What is Bitcoin? How does this translate into pounds and pence?

POSTED BY   Mark Grayson
9th August 2017
what is bitcoin?

Introduction

The UK government is very concerned about managing and monitoring Bitcoin currency around taxation.  For most of us, this is a bit of science fiction but it is here to stay. Let’s take a look in a bit more detail.

Bitcoin is a controversial computer currency that’s worth more than gold is a type of digital currency that was invented by an unknown developer. Currently, as it stands (Jul 21, 2017) a single bitcoin is worth £2,090 while a troy ounce of gold is worth $1,248 (£960).

What is Bitcoin?

The coin was created in 2009 by an unknown computer developer under the username of Satoshi Nakamoto.  The currency is virtual ie it does not have a physical form. It can only be purchased and sold online. Transactions are made without middle men, so there are no transaction fees and no need to give your real name.

Bitcoins are slowly entering the UK business market. To access the currency you can download an app and create a virtual wallet from virtual currency stores like https://blockchain.info/wallet/#/.  There are also other ways to purchase bitcoins through an online exchange or Bitcoin ATM. To find merchants that accept Bitcoin in the UK click here.

The bank of England does not have control of how many bitcoins are produced as they are created by people, businesses and computers around the world.  The main growth currency in bitcoin is called cryptocurrency.

Why people and business like Bitcoin is because it gives them the ability for them to stay anonymous when trading and also a lack of Government control.

How does Bitcoin work?

Like a service or good traded on the open market the laws of supply and demand are always present. It is determined by how much people are willing to exchange it for.

A bitcoin is produced by mining it. This means a computer a computer solving a difficult mathematical problem with a 64-digit solution. For each problem solved, one block of Bitcoins is processed. In addition, the miner is rewarded with new bitcoins.  There are currently about 15 million in existence.

However, 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 postbox to and from which the Bitcoins are sent.

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.

Is Bitcoin the future of online trading?

No one knows what will become of Bitcoin as it is mostly unregulated, but that could change as governments are concerned about taxation and their lack of control over it. So its’ USP – the anonymity – could eventually prove its downfall.

While it keeps Bitcoin users’ transactions private, it also lets them buy or sell anything without easily tracing it back to them. That’s why it has become the currency of choice for people online buying drugs or other illicit activities. Not many governments will put up with that for long.

NHS

The biggest cyber attack in the history of the NHS caused “significant problems” with IT systems and telephone networks across NHS trusts in England and Scotland. Hackers encrypted files demanding NHS staff pay ransoms of $300 (£233) per computer via the digital currency service Bitcoin to regain access. They warned the sum would be doubled if it was not paid within three days.HS cyber attack ransomware hackers demand?

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Mark Grayson

Mark Grayson is the Senior Account Manager at TDMB. He comes from an Education background, having previously worked as Head of IT in secondary education, hence his interest in Technology in Education. He is also a gifted pianist, as well as being skilled in digital marketing, and is possibly the happiest, most positive person on Earth.

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