Question C IE
- 1. Describe a time you took a great risk. What was the outcome? Bitcoin mining and trading
- 2. What did I do? • Invested 1000EUR on a bitcoin mining rig in 2011 • A home built computer that is dedicated to mining bitcoins
- 3. What are bitcoins? • Virtual currency • Peer-to-peer payment system • Developed in 2009 by Satoshi Nakamoto • Decentralized currency • High controversy – will it be the coin of the future, or is it a bubble?
- 4. What does this computer do? • Computer is linked to the bitcoin system • Constantly attempting to solve ‘blocks’ • These blocks get increasingly difficult as time progresses -Therefore you partner up with other miners in order to ‘pool’ power • When a block is solved, bitcoins are rewarded to the miners -Difficulty is automatically calculated so a specific number of bitcoins are released every X hours • This is how bitcoins are ‘created’ • It ensures there is no explosion of bitcoins – hence a drop in value
- 5. Why did I do this? • Bitcoin seemed like a very promising idea in 2011 -Huge potential for profit -Whole concept of a decentralised currency was interesting -Wanted to be a part of it • I had always wanted to build my own computer -Opportunity to learn -Useful to know how a computer works
- 6. Why is it a risk? • Relatively huge initial investment (Most of my money!) • Bitcoin could just disappear (no one was using it) • The value of the bitcoin was low (around 0.4EUR per bitcoin) • Computer is heavily built for Bitcoin mining -Not many other uses (Huge graphic power low CPU/RAM)
- 7. What was the outcome? • Bitcoin value boomed in late(ish) 2013 Bitcoin value ($) over time
- 8. What was the outcome? • Bitcoin value boomed in late(ish) 2013 • Since I mined my first bitcoin I decided to keep hold of them • Once the value started booming I decided to sell ¼ of whatever I mined each month • When the value reached around 700EUR I decided to sell all my bitcoins -This exceeded my initial 1000EUR investment by a substantial amount • With the bitcoins I currently mine I can cover my social expenses IT WAS WORTH IT AFTER ALL! • Popularity of bitcoins also rose, with many online stores accepting it as payment and substantial amounts of media coverage.
- 9. Smooth sailing? - No Many bumps: • Mtgox and other major bitcoin trading sites closing down -Value spiked down • Many, many, many hacks to the bitcoin system and to pooling websites • Hackings to my personal wallet • Invention of ASIC systems, dedicated bitcoin miners (Faster and less power consumption than my mining rig) – useless for bitcoins now! • Switched to mining litecoins, alternative cryptocurrency – similar income
- 10. Was it worth it? Yeah! • Learnt a lot about computers • Learnt a lot about trading • Made some money! • Have a brand new fully functioning expensive computer (essentially for free!) • Was part of the bitcoin movement – helped develop bitcoins!