BITCOIN: what actually is it?

Name Bitcoin

Age Nine

Appearance Hard to tell, as it’s virtual.

You mean it’s money I can’t touch? Yes – cryptocurrency, as it is known, is only transferred electronically.

So, what’s the point? Rather than using it to make purchases, most people buy Bitcoin as a type of investment, buying and selling for real-life currency.

How much would this investment cost me? It fluctuates dramatically. In December, one Bitcoin reached nearly £13,000 ( just one!), but in February this year the price dropped by over 50%, to approximately £5,050.

Why so much? Supply and demand! Bitcoin has limited availability and is released via a process called ‘mining’.

You’ve lost me… Stay with us! According to bitcoin.org, the number of new Bitcoins that can be mined each year ‘is automatically halved until there are 21 million Bitcoins in existence’. Currently, there are about 16 million.

Is it used by criminals? Bitcoin has been associated with crime because each transaction has its own unique code (called a Bitcoin address) so they can’t be linked. But all transactions are recorded into the blockchain, a growing list of records that can be viewed by other Bitcoin users.

Why would I ever need to use it? Paypal and Microsoft are accepting it as payment, and it might be hitting our high streets soon, too, with Betway having odds of 1/2 for Mcdonald’s accepting it by the end of 2018.

I’ll invest now then… Slow down! Capital Economics has said that it has a ‘classic speculative bubble, which we expect to burst’. Experts don’t believe it will ever replace standard currencies. Although it is a widespread phenomenon, several banks have banned customers from buying Bitcoins on their credit cards.