KAY’SCORNER
10 NOVEMBER 2019|COMPUTER SHOPPER|ISSUE 381
Thecryptofactor
MOSTOFTHEemails Ireceive
are extremely boring, so once in
awhile Icheck my spam folder
forabit of light relief. At the
moment, there are lots of
scammers offering me ways to
make afortune by investing in
bitcoins –yeah, right. These are
almost matched in number by
those telling me theyknow my
passwords and will lock down my
machine if Idon’t hand over the
readies (in bitcoin format, natch).
Alongside the spammers and
the scammers, my more normal
news feeds have big headlines
about how bitcoin is heading for
massive gains, having already
tripled in value since the turn
of the year.Bitcoin seems to be
the season’s hot topic.
So just what is bitcoin? A
bitcoin is one unit of acurrency
that exists only in software,
and has no central bank or
authority.It’s also the name of
the whole currency.Bitcoin is a
cryptocurrency,and is one of
several cryptocurrencies, but is
by farthe most popular.It’s a
digital currency that uses
encryption techniques to control
the creation of new bitcoins, and
to verify the transfer of funds.
Bitcoin has no backing in the
form of acentral bank or
government, and no regulator
to turn to if something goes
wrong. Because transfers of
funds typically take place
directly between two parties
and are immediateand
irreversible,you can think of
cryptocurrencies as digital cash.
The other technology that
goes with bitcoin (and other
cryptocurrencies) is blockchain.
When bitcoin was invented, one
of its aims was to get rid of
third-party payment-processing
intermediaries. This meant there
had to be away to make
transactions and record them
securely.This is done by storing
the transactions in adistributed
ledger on apeer-to-peer network
that’s open, public and
anonymous. Blockchain is the
technology used forthis. It’s a
distributed database that keeps
alist or chain of records (the
blocks). Once added to the
blockchain, the blocks can’t be
revised or tampered with.
Blockchain is increasingly
being used forother purposes
than bitcoin –there’s even an
EU Blockchain Observatory,a
European initiative to accelerate
blockchain innovation and the
development of the blockchain
ecosystem within the EU.
MINE,ALL MINE
We’ll come on to buying bitcoins
in abit, but you maywell have
heard that you don’t have to buy
bitcoins, you can mine them for
free.Intheory this is true,but it’s
something well out of the range
of normal people.Put simply,
and skipping the complex bits,
bitcoin ‘miners’ use very
powerful computers to find and
add details of other people’s
bitcoin transactions to the
blockchains that form the public
bitcoin records, and get
rewarded by being given new
bitcoins. It’s avery competitive
and specialist business.
Back in 2016, there were
around 15 million bitcoins in
circulation, with avalue of
around £400 each. At the time
of writing, they’re worth around
£10,000 each, but whether the
price will continue to rise,or
whether it will go the same way
as US subprime mortgages,
Nasdaq tech shares or tulip
bulbs in 17th-century Holland,
is another matter.
Most sensible people are still
saying steer well clear,unless
you’ve enough moneythat you
can afford to lose everything
you invest, or at least to be able
to treat it like putting afiver on
the hundred-to-one chance in
the Grand National.
UPSAND DOWNS
To give you some idea of the
volatility of the market, Istarted
writing this piece afew days ago,
when prices were around
£10,000, then got distracted.
By the time Icame back, the
headlines were that Bitcoin had
dropped to around £9,000. If I
take any more time,itmight
either have shot up again in
value,orcrashed dramatically.
If you have moneyyou can
afford to lose (or at least to risk
without lying awake), you can
buy bitcoins by signing up to a
bitcoin wallet service,where you
supply your bank or credit card
details. Youcan buy (and sell)
bitcoins or fractions of bitcoins
and store the details of those
you currently own in an online
wallet. Unfortunately,there are
also fake wallet services out
there,soyou can see how
people lose their money.
Then there’s the problem that
if you invest in bitcoin, there are
criminals specialising in targeting
investors to try to con them out
of the bitcoins in their wallet.
Because the transactions are
anonymous, if you believe a
scam email and are conned
intovisiting afake website, you
could end up either buying
bitcoins that don’t exist or
selling your actual bitcoins to
someone who then hasn’t
actually paid you. Bitcoin
transactions are irreversible,so
once you’ve clicked, it’s gone.
In addition, there’s the risk of
criminals getting intoyour
account by cracking your
password and making off with
the electronic loot.
Bitcoin isn’t abad thing, and
people have undoubtedly made
moneyfrom the digital currency,
but personally,I’m steering well
clear –Idon’t think my blood
pressure could cope.
KAYEWBANK
Software guru andShopperlegend
[email protected]
Bitcoinand othercryptocurrencieshavemadeafew peoplefilthy rich,but therearea
number of pitfallstowatchout forifyou’rethinkingofinvesting,warnsKayEwbank
Whether bitcoin’s pricewill continue to rise,or
whether it will go the same wayastulip bulbs
in 17th-century Holland, is another matter
