What actually is Bitcoin?
It’s what’s called a cryptocurrency, a digital currency generated and controlled by encryption techniques. This means new bitcoins can’t just be generated. Early in its life people were able to ‘mine’ them, crunching through potential bitcoin addresses until an unclaimed one was found, but new bitcoins are now, sadly, few and far between.
Why does this matter?
Bitcoin’s anonymous nature has made the currency very popular – and not only with hackers like those behind the WannaCry virus (see page 10). It appeals to people who need to make transactions outside of traditional financial institutions, and its increasingly being used as a way to pay for goods and services internationally. Additionally, the lack of new bitcoins means a vast amount of deflation; 2017 has seen its value increase rapidly.
Just how valuable is it?
Ridiculously so. In 2010, early in Bitcoin’s life, a Florida man paid 10,000 bitcoins (around $41 at the time) for a pair of pizzas. Today, with Bitcoin prices topping $2,000 each, those pizzas would be worth over $20 million. With the benefit of hindsight, that is some pricey pepperoni.
Let me buy in!
Hold your horses. Bitcoin’s price isn’t only going up; it’s hit several troughs over its lifetime, and there are absolutely no guarantees that its price will continue to rise. The world’s financial regulators are also eyeing it suspiciously, particularly given that its anonymity props up a marketplace for illicit and illegal goods.
Any other options?
Bitcoin may be one of the earliest cryptocurrencies, and the main one to break through, but there are hundreds more that might be worth a gamble. Although it’s a complex and sometimes toxic environment to play in. Check out cryptomate.co.uk if you’re interested in checking out prices and potentially purchasing some for yourself.