Bitcoin is a virtual currency which was created in 2009 by an unidentified computer whizz known as Satoshi Nakamoto. The individual bitcoins are created using a computer code. The total value of Bitcoin is known to be more than £112billion. Transactions are made with no third party and is simply between the two parties carrying out the transaction. Unlike colloquial money, Bitcoin is not printed but is produced by people and increasingly businesses by running computers throughout the world. In order to process Bitcoin transactions is a procedure formally known as mining where a computer solves a challenging mathematical problem with a 64-digit solution. For each problem solved on block of bit coin is produced and the miner is rewarded with new Bitcoin.
There are some elements that make it attractive to it’s users such as anonymity and no governmental control, but how legitimate is Bitcoin?
The value of Bitcoin currency is determined by how much people are willing to exchange it for. The Bitcoin protocol states that there can only ever be a maximum of 21 million bitcoins ever created and there are currently 16 million. However, these coins can be divided into smaller parts with the smallest divisible amount one hundred millionth of a Bitcoin. To receive a Bitcoin, a user must have a Bitcoin address - a string of 27-34 letters and numbers - which acts as a kind of virtual post box. Since there is no register of these addresses, people can use them to protect their anonymity when making a transaction.
The record high for one Bitcoin of £8015 ($10,740) was reached on November 29 and basically sees the coin striking its mainstream moment. The dramatic rise has been attributed to surging demand in China, where authorities warn it is used to channel money out of the country. In March 2017 the price exceeded the value of an ounce of gold for the first time - then around £940.
Sources: The Sun