Few technologies have the ability to stir passionate online debate and baffle the vast majority of the population as bitcoin. The virtual currency rocketed in value last year before crashing at the start of 2018.
But bitcoin appears here to stay, at least for the time being. The price has remained steady in recent weeks, although it has yet to reach close to the high points of last year. Although it remains well below its peak of $20,000, it has remained around $7,500 (£5,650) over recent months.
There have been spikes along the way, possibly caused by mass computer trading or short sellers jumping ship and encouraging buyers to flood back in.
It all leaves investors with a slew of questions. Is Bitcoin the future of currency? Is it currency at all? What is it for? And should I buy some? Read on to have your questions answered.
What is Bitcoin?
Bitcoin is a digital currency created in 2009 that uses decentralised technology for secure payments and storing money that doesn't require banks or people's names. It was announced on an email circular as a way to liberate money in a similar way to how the internet made information free.
FAQ | Bitcoin
How does it work?
Bitcoin works on a public ledger called a blockchain, which holds a decentralised record of all transactions that is updated and held by all users of the network.
To create bitcoins, users must generate blocks on the network. Each block is created cryptographically by harnessing users' computer power and is then added to the blockchain, letting users earn by keeping the network running.
A limit for how many bitcoins can be created is built into the system so the value can't be diluted. The maximum amount is just under 21 million bitcoin. There are currently just over 17 million in circulation, each of which was worth around $7,500 at the time of writing. That puts its total value at around $128 billion.
While at first ordinary people could mine thousands of bitcoins, potentially now worth millions of pounds, bitcoin mining now requires a huge amount of computer power to achieve. You can read our guide to bitcoin mining here.
What affects its price?
The price of a Bitcoin has jumped up and down since it first entered the mainstream consciousness in 2013. That year prices rose by almost 10,000 per cent before the collapse of Mt Gox, the biggest online bitcoin exchange at the time, sent it crashing.
Prices slowly crept up after that but surged again in 2017. This is largely put down to regulators appearing to warm to bitcoin and the rise of initial coin offerings - a way for projects to raise money by selling cryptographic tokens similar to bitcoins. Sceptics believed we were in the middle of a Bitcoin bubble while advocates say we are just beginning to see the rise starting.
Prices have fallen in 2018 amid fears of a regulatory crackdown, although have not totally crashed to the levels they were in at before the current price rises.
bitcoin price
Who is Satoshi Nakamoto?
Satoshi Nakamoto is the mysterious creator of Bitcoin and blockchain. Despite countless attempts to unmask the person or people behind the name, their identity has remained elusive.
There have been numerous unsuccessful attempts by journalists to reveal the Bitcoin founder. In a high-profile incident in 2014, Newsweek magazine relaunched with a feature outing Dorian Nakamoto, a 64-year-old Japanese-American man, as the creator. The affair, having fallen apart under scrutiny, ended with a car chase and the real Nakamoto refuting the allegations.
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