Can I get rich by mining Bitcoins?

For some years now cryptocurrencies have been generating interest and investment opportunities in equal measure. Speculation about a possible alteration in the value of some of them has only reactivated this interest. Inevitably, some myths have tagged along too, like how to earn lots of money with hardly any investment or even getting to buy a Lamborghini with Bitcoins.

This was precisely the theme of Carlos Sahuquillo, Security Consultant of GMV’s Secure e-Solutions sector, in the seminar “Cybersecurity: Twenty-first century threats” organized by the Technological University of Chile (Universidad Tecnológica de Chile: INACAP) and the Economic Crime Brigade (Brigada de Delitos Económicos: BRIDEC) of the Investigative Police of Chile (PDI). The seminar’s main purpose was to bring home the importance of cybersecurity and warn about the intrinsic risks of some technologies like Blockchain or credit cards.

GMV’s expert gave a paper under the title “Can I get rich by mining Bitcoins?” He started off by talking through the history of money, explaining how Bitcoin cropped up in 2008 to solve some of money’s conceptual problems and winding up by explaining the underlying Bitcoin technology and the risks of investments of this type.

First and foremost, however, in order to understand the value of Bitcoin and the future of cryptocurrencies, it is first necessary to speak about Blockchain, the technology underpinning these cryptocurrencies. Blockchain is basically a ledger distributed among all participants in the chain. It can therefore be construed as a distributed database; its characteristic trait is the fact that it is encrypted and decentralized; the overarching idea is to replace governments’ FIAT currencies, set up a new registration and notarization system and even turn you into your own bank. By now this technology’s versatility has become so vast that it’s hard to think of an area that is not likely to be transformed by this idea.

Blockchain is not just about generating cryptocurrencies; there are other areas where it might usefully be taken up, all touched on by Sahuquillo in his lecture, including smart contracts, insurance companies, electronic voting, identity and reputation or decentralized organizations.

So, going back to the original question … will it buy me a Lamborghini or not?

As it has also been explained that the Bitcoin mining process is becoming increasingly energy intensive, the possibility of buying a Lamborghini with it would seem to be off, so comments have been made on other forms of cryptocurrency investment and speculation.

Bitcoin’s main investment risk is its volatility. At the end of last year, December 2017, the Bitcoin price was about 20,000 dollars; today it’s 7500 dollars… that said, this time last year, in June 2017, it wasn’t even worth 1400 dollars, so anyone who has held Bitcoins since last year still comes out winning. Other perils loom too, however. Witness the recent attack on the protocol of one of the crypto currencies (Verge (XVG)) in which the hackers hived off over 20 million XVG tokens (a booty worth over 1 million dollars). And that’s not all. Sahuquillo also cited other cases of online and offline portfolio hacks, on the exchanges where these cryptocurrencies are bought, Trojans for investors’ computers, phishing, etc. In short, investing in Bitcoins is a risky business but there is likewise no doubt that Blockchain as a concept poses a huge revolution across the board and not only in our financial affairs. Carlos Sahuquillo argues that within a few years we’ll all be using cryptocurrencies on a daily basis. It is unlikely to be Bitcoin; more likely we’ll evolve towards other less energy-intensive, wider-ranging cryptocurrencies, but without a shadow of a doubt we’ll be using them with the same familiarity as we now use credit cards and are beginning to do so with cell-phone payments.

As well as taking part in the cybersecurity seminar Carlos dropped into Radio Montecarlos to carry out workshops with students and academics of INACAP University.