Back in 2009, Kristoff Koch was working on a thesis paper about encryption, which introduced him to the relatively unknown world of Bitcoin. So he decided to buy some just for fun and spent about 150 kroner that equals $26.60.
Unaware of just how successful bitcoins would soon become, he promptly forgot about them until widespread media coverage of the anonymous, decentralized, peer-to-peer digital currency in April 2013 jogged his memory.
“I thought to myself, didn’t I have something like that?” Mr. Koch said.
Koch reportedly had to scour his memory for the password to the encrypted wallet that held his investment. When he finally figured it out in April, he says he was stunned by what he found.
“It said 5000 bitcoins there. Measuring that in today’s rates it’s about 5 million kroner ($885,520),” he said.
Of course, Bitcoin is also notorious for occasionally erratic fluctuations in value. In April 2013, the value of bitcoin peaked at $266 before crashing to a low of $50 soon after. Since then, bitcoin has seen large fluctuations in its value, most recently following the seizure of online drugs marketplace Silk Road, plummeting before jumping $30 in one day to a high of $197 in October, reports the Guardian.
He cashed in about one fifth of his bitcoins, and it was enough for him to buy an apartment in Toyen, one of the richer parts of Norway’s capital Oslo.
“Not in my wildest dreams could I have imagined that they would have soared like this,” Koch said. “It’s bizarre, these psychological reflexes that make us attach a value to something that doesn’t have any in itself.”
His partner was initially sceptical about him spending “real money” on “fake money”. She has since changed her tune.
“She thinks I spend money on a bunch of crap. I buy a lot of technical little things that I never have time to use, and this was the worst of all, the fact that I was buying fake money,” Mr Koch said.
Koch isn’t the only person who has benefitted from the rise in bitcoins’ worth and popularity. According to an April report by Bloomberg Businessweek, the success of the world’s first decentralized, peer-to-peer digital currency has spawned many overnight millionaires.
“I’m happy to be considered a member of the Bitcoin millionaires’ club,” 30-year-old Jered Kenna told the news outlet. Kenna reportedly bought his first batch of bitcoins – 5,000 of them – at 20 cents each.
Bitcoins can be purchased from a Bitcoin “exchange” although that process can be a bit tricky due to money laundering regulations. Alternately, users can generate their own Bitcoins using computer hardware to “mine” them. The latter alternative is extremely time consuming and hardware intensive and is deemed by some to no longer be a profitable endeavor.
The Bitcoin movement is becoming more and more popular. Reportedly Canada is all set to release the first bitcoin ATM in the world. The $18,500 ATM will be placed near downtown Vancouver coffee house Waves, will trade Canadian dollars for online Bitcoins.