Can You Bank On Bitcoin?

Investing in cryptocurrencies promises life-changing fortunes overnight. But is this digital economy too good to be true? And should you gamble on it?

- Clare Thorp

Along, long time ago, money was just shells. A rare type of shell that people exchanged for goods. Then, it was straw. Slowly, it evolved into notes and coins, and now it seems money is changing once again, with the rise of cryptocurrencies – digital or virtual assets that can be acquired and then used as payment on certain websites. Forbes recently released its first list of crypto billionaires (all men, most of a certain age, most clammy-faced), but women are catching up, with the number of us investing doubling in the first half of this year.* But can you afford to get involved, and will it actually make you rich? We took a crash course in crypto to find out…

CRYPTOWHAT?

Bitcoin, the world’s first digital currency and still the biggest, was started in 2009 by the ultra-mysterious Satoshi Nakamoto, a person (or persons, no one is quite sure) who has never revealed themselves (though at last count was worth £4.9 billion). Since Bitcoin, other cryptocurrencies (known as “altcoins”) have emerged – there are now over 1,000 – with Ethereum, Litecoin and Ripple a few of the biggest. It’s a currency that only exists electronically – so you can’t hold it, or even see it. But that doesn’t mean it’s made out of thin air. Most cryptocurrencies are created by a process called “mining”. Powerful computers (no, your laptop won’t work) “mine” the digital money by solving incredibly complicated mathematical equations to validate a block of transactions and then receive a reward (ie some currency) – consuming more energy than a small country in the process.

WHAT’S THE ATTRACTION?