A Norwegian bought a bitcoin for $27, which is now worth $886,000

Author: Geneva

The bitcoins I bought in 2009 have appreciated in value so much that a small investment is now enough to buy an apartment.

Bitcoin's massive rise meant that for one Norwegian man, a small investment of $27 turned into a staggering $886,000 in four years.

Norwegian Kristoffer Koch discovered Bitcoin while writing a paper on cryptography in 2009, after which he bought 5,000 Bitcoins for 150 kroner ($26.6). He soon forgot about it until April 2013, when media coverage of the obscure, decentralized, peer-to-peer digital currency jolted his memory.

The purchased bitcoins were stored in an encrypted wallet with a security code, but Koch forgot the code. When he finally entered the correct code, Koch received a big surprise. He told the Norwegian Broadcasting Corporation: "When I entered the code, it showed 5,000 bitcoins. At today's exchange rate, it is worth 5 million kroner (886,000 US dollars)."

Silk Road Fluctuations

In April 2013, the value of a bitcoin peaked at $266 before quickly falling to $50. Since then, the value of a bitcoin has fluctuated dramatically, most recently following the crackdown on the black market drug shopping site Silk Road, until one day in October, when the value of a bitcoin rose from $30 to $197.

Koch exchanged a fifth of his bitcoins for enough kroner to buy an apartment in Toyen, one of the wealthiest areas of the Norwegian capital.

Two ways to buy Bitcoin

The typical way to buy Bitcoin is to buy it from a Bitcoin "dealer" with traditional currency. But due to strict anti-money laundering policies, this process can be cumbersome. Users can then send the Bitcoin back to a dealer like Mt Gox (the most famous Bitcoin dealer) in exchange for cash.

However, Bitcoin is also gaining more and more attention in the real world. First, several bars in the UK now accept Bitcoin transactions without exchanging Bitcoin for traditional currencies. These bars include Pembury Tavern in Hackney, London. On October 29, the world's first Bitcoin ATM went online in Vancouver, Canada. The ATM scans the user's palm before allowing the user to buy and sell Bitcoin for cash.

A small group of heavy gamers earn extra bitcoins through mining - a process in which users run a specific algorithm on their personal computers and receive the corresponding bitcoins.

Mining is a time-consuming and expensive activity because of the way the currency is designed. Each subsequent bitcoin mine is more complex than the previous one, requiring more computing time and, therefore, investment in electricity and computer hardware.

JPM compiled from

The Guardian, Man Buys $27 of Bitcoin, Forgets About Them, Finds They`re Now Worth $886k, by Samuel Gibbs.