Bitcoins are the digital currently recently popularized by its huge jump in value earlier this year. Kristoffer Koch, a Norwegian man, recently discovered a Bitcoin nest egg of $886,000 that he had purchased for a mere $27 in 2009. Having forgotten about his investment, the widespread media coverage of the digital currency after its sharp rise prompted him to find and decrypt the file containing his Bitcoins.
For those who don’t know, Bitcoins are a digital currency with several attractive features. It is decentralized, meaning no company or entity can control Bitcoin due to its peer-to-peer nature and purely digital existence. Verification and inflation are built into its function and do not require outside regulation. It is also private and secure, making it an ideal currency for sensitive transactions.
CC Image courtesy of BTC Keychain on Flickr
Bitcoins have a very volatile price history, with two boom/bust cycles with the price of a single Bitcoin shooting from $2 to $30 in 2011, and then from $13 to $266 earlier this year. Many people have made and lost fortunes rapidly through Bitcoins. In Koch’s case, his 5000 Bitcoin cache was enough to exchange one-fifth of the total into enough money to purchase a downtown apartment.
Anyone can acquire Bitcoins through an exchange, with Mt Gox being the most well-known. Users can also devote electricity and processing power to running Bitcoin calculations in exchange for a small payout, which is known as “mining” Bitcoin.