UK digital marketing agency In Front Digital has begun accepting bitcoin as payment following an increase in interest from businesses in the sector.

Also read:Did Barclays Just Declare War on Bitcoin Users?

The company, based in the countrys second city Birmingham, is still among the first movers in an environment comparatively slow to catch on to digital currency.

With the increase in interest in bitcoin, weve had several clients (mostly tech ones) ask if we did accept bitcoin, CEO Matthew Day told Bitcoin.com.

We have also had some interest around international work and barriers are a lot lower (and quicker) when dealing with bitcoin versus bank transfers or PayPal.

In Front Digital offers SEO and PPC services as part of its full service marketing package, all of which can now be paid for in bitcoin. In a press release issued Monday, the company indicated it had been eyeingbitcoins progress among merchants for some time prior to making a decision to come on board.

We have been following the trend and usage of cryptocurrencies over the past 18 months and see bitcoin is gaining in strength, popularity and use, Day explained.

Research into bitcoins full potential to help business process does not stop at pleasing tech clients. The past few years have seen startups demonstrate how the virtual currency can easily be used to streamline not just merchant payments, but a raft of internal processes, which Day is keenly aware of.

I would prefer to keep the money in bitcoin due to safety from inflation but I will convert some to pay for expenses, such as company running costs, as although the amount of places taking bitcoin is increasing, we are still for the most part restricted to the banking system, he continued.

He added he would welcome the day that he could pay staff salaries in bitcoin.

Unlike many businesses which use merchant providers such as BitPay or Coinbase to accept payments, Day is going it alone. Indeed, long term he considers it prudent to maintain a maximum amount of BTC profit in its original format.

I think it is safer to keep it in bitcoin rather than fiat currencies, he said. I havent really used merchant support infrastructure too much but I am aware of sites like BitPay and others.

The UK is currently shaping up to be a mixed environment for cryptocurrency and businesses that deal in it. While government schemes appear to broadly support disruptive fintech, recent moves from the countrys banks demonstrate a lack of understanding on legislation and liability.

What do you think about In Front Digitals perspective on Bitcoin adoption and the current UK regulatory stance? Let us know in the comments section below.

Images via Shutterstock, In Front Digital

If youd like to know more about how to accept Bitcoin as a business, read our User Guides or ask your questions on the Bitcoin.com Forum.

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UK Marketing Firm Goes Bitcoin as Industry Interest Surges ...

Bitcoin (valutaforkortelse: BTC eller XBT) er et online betalingssystem og en virtuel valuta, der kan bruges til betalinger et begrnset antal steder p internettet. Det blev opfundet af Satoshi Nakamoto, som offentliggjorde sin opfindelse i 2008 og efterflgende udgav systemet som open source i 2009. Systemet er peer-to-peer, s brugere kan indg i transaktioner med hinanden uden mellemled som pengeinstitutter eller centralbanker. Skabelsen af nye bitcoin og godkendelsen af transaktioner bliver i bitcoin-systemet hndteret kollektivt i et netvrk af computere ved hjlp af kryptografiske algoritmer. Som flge heraf er bitcoin i modstning til traditionelle valutaer hverken reguleret eller underlagt beskyttelsesregler i lovgivningen p dansk og europisk plan.[1] Nye bitcoin skabes i et netvrk p internettet, som er tilgngeligt for alle, via en proces kaldet minedrift (mining).

Bitcoin blev opfundet af Satoshi Nakamoto, som udgav en artikel den 31. oktober 2008 med titlen "Bitcoin: A Peer-to-Peer Electronic Cash system". Systemet, der bygger videre p flere tidligere ider, blev udgivet som open source i januar 2009. Bitcoin er en af de frste kryptovalutaer efter forgngere som David Chaums ecash, der havde sin frste transaktion i 1994, og OpenCoin, som nu hedder Ripple, der havde programmel fr november 2008.

Den frste til at modtage bitcoin var programmren Hal Finney, som tidligere havde skabt et lignende system kaldet RPOW. Finney hentede softwaren p bningsdagen og modtog 10 BTC fra Satoshi Nakamoto. Blandt andre tidlige tilhngere var Wei Dai, skaberen af forgngeren b-money, og Nick Szabo, skaberen af forgngeren bit gold. Der har vret megen spekulation om, hvorvidt Satoshi Nakamoto i virkeligheden var en af disse personer. Det skaldte hashcash-system, som bitcoin anvender, blev foreslet af Adam Back i 1997.

