What is Bitcoin and can you still get rich with Bitcoin?

Bitcoin is wildly confusing. And here’s the bad news: the fact you’re reading this now means you’re late to the game, and it’s going to be tough to turn a profit in Bitcoin mining. Nevertheless, if you want to try your hand at mining bitcoins, here we present the beginner's guide to generating bitcoins.

Following a dodgy patch in 2016, Bitcoin's value has recovered and actually surpassed the value of gold. Right now it's at £8,392.04, but yesterday hit an all time high of £8806.08(according to Coinbase).

But despite this Bitcoin is said to be under threat from several newer crypto-currencies, including Ethereum.

If you're finding yourself baffled as to what we're talking about, please let us explain.

Want to know how Bitcoin is taxed? Check out our article here.
What is Bitcoin?

Bitcoin is a digital currency that operates independently of a central bank. Encryption is used to regulate both the generation of Bitcoin units and the transfer of the currency.

If you're excited, check out our guide to buying Bitcoins as well as the best Bitcoin exchanges where you can invest them.
What is Bitcoin worth?

In essence, the more bitcoins mined or ‘found’, the harder it is to ‘find’ more coins. While once it may have been possible to use a high-powered PC at home to mine Bitcoin on its own, the sheer popularity of mining Bitcoin means it’s viable only to join a pool. This is where your computer works alongside others to mine bitcoins. It’s much like [email protected] , where clusters of computers work together to try and find extra-terrestrial life. See also: The rise of Bitcoin and why you can't mine them on your own.

Without getting bogged down with the technicalities, the groups of computers in a Bitcoin pool are crunching numbers to mine a block. For every block mined, you get 25 coins.

On 4 December 2017 one Bitcoin is worth £8,392.04.

It's crazy to think some analysts thought in 2015 that Bitcoin was doomed. Here's what prices looked like around two years ago:

Google's currency converter lets you check very quickly how much a Bitcoin is worth.
What are Bitcoin Futures?

As Bitcoin Futures get the go-ahead, Bitcoin's value is scoring sky-high and the UK government is calling for increased regulation of cryptocurrencies by expanding the reach of European Union anti-money-laundering rules. But what does all that mean?

Bitcoin Futures are contracts that balance the risk associated with volatile pricing by requiring users to agree to buy or sell a specific amount of Bitcoin once it reaches a predetermined price on a future date. In the US they will go live on Sunday evening (10 December), with the first full day of trading 11 December 2017.

If you buy a Bitcoin Futures contract, you buy the right to sell Bitcoin at a specific price. Meanwhile the seller agrees to accept the Bitcoin at that specific price on a future date. The buyer hopes to buy Bitcoin at a more favourable price; the seller hopes to fetch a higher price per Bitcoin on the settlement date.

Cboe President Chris Concannon told Bloomberg: “The launch of the futures will actually make the market healthier. It will create pricing equilibrium in the market. Clients who are holding Bitcoin now have no way to hedge their risk. These products allow them to hedge, and to take opposing views. More importantly, it brings a wave of regulatory oversight.”
Can you get rich with Bitcoin?

As we mentioned in the introduction, these days it's difficult to turn a profit mining Bitcoin. But it has been known, especially for early adopters of the virtual currency.

For example, the Guardian reports on how a Norwegian man’s $27 investment in Bitcoin turned into a $886,000 windfall four years later.

"Kristoffer Koch invested 150 kroner ($26.60) in 5,000 bitcoins in 2009, after discovering them during the course of writing a thesis on encryption. He promptly forgot about them until widespread media coverage of the anonymous, decentralised, peer-to-peer digital currency in April 2013 jogged his memory," reports the Guardian. At which point, they were worth a small fortune at $886,000.