet Archive Founder, Brewster Kahle. The Internet Archive.
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  86. Greenspan Says Bitcoin a Bubble Without Intrinsic Currency Value. Bloomberg.
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  88. CME Group and Crypto Facilities Announce Launch of Bitcoin Reference Rate and Real-Time Index. CME Group.
  89. CME CF Bitcoin Reference Rate & CME CF Bitcoin Real Time Index. CME Group.
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  96. 8 surprising places where you can use bitcoin. Business Insider.
  97. What a 20-something bitcoin millionaire learned from going to prison and starting over. CNBC.
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  99. Mt. Gox and the Surprising Redemption of Bitcoin’s Biggest Villain. Fortune.
  100. Court Approves U.S. Extradition for Alleged BTC-e Operator. Coindesk.
  101. CBOE to launch bitcoin future contracts. The Financial Times.
  102. Bitcoin Surges Past $4,000 on Speed Breakthrough. Bloomberg.
  103. Bitcoin’s ‘Toxic Culture War’ Explained. Coindesk.
  104. Neil Woodfine. Twitter.

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