Processen, der udvinder nye bitcoin samt regler og formater for transaktioner med den digitale valuta, er beskrevet i den skaldte Bitcoin Protocol. Protokollen opdateres og ndres lbende af udviklere, og den anvendes i et skaldt peer-to-peer-netvrkskonfiguration, dvs. et decentralt datanet, hvor hver computer i datanettet har lige stort ansvar for datanettets funktionalitet.

For at kunne modtage og betale med bitcoin, skal man have en skaldt pengepung (wallet) installeret p sin computer. Pengepungen implementerer ofte peer-to-peer protokollen og er afhngig af netvrket for at fungere. Pengepungen er et program, der giver adgang til en rkke adresser med hver deres saldo i bitcoin. En pengepung kan ogs ligge hos forskellige udbydere, hvilket kan sammenlignes med at have penge stende i banken.[1] Alle bitcoin-transaktioner er offentlige og foregr alene mellem to parter ved udveksling af beskeder underskrevet med digitale signaturer, men det er muligt for udbydere at have interne konti og transaktioner som bitcoin-netvrket aldrig ser.

En bitcoin-adresse er p 27-34 tegn, og bestr bde af bogstaver og tal som f.eks. 1HB5XMLmzFVj8ALj6mfBsbifRoD4miY36v. Hvis en bruger nsker at betale med bitcoin, er det ndvendigt at kende betalingsmodtagerens adresse. Overfrslen foregr fra brugerens pengepung, hvorfra transaktionen sendes til verificering i netvrket. Da bitcoin er uden central autoritet, er det op til den enkelte bruger at bestemme, hvor mange verificeringer der skal til, fr transaktionen anses for afsluttet.

Alle pengetransaktioner er offentlige og foregr alene mellem to parter ved udveksling af beskeder underskrevet med digitale signaturer. Man skal holde forbindelsen mellem sin adresse og sin identitet hemmelig, hvis man vil bruge bitcoin anonymt. For at gre bitcoin svrere at spore, kan man forvanske deres oprindelse ved at sende dem til en adresse, som modtager fra mange mennesker. Derefter blandes de modtagne bitcoin tilfldigt og distribueres igen. Dette blandingsaggregat kaldes p engelsk en tumbler (en blander). Den kendsgerning, at man ikke ndvendigvis kan knytte adressen, som har modtaget bitcoin, sammen med ejeren af adressen, medfrer, at bitcoin kan vre attraktiv til nogle kriminelle forml. Bitcoin er derfor nogle gange blevet sat i forbindelse med illegale aktiviteter som f.eks. det sorte online-marked Silk Road.[1]

Valutaen skabes og uddeles til brugerne i praksis tilfldigt, men under anvendelse af vsentlige beregningsressourcer skaldt minedrift (mining). Jo mere minedrift man driver, desto hjere bliver chancen for, at man fr gevinst, se afsnittet om indsatsbeviskden forneden. Mngden af nye bitcoin, der skabes, aftager med tiden. Sledes har systemet en endelig forudbestemt pengemngde (21 millioner). Pengemngden vokser som en geometrisk rkke hver 210.000. blok (omtrent hvert 4. r); i 2013 vil halvdelen vre genereret, og i 2017 vil 3/4 vre genereret.

Pengepunge kan man generere selv, og det er derfor let at skille foretagender fra hinanden.

Med sin forudbestemte og endelige pengemngde er systemet baseret p en deflationskonomi. Stigende eftersprgsel efter penge kan alene dkkes af stigende vrdi per enhed af valutaen. Og systemet er derfor ogs designet til at brugerne kan dele valutaen op i mindre enheder helt ned til 8. betydende ciffer. Den mindste enhed kaldes en "satoshi". Det har derfor kun psykologisk betydning, at n bitcoin kan koste tusindvis af kroner: 1.000.000 re er det samme som 10 tusindkronesedler.

