The internet was a phenomenon that enthralled excitement in people during the 1990’s when the internet became public and has since evolved to become a staple of our society. The evolution of the internet has been likened to that the commerce industry may be facing with the increasing popularity of Bitcoins and other forms of digital currencies entering the market (Tindell). Bitcoin is a digital currency that was created by a person obscured under the pseudonym, Satoshi Nakamoto (Maurer), on November 1, 2008. Bitcoin is an open-source online currency system that is secured by peer to peer connections. With the disappearance of Satoshi Nakamoto, the open-source code of the Bitcoin was modified and maintained by early bands of Bitcoin enthusiasts (Wallace). Bitcoin is not backed by any central authority or by a commodity such as gold, but rather relies on peer to peer networking and cryptography for the integrity of the currency (J.P.). This digital currency is stored in personal hardware on wallets or online wallets and due to its high liquid nature can be quickly transferred to other accounts over the internet (Grinberg). Bitcoin is a digital currency that has new features that distinguishes it from past attempts at digital currency and has major implications on our society including effects on our economic, legal, commerce, and global infrastructures.Those interested in Bitcoins can acquire them in three ways: purchasing, accepting as payment, or mining. Acquiring Bitcoins in any manner involves installing the Bit client software and creating a wallet (Biggs). This wallet can either be created online or on personal hardware with recommended back-ups made in case of hardware failure. Bitcoin transactions cost only a very small fee compared to those associated with credit cards and other payment methods. Bitcoins are highly liquid and transactions are easy to confirm. Bitcoins can be traded, bought, or shared in mining pools in divisions down to the eighth decimal place of a single Bitcoin (J.P.) and the typical jargon for 0.002 Bitcoins is 2 milliBits. The first transaction involving Bitcoins was Hanyecz paying 10,000 Bitcoins for two pizzas (Wallace) which at today’s exchange rate would be about 5 million dollars.A major problem with digital currency is “double-spending”. Normally a ledger is maintained by a trusted third party that records every transaction to prevent someone from spending the same money twice. Bitcoin sought to decentralize their currency and solved this problem by introducing a public ledger maintained over a peer-to-peer connection (Wallace). Every transaction that is made is on a public ledger so that every computer has access to it across the entire network. These computers then collect the new transactions that have occurred on the ledger into a block. A block contains the information on multiple transactions such as the owners’ public keys, a hash, and a timestamp (Nakamoto). If a computer successfully solves or mines a block, it then sends the solution to every other computer in the network. The other computers on the network check the solution by running the solution once and then accept the solution if the block is valid. The network then begins to work on creating a new block with the accepted block as last valid block (Nakamoto). The block chain accepts the larger chains as the valid chains. This prevents double spending and aggressive attacks as long as a majority of the CPU power is working with the network because the network computers will out produce the attacking computers.Bitcoin mining is a term for devoting CPU power, time and electricity on mining software to join the CPU network that confirms the public ledger block chain that Bitcoin transactions utilize (Nakamoto). The block chain is the instrument that allows for the absence of a third party but rather the network of miners to check transactions. The miners are rewards with transaction fees and will generate new currency. Those who are the fastest to solve the block chain are rewarded with Bitcoins. This started at 50 Bitcoins for a solution and halves every 210,000 blocks until the limit of 21 million Bitcoins is reached which should be approximately in the year 2140 (Wallace). This difficulty of receiving these Bitcoins is raised as more CPU power is added to the network but the total number of Bitcoins released to miners does not increase. This pace is to ensure that there is a regular growth of the currency and that it is not affected by the individual miners but rather a constant addition of Bitcoins to the market. When all the Bitcoins have been created, the incentive for miners will be solely transaction fees (Tindell). The first 50 Bitcoins were mined by Nakamoto on January 3, 2009 (Wallace.) Hardware is being developed in specifically to improve mining and gain a better proportion of the CPU power which in turn can increase the chance of mining a Bitcoin. Companies such as Butterfly Labs specialize in the sale of application specific integrated circuits (ASICs) which are the best mining tools available on the market today (Tindell). Individual Bitcoin mining may take too long to finally crack a block if it does at all so most miners join a pool where the new Bitcoins are shared among the pool at a fee (Biggs).The elimination of a third party by the peer-to-peer network, the fact that there is no federal or central authority backing, and a limited currency protects the owners of Bitcoins from inflation or manipulation of the currency by bankers. This causes people to place their trust in the Bitcoin code and numbers rather than the bankers and political leaders that can be corrupted or manipulate the money to their own advantage. The steady and predictable increase in Bitcoins contrasts greatly with the banks printing more currency and giving money to aid failing businesses under the term quantitative easing (J.P.). The production and distribution of money to car companies and Wall Street during the financial crisis caused a distrust in the financial backing of the dollar which the Bitcoin does not have. The elimination of third party intermediaries in the code for the Bitcoin also prevents the government from using these to restrict how we spend money online. The government often turned to these intermediaries to monitor and prevent transfer of funds and without intermediaries the Bitcoin is harder to track. WikiLeaks soon adapted the Bitcoin as their preferred method of receiving donations when they froze the PayPal accounts accepting donations (Maurer). This public ledger or block chain allows a pseudo-anonymity or partial anonymity in terms of the transactions and identities of those in the Bitcoin public ledger. Data mining and data warehousing of information relating to purchases is used as a value by payment companies (Maurer). The amount of data and privacy that these companies collect and release about their customers to other companies