BITCOIN’S volatility is continuing but it has recovered some of its value following a pre-Christmas collapse and a single coin is worth more than £11,000.
The cryptocurrency suffered major losses after South Korea cracked down on the cryptocurrency and has continued to see peaks and troughs in its value. Here’s the latest…
Some investors are worried by the currency’s volatile nature and the market’s inability to cope with sudden shifts in demand.
An eBay executive told Yahoo Finance the tech giant is “seriously considering” accepting bitcoin payments after its recent success.
Although Scott Cutlor, senior vice president of eBay Americas said they’re “not quite there yet”, his consideration indicates how fast the cryptocurrency is permeating the mainstream.
John Taylor Jr, president and founder of research firm Taylor Global Vision in New York, on the other hand, believes Bitcoin will soon crash, even though it hasn’t reached its peak yet.
The cryptocurrency’s recent record of nearly $20,000 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 about £940.
As of 3pm on December 30, the value of Bitcoin in GBP was £9,507.02 and $12,847.33 in USD.
What is Bitcoin?
Bitcoin is a virtual currency that was created in 2009 by an unknown computer whizz using the alias Satoshi Nakamoto.
Individual Bitcoins are created by computer code.
The total value of all Bitcoin in existence is now more than £112billion.
Transactions are made without middlemen, so there are no transaction fees and no need to give your real name.
More businesses are beginning to accept them and in some parts of the world you can even buy pizza with Bitcoins.
You can set up a virtual wallet websites like Blockchain to store, keep track and spend your digital money.
You are also able to purchase Bitcoin through an online exchange or Bitcoin ATM.
Bitcoins aren’t printed, like pounds, dollars or euros – they’re produced by people, and increasingly businesses, running computers all around the world.
It’s the first example of a growing category of money known as cryptocurrency.
How do Bitcoins work?
The value of Bitcoin, like all currencies, is determined by how much people are willing to exchange it for.
To process Bitcoin transactions, a procedure called ‘mining’ must take place, which involves a computer solving a difficult mathematical problem with a 64-digit solution.
For each problem solved, one block of Bitcoin is processed.
In addition, the miner is rewarded with new Bitcoin.
To compensate for the growing power of computer chips, the difficulty of the puzzles is adjusted to ensure a steady stream of new Bitcoins are produced each day.
There are currently about 16 million in existence.
The Bitcoin protocol – the rules that make Bitcoin work – say that only 21 million Bitcoins can ever be created by miners.
But these coins can be divided into smaller parts with the smallest divisible amount one hundred millionth of a Bitcoin.
This is called a “Satoshi”, after the founder.
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.
These addresses are in turn stored in Bitcoin wallets, which are used to manage savings.