This week the price of one bitcoin hit $8,250 (£6205.63), marking a trading high after an increase in price of 735 percent this year alone and a massive 40,000 percent rise in the past five years.
Increases in the price of the virtual currency could be largely due to policy changes in Japan and China earlier this year which let people trade in bitcoin more easily.
Interestingly, over 100 bitcoin-focused hedge funds have been created in the past year, according to TechCrunch, meaning large sums of money are being converted into bitcoin.
Even more established financial firms are creating crypto-specific funds. Digital asset broker Coinbase launched a service called Coinbase Custody this month which will securely hold digital assets such as bitcoin and other cryptocurrencies for institutional investors.
However, bitcoin has fluctuated greatly in price during recent years. In early 2014 one bitcoin was worth only $280 (£215), a stark contrast from November 2013 when one bitcoin was set at $1,000 (£770).
This guide will not help you decide whether you should invest in bitcoins, but if you have already decided to do so, it will show you how.
How to mine a bitcoin
There are two main ways of getting your hands on bitcoins. You can 'mine' them yourself or buy them from someone who has done just that.
Mining a bitcoin isn't an easy process, so don't expect a quick turnaround.
Bitcoin algorithm creators working under the pseudonym Satoshi Nakamoto generated set boundaries, in which a finite number of bitcoins (21 million to be precise) exist in the world. Currently there are just over 4.5 million bitcoins left to be mined, according to Bitcoinblockhalf.com.
The way the bitcoin mining system works is that it is easier to mine a bitcoin at the beginning, when the surplus is larger, and more difficult as we approach the 21 million threshold.
It's thought that the last bitcoin will be mined in 2140 if the current rate of extraction continues.
Bitcoin mining, in theory, is a simple process. It essentially boils down to verifying bitcoin transactions.
For example, if someone buys something from you using bitcoin, you'll need to verify that the bitcoin you receive is genuine. This is the job of the bitcoin miner.
A group of transactions will be verified by a miner, rather than just one at a time. This group is virtually locked and called a blockchain.
In the most simplistic terms, a miner will have to run extraction software that will find the key to the locked block and verify the whole group of bitcoin transactions.
The number of bitcoins generated per day due to this method is 1,728, according to Bitcoinblockhalf.com, with the approximate block generation time standing at around 10 minutes.
Bitcoin software and hardware
There are countless bitcoin mining tools, spanning both hardware and software applications.
Bitcoin mining hardware ranges in price between £100 and £1,000, although for those wanting to make decent money from mining bitcoins, you'll probably have to invest in some serious, expensive kit.
Antminer offers a bitcoin mining hardware device which is proving popular with bitcoin hobbyists, along with Avalon and AntMiner.
As there are lots to choose from it's better to discuss what they do in general, rather than specific features of specifications of individual devices.
The initial process of mining a bitcoin was to be carried out via central processing units (CPUs). Now bitcoin miners use application-specific integrated circuits or ASIC for short.
This piece of hardware provides more hashing power, which is in simple terms, the number of combination attempts per second when trying to unlock the blockchain.
While it is possible to mine bitcoins without this hardware, the process is limited and could damage your machine.
Bitcoin mining software is vital, even though it isn't heavily linked with the actual mining process.
Bitcoin mining software will connect your hardware to the blockchain and to other miners working within mining pools (groups of people working together to mine and share the profits).
Bitcoin software will monitor the mining process ensuring the hardware itself is running well, for example, it will monitor the device's temperature and fan speed which is crucial as bitcoin miners tend to become very hot and overheat in many cases.
Bitcoin Miner, BTCMiner, CGMiner and EasyMiner are some examples popular bitcoin mining software, although others do exist and are OS specific.
In order to use bitcoin software, you'll need to set up a bitcoin wallet which will house your details that will be used to send your mining rewards to.
Popular bitcoin wallets include Myceliuml, Electrum and Copay Bitcoin wallet and like bitcoin software, there are specific wallets depending on your platform, i.e. desktop, Android, iOS and web.
(We haven't tested all the wallets listed so take extra care when choosing one.)
Buy a bitcoin
Like mining bitcoin, you'll need to have a bitcoin wallet set up to store then, whether that's online, using a desktop wallet or one for iOS or Android. You'll just need to download it and set it up with your details.
Next, you'll need to get in touch with a bitcoin exchange, a place where sellers and buyers of bitcoin can virtually meet.
These platforms will need your bitcoin wallet location which typically looks like a long (probably more than 12 unit) name, containing both numbers and letters.
These sites will also support other cryptocurrencies.
Most exchanges will have the bitcoins in your account within a couple of hours.
Sell things and ask for bitcoins as payment
One of the easiest ways to acquire bitcoins is to sell things online and request bitcoin as the preferred payment method.
You'll still have to set up a wallet, but if you want a relatively quick process to gain bitcoin, this could be it.
Obviously, you'll need to sell some pretty high-value items to gain a good amount of bitcoins. However, with the price of one bitcoin continuing to grow, even fractions of a bitcoin are a nice amount of money.
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