The U.S. Treasury identifies Bitcoin as a decentralized virtual currency. It was created in 2009 by an individual or group using the alias “Satoshi Nakamoto.” It exists independently of any virtual world, and can be transferred without a central bank, clearing-house or other third-party administrator, successfully reducing transaction fees and other charges. By removing any central authority, Bitcoin gives each person the ability to directly and freely choose whom to associate, interact or exchange with.
Transactions are made directly between sender and receiver, and verified by network nodes using a public ledger. The verification process is entered through the system through a process called “mining.” “Miners” solve increasingly complex mathematical equations to authenticate transfers, and are compensated for their services with newly-created bitcoins.
Approximately 15 million bitcoins have been mined thus far. As of March 2016, the average price of Bitcoin was $415. A finite number of bitcoins are available for generation, to be capped at $21 million. Experts anticipate the last bitcoin’s issuance will be reached in 2140.