Bitcoin recently surged to a record high of over $1,200.But the currency’s workings still remain a mystery to many.Here's what you need to know.There are four important things to know about bitcoin and how it works.First, bitcoin is digital.It can only be created, held and traded electronically.Second, bitcoin is decentralised.It is not controlled by a central authority, such as a national bank.This means there is little risk that bitcoin users’ wallets will be impacted by a change in monetary policy – or that their savings will be taken away completely.Third, bitcoin is encrypted.Each "coin" has a "private key" – a secret number known solely to the individual who created it.Only the owner of a coin’s private key is able to spend those funds, and must confirm that a transaction is legitimate via a mathematically generated signature.Finally, bitcoin is not just a currency – it is also a payment system.Bitcoins can be created and transacted – at high speeds and low costs – within the same network.

All transactions are then detailed on a huge ledger called the blockchain, which is visible to all.While real-life identities are not used, all payments are made to bitcoin addresses – virtual pseudonyms – that are publicly stored on the blockchain.Users can complicate this by setting up multiple bitcoin addresses, but this still does not provide complete anonymity.bitcoin etf chancesIn theory, anybody with a computer.bitcoin ppt reportIt takes a lot of computer power (and time) to run the blockchain effectively but as there is no central authority, it is no single person or organisation's responsibility to expend the power, time and money necessary.bitcoin plus mxThis is where the so-called "miners" come in - they opt to provide their own computer power and time, along with their own energy costs, in hope that a pay-off (of course in the form of bitcoin!)litecoin mining bot

will make it worthwhile.Why has bitcoin hit an all-time high?Nobody seems sure, though there are several possibilities.Bitcoin has traditionally been considered an asset that -- like gold, the Swiss franc and Japan's yen -- tend to perform well when stock markets, which are considered riskier, sell off.riot games bitcoinPerhaps unusually though, several US benchmark stock indices – including the S&P 500, the Dow Jones Industrial Average, the Nasdaq and the Russell 2000 – all registered record highs last week.This could indicate that bitcoin is beginning to act in-line with stock markets, as more businesses view it as a credible form of payment.ethereum ico historyAnother factor at play is the recent regulatory crackdown by Chinese authorities.bitcoin the good the bad and the ugly

Bitcoin has proved incredibly popular in China and the Chinese market accounts for much of the world's bitcoin trading volumes, but this has long been a thorn in the government’s side.Earlier this year, Chinese regulators implemented tighter controls on the currency but bitcoin rallied regardless.farmer du bitcoinSome speculate that the crack-down wasn't as widely anticipated.boutique acceptant bitcoinOthers say that plenty of trading happens away from regulated exchanges making it hard for authorities to control.Business picture of the day Business picture of the day The bitcoin community is also awaiting news from the US, where the Winklevoss brothers hope that their bitcoin exchange-traded fund (ETF) – the first of its kind in the US – will receive regulatory approval.The cryptocurrency’s record high may suggest that traders are preparing for a positive verdict at the hearing on 11 March.

That could result in more investors being able to snap up bitcoin.There are basically two ways to get bitcoins: mine them, or buy them from somebody who did.Mining is the process by which new coins are created: you tell your computer to crunch through a set of difficult mathematical problems and success is rewarded with bitcoin.That sounds simple, but successfully installing and running the necessary software isn’t for the faint of heart.And there are further hurdles.Only a finite number of bitcoins can ever be created (21 million, to be exact) and as more and more people compete to mine them, they require more and more computing power to unlock.In the early days you could generate dozens at will with even a modest computer, but now it’s unlikely you would see any rewards without extremely expensive specialist hardware.And if you had that equipment the energy bills from using it would likely erode most of your income.One bitcoin mining start-up has servers in Iceland to take advantage of cheap geothermal energy, but that probably isn’t feasible for you.

So, mining is out and we'll ignore the obvious third way - to provide goods and services and earn them - for now.That leaves buying them.Before you can buy any coins you must create a “wallet” to store them.This is essentially a computer file which holds digital money.You can do this by installing the bitcoin client, the software which powers the currency.But be warned: if your computer is hit by hackers or a virus, or you simply misplace your files, you may lose your bitcoins.The data on your computer is what has value and once it’s gone, it’s gone.The alternative is to use an online wallet such as blockchain.info where this data is stored in the cloud.This is easier to setup, but you will be trusting your money to a third party.Blockchain.info has been one of the larger and more reliable sites until now, but there are no gaurantees when using a decentralised, unregulated currency.Once you have a wallet you’ll see an address which looks something like this: 1GVA4cyUc7wXCu1nsN6TahVkMXE4vC1nGe.

This is safe to distribute and is what people would use to send you money - think of it like an account number and sort code, rather than your secret PIN.As you can see from that link, all bitcoin wallets are public.It's often described as an anonymous currency but this is far from the truth.Essentially, your "bank statements" are public, but nobody knows whose they are.Now that you have a wallet, you can get some coins.One of the easiest options at the moment is Bittylicious, whose simplicity almost makes up for its name.Rather than selling bitcoins directly, this exchange puts sellers in touch with buyers.But all of that is largely invisible to buyers - you only need to interact with the site and don’t even need to know who you're buying from.Enter how many bitcoins you want to buy and the address you want them sent to (as above, but use yours, not mine - check it carefully, then check again), pay for them by transferring money with online banking and wait.If you’re already using Barclays’ clever Pingit app then you can also use this to pay.

If you want to buy large amounts you'll need to verify your identity but for smaller volumes there's no need.The site promises that transactions will complete in two hours, or it will refund your money.It also supports rival but similar crypto-currencies FeatherCoins and Litecoins.There are dozens of bitcoin competitors although none have gained the same amount of traction.I tried it this week and my 0.01BTC came through within minutes at a cost of £5.60.Marc Warne, the founder of Bittylicious, admits that his service is not always the cheapest, but avoids the costly and complex international bank transfers which some services demand, and which can make buying small amounts prohibitive.“A lot of people do use it to invest, they’ve heard about it and they think it’s a good idea and it’s going to go up.A fair amount of people, myself included, do use it for real things.I pay my accountant with it,” he said.“I think, long-term, definitely it’ll go up.Short-term, it could go in any direction.