This purchase cost one bitcoin

Cryptocurrency volatility is extreme and, right now, a bitcoin is likely to be worth half as much, twice as much, or ten times less than it was on the day we prepared this coaster and the text you are reading.

Bitcoin was conceived in 2008 by an entity or person known by the pseudonym Satoshi Nakamoto; in fact, we still don't know who actually devised it, which only serves to strengthen the myth surrounding the currency.

The idea behind bitcoin is simple: to create a currency (in this case, digital) that is not controlled by any single entity or central bank and which is generated in a similar way to how gold is 'generated' (that is, by mining), and in so doing to solve the problems typical of traditional currencies such as the dollar or euro.

If we think back thousands of years, the first people to look for gold must have found it relatively easily because it was hidden just a few metres underground and in large quantities all over the world. As mining expanded, it became increasingly difficult to locate and required deeper digging and more resources and energy. This in turn has led to the inevitable realization that the amount of gold in the world is finite and that, once we have extracted it all, we will no longer be able to find (mine) any more. This is, more or less, is how bitcoin is conceived and functions, although it also involves staggering mathematical and computational complexity.

Continuing with the gold mining analogy, in the case of bitcoin:

• Instead of physical gold mines, there are nodes, peer-to-peer networks and open-source software.
• Just as the quality of gold is validated, so too is the veracity of bitcoin, which is achieved through cryptographic verification.
• A blockchain system records every bitcoin transaction and thus eliminates the risk of counterfeiting.
• The 'increasing difficulty of mining' gold is simulated by the increasingly complex and energy-intensive mathematical calculations that are required to mine bitcoin.
• Like gold, the total amount of bitcoin is finite by design, unlike modern currencies, which can be created simply by the relevant authorities printing banknotes.

The first purchase using bitcoin was in 2010, when two pizzas were paid for with 10,000 bitcoins. From that early 'geeky' transaction, bitcoin has evolved into a cryptocurrency that by December 2024 was hovering around $100,000 and is now recognised by investors as a benchmark investment asset. Bitcoin was the start of a whole new world: that of cryptocurrencies, which, at the time of writing, now number over 20,000. Some you may have heard of are Ethereum, Litecoin, Cardano, Polkadot, Bitcoin Cash or Stellar.

The lack of regulation in the sector and the complexity of understanding how cryptocurrencies work, combined with their volatility and the high level of speculation, make them a dangerous investment asset, which is how the vast majority of private individuals use digital currencies. But whatever happens, the technology associated with the blockchain and tokens is here to stay and will revolutionise the way we understand the world.