Should I buy Bitcoin, what are Ripple, Ethereum and Iota, and how safe is the cryptocurrency?
BITCOIN continues to create financial drama marked by surges and dramatic falls
Here is everything you need to know if you're thinking of investing in Bitcoin or one of the other fashionable cryptocurrencies...
How do I buy Bitcoin?
The most common way to buy the currency is to download a broker app such as Coinbase and Blockchain.
These allow users to use a credit or debit card to exchange pounds for Bitcoin.
Users do not have to buy whole Bitcoins and can purchase a small percentage that matches the value of their cash investment.
Once a request has been made, online “miners” will decide whether to approve the transaction.
If approved, the money will be taken from a user's account in exchange for Bitcoin.
When selling, users can use the same app to sell their Bitcoin in return for its cash value.
It is also possible to buy Bitcoin directly from sellers on other websites – bypassing the need for a broker.
There are fewer transaction fees in this case, but the process is a bit riskier and more complicated – especially for a beginner.
Investors can also buy Bitcoins by depositing cash at a nearby Bitcoin ATM.
These have been popping up in newsagents and can be found by Googling them or visiting Coin ATM Radar.
Is it safe to buy Bitcoin?
Anyone thinking of investing in Bitcoin or another cryptocurrency should be very careful.
Their values are volatile, with the ability to plummet as quickly as they shoot up.
On January 9, 2018, after major monitoring platform Coinmarketcap decided to leave out the trading prices from South Korea — a major market whose absence spooked already jittery investors.
Prices fell by around 20 per cent across the cryptocurrency market as a result of the move.
Investors are also frequently targeted by hackers and other criminals who seek to steal their crypto-cash online.
Be especially careful if you are using direct, peer-to-peer platforms to sell and buy cryptocurrencies.
These are the equivalent of something like Gumtree for Bitcoin – you never know who you might be dealing with.
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What are Iota, Ethereum and Ripple?
Iota is a new cryptocurrency growing in popularity, similar to Bitcoin, but different in certain ways.
Bitcoins aren’t printed, like pounds, dollars or euros – they’re produced by people, and increasingly businesses, running computers all around the world.
To process Bitcoin transactions, a procedure called “mining” must take place, which involves a computer solving a difficult mathematical problem with a 64-digit solution.
For each problem solved, one block of Bitcoin is processed.
Iota, on the other hand, removes the need for this by asking anyone submitting a transaction to verify two other random transactions.
It all sounds quite technical but it basically means it is decentralised, there’s no fee for transactions and the more people using Iota the faster the network becomes.
Ethereum is another cryptocurrency – one which some have said could overtake Bitcoin as the dominant coin in the market.
But it is also a ledger technology – using “blockchain”, like Bitcoin – that companies are using to build new programmes.
Ripple acts as a payment network, RippleNet, and a cryptocurrency, Ripple XRP.
The platform makes it easy to transfer almost any currency to almost any other currency in the world in no longer than four seconds.
