You’ve got a pirated copy of Windows, thats why its so cheap.

Consider yourself lucky if Windows doesn’t blacklist your license key — if someone else on the other side of the world activates their copy and happens to have the same license key as yours, your copy is effectively “invalid” — and as such won’t be reported as genuine anymore. When that happens, you lose the ability to use Windows update and you’ll become vulnerable to trojans.

Either way, it doesn’t hurt to backup all your essential files before an upgrade. Windows should preserve most of your settings but there is no guarantee that *all* of your software will continue working.

Back up your data. I think it shouldn’t lose anything, just unlock new features, but since Basic is so basic, it might perform a new install. As long as the Ultimate is real, you’ll be able to get updates.