Bitcoin-systemets relative succes har frt til fremkomsten af en rkke lignende kryptovalutaer med navne som Litecoin, Peercoin, Dogecoin, Namecoin, Mastercoin og Primecoin. Samtidig vurderer nogle, at det er nogle helt srlige mindre grupper, der tiltrkkes af bitcoin som betalingsmiddel: Teknologientusiaster, der fascineres af de nye digitale muligheder, professionelle spekulanter, der opkber og gemmer bitcoin for at tjene penge, ideologisk orienterede anarkistisk-liberale, der tiltrkkes af ideen om en ikke-statslig betalingsenhed, samt grupper, der nsker at frdes og handle p nettet uden overvgning, herunder ogs kriminelle.[2]

Det danske Finanstilsyn og Den europiske banktilsynsmyndighed EBA har advaret mod brug og handel med bitcoin. Finanstilsynet anser ikke bitcoin for omfattet af den finansielle lovgivning.[3]

Fremkomsten af bitcoin og andre former for digitale valutaer har fet en rkke konomer til at interessere sig for fnomenet. Vurderingen er dog ofte skeptisk eller direkte negativ.[4]Nobelpristageren i konomi Paul Krugman har sledes i et bermt blogindlg "Bitcoin Is Evil" fremfrt, at en valuta for at fungere ordentligt bde skal kunne fungere som et betalingsmiddel og som et stabilt vrdiopbevaringsmiddel, og at bitcoin vil f svrt ved at opfylde det sidste kriterium, fordi der ikke er nogen centralbank eller offentlig myndighed til at garantere vrdien.[5] konomiprofessor ved University of California, Berkeley Brad DeLong mener, at bitcoin aldrig kan blive et alment accepteret betalingsmiddel, fordi omkostningerne ved at skabe en bitcoin-klon som Dogecoin o.l. med stort set de samme egenskaber er meget sm og den konomiske tilskyndelse til at gre det vil vre meget stor, hvis bitcoin fr en vsentlig udbredelse.[6] Professor Tyler Cowen argumenterer, at en deflationr konomi, hvor priserne konstant falder, som bitcoin er designet til at skabe i det lange lb, vil vre problematisk.[7]

Ogs Danmarks Nationalbank har undersgt fnomenet bitcoin i bankens kvartalsoversigt i 1. kvartal 2014.[1] Analysen nvner, at betalinger med bitcoin sammenlignet med andre betalingsformidlingssystemer har lave transaktionsgebyrer, men peger p en rkke uhensigtsmssigheder ved bitcoin som betalingsmiddel: De kan kun anvendes f steder, kbekraften er meget svingende som flge af de kraftige kursudsving p bitcoin, systemet bygger p en underliggende deflationstendens, anvendelsen er ikke dkket - og derfor heller ikke beskyttet - af lovgivning, f.eks. ved hacker-angreb, og mange mennesker vil formodentlig mene, at betalingen i praksis foregr mere besvrligt end ved gngse betalingsmetoder. Derudover mener analysens forfattere, at det vil vre vanskeligt at holde omkostningerne ved at benytte bitcoin nede, idet det ligger i metodens konstruktion, at det bliver mere og mere omkostningsfuldt at skabe nye bitcoin. Disse omkostninger skal i sagens natur dkkes ind.[1]

Indsatsbevis-algoritmen, der udsteder nye bitcoin, er en vigtig del af Bitcoin. Hver mntenheds skiftende ejerskab registreres ved hjlp af digitale signaturer. Denne registrering sker i blokkden (se forneden), og er den eneste offentligt tilgngelige information om Bitcoin. Navne og adresser er sledes ikke gemt i blokkden, som gemmer alle transaktioner.

Registreringer af aktuelle bitcoin-transaktioner, der er kendt som en blok, tilfjes til fortegnelse over tidligere transaktioner i blokkden (block chain).

Adressen er afledt af den offentlige ngle (public key) til pengepungen. Adressen gengives med grundtallet (radix) 58 for p den mde at gre adresserne kortere, end hvis der blev brugt f.eks. decimal- eller hexadecimal-gengivelse.

For at f en transaktion distribueret i systemet skal man i praksis betale et transaktionsgebyr. Transaktionsgebyret fr minedriveren som belnning for at inkludere transaktionen i den nye blok, der blev fundet. Transaktionsgebyret kaldes ogs minedriverens afgift (miner's fee).

