Part 1: All about Bitcoin

Where did Bitcoin come from?

Created by a mysterious developer who uses the pseudonym Satoshi Nakamoto, Bitcoins exploded on to the financial scene in 2013, following enormous increases in their value.

In the original Bitcoin white paper, Nakamoto describes his creation as a "peer-to-peer version of electronic cash", allowing "online payments to be sent directly from one party to another without going through a financial institution".

Bitcoin isn't just a currency, like dollars or euros or yen. It's a way of making payments, like PayPal or the Visa credit card network. It lets you hold money, but it also lets you spend it and trade it and move it from place to place, almost as cheaply and easily as you'd send an email.

Of course, bitcoin isn’t quite the hot new thing mainstream media would have you believe. It broke onto the scene in 2009 after a Japanese programmer who uses the name Satoshi Nakamoto published a proof of concept, and it really gained steam a year later, when developers flocked to the project. By the end of 2011, bitcoin was established enough in certain circles to spark an expose on Gawker about people using the currency to buy illicit substances, and a Wired feature titled “The Rise and Fall of Bitcoin.” Then the hubbub died down—until early 2013, when Coinbase, a bitcoin “wallet service,” reportedly sold $1 million in bitcoins in a single month. That’s big money, and the real-world market took interest.