BITCOIN IS STILL a mystery to most people.
We know a lucky few made eye-watering profits on the cryptocurrency in recent weeks as the price of one Bitcoin reached a high of almost €15,000 just before Christmas.
This is a staggering increase – potentially a bubble – if you bear in mind that someone bought two pizzas with 10,000 worth of the currency in 2010.
Aside from its connections to the dark web and organised crime, it’s hard to get a firm understanding of its use and how exactly it works.
But how difficult would it to be to sum this up for President Michael D Higgins? Patrick Sheridan, a student from Meánscoil Na Mbráithre in Co Clare, had this task at the BT Young Scientist and Technology competition earlier this week.
Firstly, here’s a quick crash course:
Bitcoin is a decentralised digital currency.With standard currency, John might send Mary €5 using his bank. The bank verifies that he has €5, and transfers it to Mary’s account.
Bitcoin skips the middleman.
John sends Mary €5 worth of Bitcoin (currently ฿0.0004) from his account to her account.
Neither of these are linked to John or Mary’s actual identity.
To make sure John actually has this money, the transaction is verified on a public ledger known as the blockchain. Thousands if not millions of computers around the world are dedicated to running the algorithms that verify the blockchain transactions to make sure they’re accurate and not fraudulent.
Once this process is complete, Mary knows she has her €5. No banks, no middleman. (If you’re still in the dark, try here, here and here.)
Depending on who you talk to, it’s either the future, a complete waste of time, or something that could prove useless with a bit of tweaking and a lower price.
Patrick had to sum this up at the BT Young Scientist and Technology Exhibition on Thursday, when President Michael D Higgins and his wife Sabina were led to his stall.
Patrick said his heart dropped when the President asked him to explain, not knowing how much he would be able to get across the line.
“Honestly, I was really surprised actually,” Patrick told TheJournal.ie,
He actually knew a lot about it, and also [another cryptocurrency] Etherum.
The President stayed at his stall for several minutes, discussing the project and the ramifications of using digital currencies like Bitcoin.
Patrick’s project was based around minimising the energy impact of something known as cryptocurrency mining, the crucial process by which transactions are processed and added to the public ledger of all of the relevant currency’s transactions.
The more transactions you process, the better chance you have of earning Bitcoin as a reward. Previously this was easy, but is growing increasingly difficult over time, requiring more energy and more powerful computers to make it worthwhile.
This is a subject of focused debate – right now its energy consumption matches that of Hungary.
Patrick looked at making this more sustainable. He used a gaming computer to mine for Bitcoin, and tweaked it to find the most effective rate at which to mine, compared to the amount of electricity being used.
He then used a solar panel with double the necessary wattage – half to power the computer, half to charge a battery so it could run at night.
The result was a computer essentially creating free money – however, it would initially take several months to pay off the initial investment.
If your eyes are popping at the prospect of this, Patrick urged some caution. It’s very expensive to do, and arguably not even worthwhile for the average punter with Bitcoin. There are hundreds of other cryptocurrencies out there, but one he highlighted was Etherum. It’s the second most popular in the world right now (it was briefly overtaken by Ripple in recent weeks), and could take over from Bitcoin due to its improved efficiency.
With a €300 investment, Patrick said you could end up making the princely sum of €15 a month – so it’s probably not time to quite the day job.
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