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Closelook: A bitcoin odyssey

4 months ago

Bitcoin has been all over the news recently. It’s easy to see why. In 2017 it increased in value 14-fold. Is the excitement valid or a bubble destined to burst? Here are 5 points to help cut through the hype…

What is it? Bitcoin is a cryptocurrency.  It is a medium of exchange to buy and sell things and only exists in digital space. Bitcoin is the most famous cryptocurrency, but there are plenty of others – including Ethereum, Ripple and Litecoin.

A myth. Nobody knows! Myth surrounds the creator. The first version of the bitcoin code was released in January 2009. No more than 21m of them can be created. So far, we’re around the 17m mark.

Liberté, égalité. The philosophy behind bitcoin is libertarian - to uphold freedom. The idea was to create an anonymous peer-to-peer currency. It is therefore not backed by governments or regulated by central banks.

Drugs and games! Bitcoin first gained notoriety as a financial instrument favoured by criminals, partly to preserve their anonymity. They are a favourite of gamers and are gaining wider acceptance. But they have yet to hit the financial mainstream.  Just try finding a local shop that accepts them...

A risky business.  In January 2011 one bitcoin was worth less than $1. In January 2018, it exceeded $17,000. They could be worth much more next year. Or worth nothing. It’s extremely volatile and unregulated. A state could decide to block conversion into euros or dollars. And losing your passcode for a bitcoin means it’s lost forever.

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