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A Year in Bitcoin


Another of our guest blog series is this one here about Bitcoins. Coreco’s Rob Gill explains a little more about them.

About a year ago I started developing what one wag has termed an “unhealthy interest in Bitcoin”. With a study out recently stating that 57% of Britons are aware of Bitcoin, and that 5% of us have even used the crypto-currency, I thought it might a good time to explain my interest via a blog. So here are some answers to the questions that have been fired at me since I came out as a fully certified, Bitcoin nerd.

What is Bitcoin?

The 10 billion dollar question! (or at least that was the market cap of Bitcoin at its peak in November 2013). The short answer is that it’s extremely complicated and has taken me best part of a year to get to grips with. The long answer is therefore far too long for any blog. My best stab at the middle ground is as follows.

Bitcoin is an electronic currency with one key difference: there is no central issuing authority. Pounds sterling, US dollars, the Euro are all largely electronic these days (think direct debits, bank transfers, card payments…) and all have a central issuing authority in the form of their governments and central banks via the banking system. Other electronic “currencies” such as Amazon vouchers, loyalty points and the fascinating example of pay-as-you-go airtime used as currency in parts of Africa, also have a central issuing authority in the form of the underlying companies.

Bitcoin however does not have any central issuing authority. It is controlled on a peer-to-peer basis, much in the same way Napster was for music file sharing. This lack of any government or corporate control is the key difference, and what makes it so interesting to many, so scary to others. There are no banks to mis-sell products, overcharge for services or create an unholy credit-crunch style mess, no governments to devalue the currency via QE or other meddling. A libertarian’s dream, entrepreneur’s blank canvas, regulator’s nightmare.

The lack of any central authority poses some interesting questions around how to check for false payments or “double spends”. You cannot for example spend money in your bank account twice because your bank keeps a record that it’s gone. Nor can you spend an Amazon voucher twice as Amazon check whether that voucher code has previously been redeemed. How can any e-currency, without such an authority to make these checks, operate securely?

This is where it does get extremely complicated, but the key point is that every transaction ever made is made public via the “Bitcoin ledger”, otherwise known as the Blockchain. That means everyone can literally check every transaction to make sure no such double spends occur. So, when someone sends you some Bitcoin, you (and others on your behalf) simply check whether they actually have those Bitcoin available to send to you. It’s as simple and complicated as that!

This has only been possible in recent years when consumer hardware and broadband speeds made recording such data on a peer-to-peer basis viable (the current size of the Blockchain is approaching 14GB), and this is the absolute key to the concept and execution of Bitcoin.

What is Bitcoin mining?

Bitcoin mining is the process by which the Blockchain is maintained. A computer attached to the network in order to assist with this process is known as a miner and they perform two important functions. Firstly, they check and process payments, making sure there are no double spends, and recording them into the ledger for future reference. Secondly, they are rewarded for these efforts by the award of Bitcoin, which in turn introduces more Bitcoin into circulation.

That is a huge simplification as the process of mining goes way beyond the scope of this blog (and indeed this writer). An important point to note however is that the computing power required to become a successful miner is now enormous, beyond even the highest spec PCs. Indeed, specialist super computers or mining “rigs” sell for tens of thousands of dollars. It’s also a competitive process, at the time of writing the reward on offer is equivalent to about £10,000 worth of Bitcoin every 10 minutes, and so the process becomes ever more difficult requiring more and more computing power. Mining is an arms race and is out of reach for all but the most committed.

How can I get some Bitcoin?

Mining is pretty much out, which leaves buying some using Pounds, Dollars or Euros. That isn’t straightforward either as banks don’t like Bitcoin and make it as hard as possible to transfer money to any formal exchange.

I’ve used two peer to peer websites for my purchase ( and where you buy from a private seller and wire them funds from your bank account. They’re sort of an eBay for Bitcoin (and you can even buy Bitcoin on eBay). It’s always worth checking the price against a major exchange before you buy from an individual like this, such as Bitstamp which is now the world’s biggest.

You then need to transfer your Bitcoin to a Bitcoin “wallet”, either by downloading software (the Bitcoin “client”) to your PC or opening an online equivalent. Online is the easier option and the biggest out there are who also have an Android mobile.

What can I do with them?

Two options- invest or spend!

As an investment, Bitcoin are extremely volatile. I bought my first Bitcoin for about U$100 in July 2013, watched it rise all the way to over U$1,200 by November, crash down to U$400 and rise again to about U$700 at the time of writing. Not for the faint hearted!

Far more fun is to spend them! I’ve bought beer and pizza at a pub in the East End, specialist coffee from Indonesia and a Dutch language book for my son. Bitcoin was a very easy way to make payment, cost the merchant way less than credit or debit card, and for the latter two there were no foreign exchange charges for either side. That’s really why I bought my first Bitcoin, no better way to understand the concept and possibilities than getting stuck in. Plus by spending it I realised some of the gain in price of the Bitcoin itself (which made for some very cheap beer!).

Why do you like Bitcoin so much (you sad, nerdy…)?

A very good question. Ultimately it combines two of my strong interests, economics and finance, with a growing one, technology. I’ve been inspired to understand it better and enjoyed the intellectual challenge of getting to grips with the tech side. I’ve met some fascinating people, from the train-spotter genuine nerd types, anarchists who truly believe Bitcoin will change the world, through to whip-smart tech start up guys operating at the very forefront of this evolving technology. Definitely one of my coolest moments ever was meeting the pioneer of a new UK Bitcoin exchange, in an Antipodean coffee house bang on Silicon Roundabout itself for coffee (Flat whites of course). There are even some old trading contacts involved in the Bitcoin scene who I’ve reconnected with.

Overall a very interesting, extremely mixed crowd, many of whom I’d never have met otherwise, and others who are much like me.

What’s the future for Bitcoin?

There are almost as many theories on this as there are Bitcoins in circulation (currently about 12 million). The fanatics believe Bitcoin will change the world, and certainly banking and finance, forever. Either the general populace, having lost faith with traditional currencies and banking, will adopt Bitcoin on mass, or even a country itself will install Bitcoin as its official currency (Scotland perhaps?!). Sceptics claim it’s a Ponzi scheme, a house of cards based on flimsy technology and worse economics that is destined to collapse, often likening it to the Dutch Tulip of the 17th century.

Personally I’m back to the Napster analogy; the technology is out there, it can’t be put back in the bottle and it could force radical change to the established order. To give just one example, transaction costs around Bitcoin are so low, and can literally be zero, that if it becomes even close to mainstream banks and card companies will face stiff competition. The major US retailer recently started accepting Bitcoin, with annual sales of U$1.1bn that could mean quite a saving.

Whatever happens to Bitcoin, it’s been huge fun following it for the last year or so. I’ve learnt a lot, met some interesting people, and enjoyed some virtually free beer courtesy of a virtual currency!

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Andrew Montlake

Written by Andrew Montlake

Andrew Montlake, better known as Monty, began his journey with an Hons degree in Economics & Politics before starting in the mortgage industry in February 1994. As a main founder of Coreco in 2009, he successfully grew the brand, marketing, and communications, and was made MD in 2019 focussing on the overall vision, strategy, and culture of the company. As Coreco’s media spokesperson, Andrew can often be seen or heard on TV and radio as well as regularly commenting in the national, local, and trade press. He is the author of this acclaimed Mortgage Blog and is well-known for his social media, podcasts, and public speaking. Andrew is now proud to serve as Chairman of the Association of Mortgage Intermediaries, (AMI) as a cheerleader for the Mortgage Industry as a whole and continues to work at the coal face, writing mortgage business and advising clients.

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