A bitcoin investor who forgot he bought £17 of currency four years ago is sitting on a small fortune now worth more than half a million pounds.
The meteoric rise in the internet-based money has meant that within the space of four years, Norwegian Kristoffer Koch has made a huge profit, the Guardian reports.
He invested 150 kroner (£17) in 5,000 bitcoins in 2009, after discovering them while writing a thesis on encryption.
He forgot about them until he started seeing media coverage of the digital currency in April this year.
Bitcoins are stored in encrypted wallets secured with a private key. Mr Koch had forgotten his password but when he eventually remembered it he was stunned by how much they had jumped in value.
‘It said I had 5,000 bitcoins in there. Measuring that in today’s rates it’s about NOK5m (£551,000),’ Mr Koch said.
In April 2013, the value of bitcoin peaked at £165 before crashing to £30.
When Silk Road, the online drugs marketplace, was stopped, the value of bitcoins took another tumble. A bitcoin is now worth about £122.
Koch changed up 1,000 bitcoins and had enough kroner to buy an apartment in Toyen, one of the Norwegian capital’s wealthier areas.
The currency is usually bought using an ‘exchanger’, although this can be difficult due to anti-money laundering laws.
A user can then withdraw money by sending the bitcoins back to an exchanger for cash.
The Pembury Tavern pub in Hackney, London, has become the first to accept bitcoins and today the world’s first bitcoin ATM went online in Vancouver, Canada. It scans a user’s pam before letting them buy or sell bitcoins for cash.
A small group of people can generate bitcoins by ‘mining’ for them – a process that requires computers to perform the calculations needed to make the digital currency work, in exchange for a share of the built-in inflation.
Mining is time-consuming and expensive due to the way the currency is designed.
In August this year, Germany recognised bitcoin as a ‘unit of account’, allowing the country to tax users or creators of the digital currency.Thanks for subscribing to our newsletter! We guarantee you won’t be disappointed!