Den asymmetriske krypteringsalgorithme som Bitcoin bruger, er Elliptic Curve DSA, som bygger p, at det er for svrt at finde den diskrete logaritme af et tilfldigt elliptisk kurveelement (fra en stor elliptisk kurve) ud fra et offentlig kendt basispunkt.

Grundlaget for bitcoins transaktionsmekanisme er indsatsbevis-algoritmen. Som indsatsbevis-algoritme (proof-of-work algorithm), bruges hashcash-konceptet, i inkarnation som SHA-256. Da SHA-hashen er kryptografisk plidelig, kendes intet system for, hvordan man hurtigt finder data som hasher til en given vrdi, derfor anses bitcoins for at blive tilfldigt tildelt. Netvrket accepterer kun hashes, som er tilpas lave (i hexadecimalgengivelsen vil de have flere nuller foran). For at finde en sdan hash, stter minedriveren sin datamat til at hashe tilfldig data. Denne proces kaldes minedrift. Netvrket justerer svrhedsgraden (antal nullerne) i henhold til omfanget af minedriften.

Indsatsbevis-algoritmen, kombineret med blokkden, lser et gammelt datalogisk problem: problemet om byzantinsk fejltolerance:

Indsatsbevis-algoritmen er en lsning p de byzantinske generalers problem. Jeg vil hermed forsge at genformulere det i den kontekst.

Et antal byzantinske generaler har alle computere, og vil gtte kongens wi-fi-kodeord ved brug af et brute-force-angreb. De ved, at kodeordet bestr af et givent antal tegn. S snart de stimulerer netvrket til at generere en pakke, skal de gtte kodeordet p begrnset tid, for at bryde ind og slette deres spor, ellers bliver de opdaget og kommer i knibe. De har kun nok processorkraft til at knkke det hurtigt nok, hvis et flertal af dem angriber p samme tid.

De er ligeglade med, hvornr angrebet finder sted, bare de alle er enige. Det besluttes at enhver kan bestemme et tidspunkt, og det frste tidspunkt der bliver udmeldt, vil vre det officielle angrebstidspunkt. Problemet bestr i at netvrket ikke leverer meddelelser omgende, og hvis to generaler udmelder forskellige angrebstidspunkter nsten samtidigt, vil nogle f den ene udmelding frst, og andre vil f den anden frst.

De bruger en indsatsbeviskde til at lse problemet. S snart hver general modtager det angrebstidspunkt han hrer frst, stter han sin computer til at lse et ekstremt svrt indsatsbevis-problem som hasher angrebstidspunktet. Indsatsbevis-algoritmen er s svr, at det forventes at tage dem 10 minutter, selv nr de arbejder samtidigt (men uafhngigt), fr nogen finder en lsning. S snart en af generalerne har fundet et indsatsbevis, udmelder han det til netvrket, og alle ndrer deres nuvrende indsatsbevis-beregnelse til at inkludere dette indsatsbevis i det hash de regner p. Hvis nogen arbejdede p et andet angrebstidspunkt, skifter de til dette, fordi dets indsatsbeviskde nu er lngere.

Indsatsbeviskden kan gemmes effektivt i et Merkle tr.

Hvis svrhedsgraden er hj, kan det tage lang tid at finde en blok. Blokkene belnnes med flere bitcoin (som kan vre flere tusinde kroner). Derfor slr folk sig sammen i mineforbund (mining pools). P den mde fr alle hyppigt en lille gevinst, da der oftere vil vre nogen i netvrket der finder en blok. Mineforbundet krver naturligvis, at man yder sin andel for at f del i udbyttet.

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Bitcoin - Wikipedia, den frie encyklopdi

Fintech company Paxos has partnered with the Euroclear team to bring blockchain-based gold settlement to the London Bullion Market. The project, called Euroclear Bankchain, aims to leverage blockchain technology to make post-trade settlement more efficient.

Also read:Top 10 Killer Apps for Bitcoin: Ideas That Can Change the World

Paxos and Euroclear executives announced the collaboration during this weeks SIBOS annual conference in Geneva, Switzerland. Paxos CEO Charles Cascarilla told attendees the partnership will producethe first concrete blockchain use case for gold settlement in the London Bullion Market.

The blockchain-based gold solution will benefit investors and key stakeholders during the Bankchain initial offering, Cascarillatold reporters.

