Hype, milestones, big risks surround bitcoin in ’17
Cryptocurrency price hits an all-time high
Bitcoin came into its own this year. The digital currency, which was created nearly nine years ago, became a high-flying investment vehicle, prompting much discussion about its existence, how to capitalize on its rise and the mania surrounding cryptocurrency. As 2017 comes to a close, we decided to look at some major events and themes for bitcoin.
BITCOIN’S MILESTONES
This is the most obvious theme of the year is the digital currency’s astronomical rise. On the first day of 2017, bitcoin was valued at $973, according to the cryptocurrency trackercoinmarketcap.com. Then in March the cryptocurrency for the first time surpassed the value of one ounce of gold at $1,235. Just seven months later, bitcoin reached an all-time high of $5,856, in October, bringing its market capitalization above that of major financial players Goldman Sachs and Morgan Stanley. And as of Friday morning, the virtual currency is worth more than 15 times the amount it started off at the beginning of the year, at $14,670.
Experts say the rise in bitcoin’s value has prompted public interest, converting excitement into greater investment and, in turn, higher prices.
“Everyone is talking about it,” said Angela Walch, a professor at St. Mary’s University School of Law and a research fellow at the UCL Centre for Bockchain Technologies.” In Starbucks, everyone is talking about it. At Christmas everyone is talking about it.”
Christian Catalini, a professor and founder of MIT’S Cryptoeconomics Lab said news coverage has led to a rush to buy bitcoin. “The fear of missing out has been the leitmotif of the year. People hear about the price of bitcoin increasing and increasing and when that happens the price goes up. You’ve seen this dance of enthusiasm and hype building.”
Now, the meteoric rise wasn’t without major drops throughout the year. Last week the digital currency saw a decline of 30 percent in a single day before recovering some. And this brings us to the next theme this year:
MANY risky MOVES were MADE
Bitcoin is largely unregulated, and it is not issued by a government or controlled through a centralized financial institution. Its value can swing drastically in days or even hours.
“It’s important to remember these are highly speculative assets,” Catalini said. “They are highly volatile. These are experiments. Bitcoin is a massive experiment, and there are many ways that the experiment can go wrong. People should consider this as a form of gambling.”
Businesses even renamed themselves to capitalize on the hype
Hoping to seize on the bitcoin frenzy, some businesses have even changed their names to include the word “blockchain,” the technology that drives the virtual currency. Last week, the beverage company Long Island Iced Tea said that it was renaming itself Long Blockchain. Soon after, its stock price tripled. And when a British company named On-line PLC announced that it would change its name to On-line Blockchain PLC, its shares jumped by almost 400 percent, according to Bloomberg News.
“Blockchain and other names associated with the cryptocurrency world have been used for marketing for a while,” Walch said. “Put blockchain and Powerpoint together and VCS will throw money at you. What we have seen is this has become laughable.”
MAJOR thefts AND Losses
This year, cryptocurrency investors also suffered through major thefts. In early December, hackers stole more than $70 million worth of bitcoin from Nicehash, a marketplace for generating virtual currencies through complex mathematical calculations. But digital heists weren’t the only way cryptocurrency investors were stripped of their money.
Some have lost small fortunes by their very own hands. Harrowing tales have cropped up recently detailing how people have lost or forgot their login credentials to access their bitcoin, prompting some to hire hypnotists, enlist benevolent hackers and even endeavor to rummage through mountains of trash to get their bitcoin back.