and entities may breach and cause uncertainty of the customer towards the data collecting company. A customer will look for a more private and secure way to commence online purchases and Bitcoin offers privacy by protecting the identity of a customer from a transaction. In a traditional privacy model, a trusted third party knows the identity of the customer, the transaction, and the counterparty and protects this information from the public. Bitcoin eliminates the third party and directly protects the anonymity of the customer by using a public key that protects the customer identity from the public (Maurer). The public key can also change per transaction to prevent that public key from being traced to a single owner (Nakamoto). This allows the public to feel more secure that their privacy is not being invaded and sold to other entities. Bitcoins have a wide array of effects on global communication, trade, and currency. Bitcoin has the ability to become a global currency because it is decentralized. Individual governments of countries do not have to agree on a financial backer whereas a currency with a central authority would require many sacrifices and negotiations by both governments. Bitcoins can be accepted anywhere and the transactions are fast and simple. Bitcoins do not need to be converted to local currency to be spent. Local vendors and those who accept Bitcoin would be able to convert these Bitcoins into local currency. This would make international and trade simpler because there would be a common monetary unit all over the globe. The current marketplace is gathering industries that are open to receiving Bitcoin as a payment. There are online vendors, retailers, and some restaurants are even starting to accept Bitcoin. A few online businesses even allow for a discount on purchase if the customer uses Bitcoin due to the low transaction cost of a Bitcoin. Overstock.com is one of the largest online retailers that is currently accepting Bitcoins and offering a discount if Bitcoins are used to purchase the merchandise (Brodkin). Bitcoins low transaction cost also allows for micro transactions on a smaller scale than credit cards and other payment devices (Grinberg). In Boston’s South Station, founders of a Bitcoin ATM called Liberty Bitcoin are present to help people set up wallets and insert cash and receive their first Bitcoins for a small fee (Brodkin). Bitcoin entrepreneurs are even working on incorporating Bitcoins into point of sale machines to ease the use of the currency.In the marketplace, other unique uses are being created for the Bitcoin. The block chain of the Bitcoin can be used for more than just currency. The block chain could be used in the field of real estate do reduce the costs of closing fees and transferring fees associated with the closing of a house. Incorporating the block chain into real estate can eliminate the large sum of closing fees from real estate purchases because the data and transfer will all be recorded on the block chain (Hodson). Researchers have also recently tried coloring a Bitcoin which means that they digitally label a Bitcoin with specific information such as representing a sum of gold (Hodson). This “coloring” of a Bitcoin could be used to trade other commodities such as stocks (Hodson). Legal implications play a key role in the rise and fall of digital currencies and Bitcoin has the same tendencies. Detractors of Bitcoin point to a government crackdown on Bitcoin due to the Constitution giving control of currency to the Congress and Federal Reserve (Grinberg). People attempt to use Bitcoins anonymity in illicit activities such as money laundering. The most notorious use of Bitcoins was in funding the black market trade on Silk Road prior to Silk Road being shut down (Maurer). Although Bitcoins transactions offer less information than a credit card transaction and are hard to trace they are easier to follow than the transfer of cash (J.P.). Network analysis could be used to track down users and the public ledger is publically available meaning every Bitcoin can be traced. Bitcoin accounts cannot be frozen from a government standpoint but can be seized by obtaining the hard drive where the wallet is saved (J.P.). Bitcoins are treated as a trading commodity when determining the regulations placed upon them by law (J.P.) and for the determination of tax, payments in Bitcoins are treated as barter. The tax code and other legal implications such as enforcement are hard to determine due to this being a relatively new phenomenon. If the courts decided to take an aggressive stance against Bitcoins then the market would plummet and only hardcore supporters would be left.Despite the beneficial uses of Bitcoin there are dangers in the use and the structure of the Bitcoin. Investment in mining may not pay off due to the high startup cost and the electricity required to continue mining. Pool mining, online wallets, and transaction sites may steal your Bitcoins or be infiltrated by hackers which results in the clients losing Bitcoins. Personal copies of Bitcoin wallets can be lost if a hard drive fails with no recovery system in place (J.P.). Theft of Bitcoins are hard to trace because of the anonymity that is innate in the infrastructure. Hackers that steal information can transfer Bitcoins from the account. One Bitcoin user reportedly lost $500,000 worth of Bitcoins to a theft (J.P). Unpredictable drastic fluctuations in the Bitcoin both cause a loss of credibility in the network (J.P.). There is also the fear that the large pool mining sites that consist of the bulk of mining could attempt to hijack the network. The introduction of the internet was met with many problems and but its widespread use and beneficial advantages led to it revolutionizing society and commerce (Hodson). The creation of the block chain of the Bitcoin has shown that it may become the internet of this generation. Bitcoin continues to improve its functions in our society with its diverse use and decentralized nature. Bitcoin does not rely upon a central authority and can used cheaply and efficiently in trade. Bitcoin differentiated itself from earlier attempts by using a peer to peer network to confirm its transactions. The increasing popularity of the Bitcoin has many implications for all facets of society from legal to global trade. The introduction of Bitcoin has caused a creation of several other forms of digital currency based off its block chain such as Dogecoin, Mastercoin and Peercoin (Kristoufek). The introduction of a stable from of cryptocurrency is sure to revolutionize commerce and trade globally. The current price of one Bitcoin is around $500. Much like the internet, the block chain and Bitcoin have been released and will surely have a lasting impact in the field of cryptography and its uses in society. Bitcoin can become the first globally accepted currency that would radically change global trade and commerce.?