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Communications of the ACM

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Bitcoin: Under the Hood

Bitcoin: Under the Hood, illustration

Credit: Asaf Eliason

"I just want to report that I successfully traded 10,000 bitcoins for pizza," wrote user laszlo on the Bitcoin forums in May 2010—reporting on what has been recognized as the first item in history to be purchased with bitcoins.a By the end of 2013, about five years after its initial launch, Bitcoin has exceeded everyone's expectations as its value rose beyond the $1,000 mark, making laszlo's spent bitcoins worth millions of dollars. This meteoric rise in value has fueled many stories in the popular press and has turned a group of early enthusiasts into millionaires.

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Stories of Bitcoin's mysterious creator, Satoshi Nakamoto, and of illegal markets hidden in the darknet have added to the hype. But what is Bitcoin's innovation? Is the buzz surrounding the new cryptocurrency justified, or will it turn out to be a modern tulip mania? To truly evaluate Bitcoin's novelty, its potential impact, and the challenges it faces, we must look past the hype and delve deeper into the details of the protocol.


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