I have always wondered what the story with Bitcoins was. OK, it's a cryptocurrency, completely digital money - the first and biggest. I kind of get that. But how do you spend them? How do you get them? What are they worth? What is Bitcoin Mining? Is it something like Super Mario collecting coins?
They seem to pop up in the media every now and again - not normally for positive reasons. They even made an appearance in the BBC drama series - Ashes to Ashes. They've popped up recently on the news where Baroness Michelle Mone (originally of Ultimo, now a leading entrepreneur, speaker and mentor) was discussing her latest venture in Dubai. Here apartments are being priced in Bitcoin. However buyers will have to convert bitcoin into dollars, and the crypto price will be adjusted in line with the currency's dollar exchange rate.
Also in the news last month (also on the BBC) was information that the value of Bitcoin had tumbled by more than 10% having previously hit a record high value of nearly $5,000 per BTC. JP Morgan's Chief Executive, Jamie Dimon, has publically described Bitcoin as "a fraud" which will eventually "blow up". Bitcoin has definitely had a chequered history with issues over hacking, theft and illegal pyramid schemes, with losses running into the millions!
It is possible to acquire Bitcoins as payment, they can be bought through an exchange, exchanged with an individual or earned through mining. This is how Bitcoins are created. I had considered this could be a little pocket money generator, after all it's just something you leave the computer to do - right? Back in 2013 a Norwegian man remembered about a $22 investment he had made 4 years earlier. Having just timed it perfectly he found this (£14) investment was now worth a staggering $850,000!!! Well all we can say to that is hindsight is a wonderful thing. And as sometimes happens, it's the early adopters who took the risks that will reap the dividends - assuming they haven't lost their fortune to a hacker.
The mining process involves individuals using their computers to process Bitcoin transactions and securing the Bitcoin network. It's like you doing Barclaycard's job for them and getting paid for it. This process is incredibly intensive on your poor old computer. There are companies out there that will build you a specialised machine that costs $6,000 - but pure speculation suggests that this could net $50,000 a month. Surely if that was the case we'd all be doing it! One thing for certain, your electricity provider would be happy with your bills - this computer has a 2100w power supply (your desktop will probably be around the 500w mark). This is like running an electric kettle - all day - every day.
So who owns Bitcoin? No-one. It's a consensus network with no central authority. Developed during 2009/2010 it recorded a total value last April of $20billion. There can only ever be 21 million Bitcoins in existence, but considering no-one owns or runs Bitcoin - who made this decision? Ah yes - the consensus! The number created each year is automatically halved until the 21 million has been reached - so they are created at a decreasing and predictable rate. This means that everyone is working for a share of a finite amount. The more people involved, the less your potential share can be - hence it's competitive.
All things considered, I think I'll leave Bitcoins where they are. I'm a little too risk-averse for this kind of adventure!
Will this article change the way you work on a day to day basis? I severely doubt it! But hopefully it has answered a few niggling questions about the elusive Bitcoin. It certainly has for me.
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