In-depth

The Bitcoin business: Securing your crypto-currency

For many, Bitcoin remains clouded in confusion. Davey Winder explores what it is and how to use it securely.

Bitcoin, to some people, is the evil currency in which cyber criminals deal upon the 'Dark Web' as typified by the now infamous (and defunct, for all intents and purposes) Silk Road underground drugs and guns classified site. For others, including a growing number of small enterprises, it's a virtual crypto-currency that can bring very real and very profitable benefits.

What is it?

Let's start with the basics, and cover what Bitcoin really is. Yes, I've already stated that it's a virtual crypto-currency, but what the heck does that actually mean? Perhaps it would be easier to quickly reel off the things that it isn't. It's not printed by a central bank nor regulated by government, and it's not impacted by fluctuations in international exchange rates.

The main thing that it isn't, although I will contradict this statement in just a moment, is that Bitcoin isn't real. There are no paper notes or metal coinage, so there's nothing physical about Bitcoin. But that doesn't really mean that the currency itself isn't real, it just exists in a different form to our traditional view of what money is.

When you think about it, the traditional view of money has travelled a long way down the same road to virtuality itself. Other than some loose change, most of us these days are used to paying with a contactless swipe of a plastic card, or even allowing virtual payment schemes such as PayPal to seal the transactional deal with a click of a button or touch of a screen. Real cash isn't as valuable to us anymore, which is one reason why Bitcoin has been able to come into existence.

There is enough trust in cash as being just numbers on a screen for the more technically savvy, for the early adopters and geeks (including business and finance geeks it has to be said) to run with the idea of a virtual crypto-currency. Yes, I've used that 'crypto' term again and still haven't explained it, so here comes the science bit.

The clue is in the name. Simply speaking each and every Bitcoin is in fact a private cryptographic key. The idea of such a crypto currency is nothing new, and Bitcoin itself dates back five years.

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