We are coming to market with a ground-breaking offering that will drastically impact the post-trade process and overall trading infrastructure within the global gold market.

Founders Richmond Teo and Charles Cascarilla consider the flagship product Bankchain to be a next-generation blockchain settlement platform. The platform providesprompt settlement and automationto bringmore fluid efficiency to post-trade capital markets, Cascarilla added.

The company has raised a total of $28.25 million USD through two funding rounds. Last year, withinvestors such as the Digital Currency GroupandBlockchain Capital, the company acquired $25 million in one Series A funding round. Cascarilla and partners first launched Bankchain under the cryptocurrency exchange itBits umbrella.

Euroclear claims it has a reputation as a trusted post-trade services provider witha double-A rating from Standard & Poors.

The companyworksto provide settlement and safekeeping for securities, equities, bonds, and derivatives to investment funds. Italso believes blockchain technology can transform the post-trade markets.

Currently, post-trade settlements often take days and come with significant costs from third parties, auditors, and paperwork. Euroclear says that with a distributed ledger mechanism, clearing can be done faster, more formally, and with cost savings. The Bankchain protocol, it says, can advance settlement times by providinga more frictionless environment.

As a neutral market infrastructure, with a track record of providing high quality, reliable post-trade services to some of the worlds leading financial institutions, we are adopting a collaborative approach wherever possible, working with third-party innovators in ways that reward their innovation while simultaneously giving us flexibility, said Luc Vantomme, Euroclears managing director and Global Head of Innovation.

The settlement of unallocated gold is a very capital-intensive process. We are working to develop a service to reduce risk and balance sheet constraints.

Both firms believe Bankchain can produce better results than the traditional London Bullion Market system. Cascarilla said that overall, the platform will reduce counterparty risk, and offer real-time tracking and transparent auditability.

The advent of blockchain settlement platforms, he said, will streamline the post-trade process. To prove its worth, his companyis startingwith the London Bullion and precious metals markets.

What do you think about Pax and Euroclears blockchain-based gold settlement Bankchain? Let us know in the comments below.

Source: Paxos

Images via Shutterstock, Pixabay.

Did you know Bitcoin.com is throwing a blockchain conference in London this year? Our premiere event,Blockchain: Money,features the biggest innovators and executives in the industry. The event will also take placein the beautiful surroundings of 155 Bishopsgate, London onNovember 6-7, 2016. Reserve your tickets today!

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Blockchain-Based Gold Settlement is Coming to London ...

Inside a metal shed in the Tibetan highlands of western China, thousands of microprocessors flank narrow corridors, generating a constant hum and stifling waves of heat.

Outside, the sky is clear and blue, with a mountain peak looming at the top of a narrow wooded valley. A flock of goats ambles idly past a pile of discarded foam packaging. Inside, though, tranquility is transformed into clamor. Red, blue and green lights constantly flash; cooling water trickles down the walls, and large ventilation fans thrum as they struggle to shift the hot air produced by all this concentrated computing power.

This is a bitcoin mine, the engine room of the worlds leading digital currency. The microprocessors here approve and record all the transactions that keep the bitcoin system running. They also compete to solve complex mathematical problems and are rewarded with bitcoins: Thats a way of putting fresh digital currency into circulation and incentivizing more people to set up mining operations.

Bitcoin began as a utopian, libertarian dream, a decentralized currency outside the control of governments, a system that gives its users the anonymity of cash and the instant, global power of email. This was a system built not just for convenience, but also for those who cant bring themselves to trust the global financial system, created by a programmer whose identity remains a mystery.

Across Tibet, China is busy pulling mineral resources out of the ground; there is even a gold mine close by. But here in Kongyu, most of the mining is virtual. It is here because of extremely cheap hydropower, cheap wages and perhaps because Chinese entrepreneurs have a knack for the business.

[Chinas scary lesson to the world: Censoring the Internet works]

For a while, bitcoin was effectively kidnapped by drug dealers, becoming the anonymous payment backbone of the Silk Road, a black market in illegal drugs that flourished on the dark Net until the FBI closed that market down in 2013.

Today it is an industry that is starting to come of age, but whose center of gravity has shifted to China, and away from utopian dreamers toward venture capitalists.

