Bitcoin is a software-based payment system, initially released in 2009 by Satoshi Nakamoto as open source software. The payments in the system are recorded in a public ledger using its own unit of account, which is called bitcoin.
Payments operate on a peer-to-peer system without a central repository or single administrator. This has led the U.S. Treasury to call bitcoin a decentralized, virtual currency. Media reports, on the other hand, often refer to bitcoin as a “cryptocurrency” or “digital currency.”
Bitcoins are created as a reward for payment processing work, called “mining,” in which individuals or companies offer their computing power in order to verify and record payments in the public ledger. Users engage in mining in exchange for transaction fees and newly created bitcoins. Bitcoins can also be obtained in exchange for fiat money, products, and services.
Mainstream websites started accepting bitcoins in 2012 and 2013. The first bitcoin ATM was installed in Canada in October 2013. As of November 2013, roughly 12 million bitcoins were in existence.