Fungibility Wallets and similar software technically handle all bitcoins as

Fungibility wallets and similar software technically

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Fungibility Wallets and similar software technically handle all bitcoins as equivalent, establishing the basic level of fungibility . Researchers have pointed out that the history of each bitcoin is registered and publicly available in the blockchain ledger, and that some users may refuse to accept bitcoins coming from controversial transactions, which would harm bitcoin's fungibility. Projects such as CryptoNote , Zerocoin , and Dark Wallet aim to address these privacy and fungibility issues.
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Scalability The blocks in the blockchain are limited to one megabyte in size, which has created problems for bitcoin transaction processing, such as increasing transaction fees and delayed processing of transactions that cannot be fit into a block. On 24 August 2017 (at block 481,824), Segregated Witness went live, increasing maximum block capacity and making transaction IDs immutable. SegWit also allows implementation of the Lightning Network , a second-layer proposal for scalability with instantaneous transactions and near-zero fees. Economics Classification Bitcoin is a digital asset designed by its inventor, Satoshi Nakamoto, to work as a currency. It is commonly referred to with terms like digital currency, digital cash , virtual currency , electronic currency , or cryptocurrency. The question whether bitcoin is a currency or not is still disputed. Bitcoins have three useful qualities in a currency, according to The Economist in January 2015: they are "hard to earn, limited in supply and easy to verify". [103] Economists define money as a store of value , a medium of exchange , and a unit of account and agree that bitcoin has some way to go to meet all these criteria. It does best as a medium of exchange; as of February 2015 the number of merchants accepting bitcoin had passed 100,000. As of March 2014, the bitcoin market suffered from volatility , limiting the ability of bitcoin to act as a stable store of value, and retailers accepting bitcoin use other currencies as their principal unit of account. General use Liquidity (estimated, USD/year, logarithmic scale). [52] According to research produced by Cambridge University , there were between 2.9 million and 5.8 million unique users using a cryptocurrency wallet, as of 2017, most of them using bitcoin. The number of users has grown significantly since 2013, when there were 300,000 to 1.3 million users. Acceptance by merchants In 2015, the number of merchants accepting bitcoin exceeded 100,000. [12] Instead of 2–3% typically imposed by credit card processors, merchants accepting bitcoins often pay fees under 2%, down to 0%. [105] Firms that accepted payments in bitcoin as of December 2014 included PayPal , Microsoft , Dell , and Newegg . In November 2017 PwC accepted bitcoin at its Hong Kong office in exchange for providing advisory services to local companies who are specialists in blockchain technology and
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cryptocurrencies, the first time any Big Four accounting firm accepted the cryptocurrency as payment. [110] [111] Payment service providers Merchants accepting bitcoin ordinarily use the services of bitcoin payment service providers such as BitPay or Coinbase . When a customer pays in bitcoin, the payment service provider accepts the
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