When bitcoin was invented, the people dedicated to it were mostly crypto-punks and libertarians, said Eric Mu, the chief marketing officer with HaoBTC, which operates the bitcoin mine in this township in Chinas western Sichuan province. Now they are more like bankers and lawyers who see opportunities in the industry. And as they join, the industry is changing.

In this case, changing also means moving to China.

Today, mines run by Chinese companies account for about 70percent of the worlds bitcoin processing power, its factories produce the cheapest microprocessors to run these mines, and its exchanges account for about 70percent of the worlds bitcoin trade.

It is increasingly big business. Altogether there around more than 15 million bitcoin in existence: Each is worth $615 at current prices, with a market capitalization of $9.2 billion.

For some, Chinese domination of an industry once controlled by libertarian crypto-punks is a rich irony. For others, it is a more practical threat: Chinese miners, some argued, have been standing in the way of reforms needed to speed up transaction speeds on bitcoins fast-expanding network of users.

But those concerns might be overblown.

Some people in the Western world were painting Chinese miners with too broad a brush, said Emin Gn Sirer, a computer science professor at Cornell University. Its not the case that all Chinese miners are part of the same enterprise or are colluding.

But Sirer identifies one risk with the concentration of mining power here: If the Chinese government wanted, it could in theory crack down on miners and force them to block certain bitcoin accounts.

They would not be able to usurp funds, but they could stop the motion of funds, he said, describing exactly the sort of government control bitcoin was supposed to guard against.

These are concerns that have parallels with the way China is using its digital market power to reshape the Internet and influence the global debate about censorship and surveillance.

But here, in the mountains of Sichuan, it is hard to see much evidence of a Chinese plot to bring bitcoin to heel.

The Chinese government has employed a fairly light touch. Although it banned banks from taking part in bitcoin trading in 2013, it left ordinary people free to buy and trade the crypto-currency, and miners free to operate.

[Internet activists are finding ways around Chinas Great Firewall]

The industry is run by a disparate mix of investors and dreamers and is manned by electricians and IT experts. There are people like Ryan Xu, an infectiously enthusiastic Chinese-born Australian who first became interested in libertarian economics while working as a reactor operator in a nuclear power plant. He now describes himself as both a utopian and a venture capitalist.

We need to foresee the next five or 10 years, he said in a wide-ranging conversation over dinner in the western city of Kangding. All the governments are printing money and diluting peoples wealth. Is that justice or robbery? The financial system also keeps crashing every five or 10 years. I think thats an illness in the monetary system and it needs a cure.

He says he is not sure bitcoin is the answer, but it is at least an experiment that might work.

So why China?

Running microprocessors sucks electricity. Competition is intense, and profit margins are narrow: Xu has moved his mines around the world in search of the cheapest power, from Iceland to Georgia, and then to Washington state, from the coal fields of Chinas northern Inner Mongolia province and now to the mountains of Sichuan.

His latest mine is still under construction, between a hydroelectric power plant and the concrete shell of a disused power transmission station, between Kongyu and the city of Kangding.

As Chinas economy boomed, private companies set up hydroelectric plants in western Sichuan; then, as the economy slowed, they found themselves unable to sell to the national grid, elbowed out of the market by more politically powerful state-owned firms.

It took a lot of money to build the plants, but it doesnt cost that much to maintain them, said HaoBTCs Mu. So it makes sense for them to sell the power to anyone willing to buy, even at a low rate.

Maintenance staffers are cheaper here than in the West. Mu says his company employs 10 people at three mines in the mountains, paying them around 6,000 yuan ($900) a month, a decent salary for this part of the world. HaoBTC runs one other mine in Sichuan and one farther west in Xinjiang, with more than 11,000 machines, earning more than 80 bitcoin a day a daily income stream worth more than $745,000.

[These viral selfie apps with 1 billion downloads are shaping Chinas start-up culture]

But it is not only Chinese entrepreneurs who have taken to bitcoin. Deprived of good investment opportunities at home, and burned by a volatile stock market, a growing number of Chinese people have begun speculating and investing in bitcoin.

Bobby Lee, a former Silicon Valley engineer who founded Chinas first bitcoin exchange, BTCC, attributes it partly to a natural instinct to buy and sell.

If you look at Las Vegas or Macau or casinos worldwide, how come most of the clientele are of Asian descent, or Chinese specifically? he asked. It has to do with some cultural instinct. Chinese people like to gamble.

Yet as bitcoin matures, it is also experiencing some significant growing pains.

Bitcoin is virtual money that cuts out banks and credit card companies, and has gotten more popular recently. Here's what you need to know about the original cryptocurrency. (Davin Coburn/The Washington Post)

On Aug. 2, the Bitfinex exchange in Hong Kong was forced to admit that hackers had stolen nearly 120,000 bitcoin worth $72million from customers accounts. That news caused the bitcoin price to fall by more than 20 percent and underlined the safety concerns that many ordinary people feel about owning digital money.

At the same time, the system is showing signs of overloading. Bitcoins current technology can process only around three digital transactions a second minuscule compared with the roughly 24,000 transactions per second that Visa can manage.

Delays in processing transactions have grown, as have transaction fees, and the industry has become deeply divided about how to reform the system to solve the problem.

Jeff Garzik, a leading bitcoin developer based in Atlanta, argues that a technological fix is in the pipeline that soon will allow bitcoin to process tens of thousands of transactions a second.

I think that with new technologies coming down the pipeline, it can scale up to everyone buying their coffee with bitcoin in the entire world, he said. It really can be the first really good substitute for physical in-your-hand cash.

Like Sirer, he isnt too worried about the current concentration of mining power in China, partly because the market is so dynamic and the dominant players change every year.

Its much easier to challenge the dominant players in this space because market entry is so easy, he said. If the Chinese miners suddenly power off their rigs, within 24 hours well see the emergence of another competitor.

Here in the mountains, miners while away their free time playing mah-jongg or poker, smoking cigarettes or surfing on their smartphones. Site manager Guo Hua used to run a small camera-repair shop and still likes fiddling around with machines. Marketing manager Mu, who spends only a few weeks of the year here, likes to translate books in his free time or run to the nearest town to buy cigarettes for his colleagues. Sometimes he hikes into the mountains, toward a remote Tibetan village or a looming peak, a welcome change of change of pace from Beijing and its polluted air.

And all the time, the microprocessors keep on running.

Australian entrepreneur Craig Wright has come forward as the mysterious creator behind the virtual currency Bitcoin. Here's a look at what we know about the creator's pseudonym Satoshi Nakamoto, Bitcoin's history and Wright's claims. (Jenny Starrs/The Washington Post)

Xu Yangjingjing contributed to this report.

Read more:

America wants to believe China cant innovate. Tech tells a different story.

The Internet was supposed to foster democracy. China has different ideas.

Todays coverage from Post correspondents around the world

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The bizarre world of bitcoin mining finds a new home in ...

Using Bitcoin to pay and get paid is easy and accessible to everyone.

How to use Bitcoin

Bitcoin is different than what you know and use every day. Before you start using Bitcoin, there are a few things that you need to know in order to use it securely and avoid common pitfalls.

You can bring a Bitcoin wallet in your everyday life with your mobile or you can have a wallet only for online payments on your computer. In any case, choosing your wallet can be done in a minute.

You can get bitcoins by accepting them as a payment for goods and services or by buying them from a friend or someone near you. You can also buy them directly from an exchange with your bank account.

There is a growing number of services and merchants accepting Bitcoin all over the world. You can use Bitcoin to pay them and rate your experience to help honest businesses to gain more visibility.

How to accept Bitcoin

Bitcoin does not require merchants to change their habits. However, Bitcoin is different than what you know and use every day. Before you start using Bitcoin, there are a few things that you need to know in order to use it securely and avoid common pitfalls.

You can process payments and invoices by yourself or you can use merchant services and deposit money in your local currency or bitcoins. Most point of sales businesses use a tablet or a mobile phone to let customers pay with their mobile phones.

Merchants often deposit and display prices in their local currency. In other cases, Bitcoin works similarly to a foreign currency. To get appropriate guidance regarding tax compliance for your own jurisdiction, you should contact a qualified accountant.

There is a growing number of users searching for ways to spend their bitcoins. You can submit your business in online directories to help them easily find you. You can also display the Bitcoin logo on your website or your brick and mortar business.

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Getting started - Bitcoin