Monthly Archives: May 2017

Seven years ago, the value of a single bitcoin was worth a quarter-of-a-cent. Today, that single bitcoin is worth upwards of $2,200 .

Monday marked the seventh anniversary of what is said to be the first recorded instance of bitcoin used in a real world transaction. Over the course of seven years, bitcoin's value has multiplied 879,999 times over since 2010. If an investor had decided to spend five dollars back then on about 2,000 bitcoins, that stake would be worth $4.4 million today. With $1,200 spent on some 480,000 bitcoins, the investor would be worth at least $1.1 billion today.

The early months of 2017 have been particularly heady days for bitcoin. Since the beginning of the year, the value of the cryptocurrency has surged as it gains legitimacy in countries like Japan . Investors have also come to see the currency as something of a safe haven asset amid geopolitical turmoil and there's been plenty of that in recent months, in both Europe and the United States.

And that first transaction? A software programmer on " Bitcoin Talk " known as Lazlo Hanyecz offered to 10,000 bitcoins for a couple of pizzas. For a least three days, no one took bite of the offer, with Hanyecz writing: "So nobody wants to buy me pizza? Is the bitcoin amount I'm offering too low?"

A user eventually paid about $25 for two pizzas. In today's bitcoins, those pizzas cost Hanyecz $22 million.

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If You Bought $5 in Bitcoin 7 Years Ago, You'd Be $4.4 ...

With that said, you might not want to get too comfy if you've amassed a fortune. As our TechCrunch pals observe, Bitcoin's share of the cryptocurrency market has plunged sharply in the past few months. Where it regularly dominated the market with about an 80 percent share, it's down to just 47 percent in a matter of months. Ethereum, Ripple, Litecoin and others have all seen surges that have whittled away Bitcoin's control.

It's not certain just why that is. There is a concern that Bitcoin's scaling is causing problems by slowing down transactions -- people may just want to explore alternatives that won't bog down so easily. The rapid rise in Bitcoin's value casts doubt on that, though, as you'd expect its worth to tank. If scaling is a problem at all, it hasn't spooked users yet. It may just be a matter of the market growing up, or of speculators hedging their bets by pouring money into more than one digital currency. You wouldn't want to panic if you've already committed to Bitcoin, but nor should you assume that it'll always be the format of choice.

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Bitcoin is worth more than ever, but it's losing clout

Since hitting a record high of over $2700 on Thursday, the digital currency Bitcoin has gone into a sharp correction, losing nearly 30% of its value in just two days, according to numbers from CoinMarketCap. A broad range of cryptocurrencies, including Ethereum, Ripple, Litecoin, Dash, and Monero also declined, in most cases dropping even more steeply.

Some analysts have described this as profit-taking , which would suggest the declines will level off. But technical analysts speaking to CNBC say the losses could go as deep as 46.5%, pushing Bitcoin down to $1,470.

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A look at history suggests even that might not be the floor. The cryptocurrency rally of the last six months is strongly reminiscent of a Bitcoin bump that unfolded from October to December of 2013, when the price skyrocketed from under $130 to over $1100. That was followed not just by a correction, but by a long, slow decline that had prices pared back to just over $200 within a year, followed by two years of steady, but slow, growth.

Its unlikely that the same precise pattern will repeat itself, mostly because the ecosystem of startups and services surrounding cryptocurrency is vastly more robust now than it was four years ago. But a vital lesson still holds: cryptocurrency prices are volatile because very few speculators actually understand the technology or its potential, leaving it vulnerable to reactive, emotion-driven swings.

For proof, just look at how closely various cryptocurrency tokens' prices are tracking each other, regardless of their often very different realities on the ground. Bitcoin is the first and most basic form of cryptocurrency, with a lot of adoption and stability, but relatively few features. Ethereum is a robust smart system that is already being widely adopted for building complex data-sharing applications. And Ripple is a mostly privately-held solution focused on interbank transfers. Yet the three tokens' charts for the last few months are remarkably similar.

That suggests very little close analysis by those buying into cryptocurrency (and likely a lot of purely algorithmic trading).

The fundamental reason for these massive price swings is that the promise of blockchain tech is simultaneously so profound and yet so far from fruition. Even if one accepts the idea that blockchains will someday underly everything from health records to insurance , the road to overhauling those systems will be long and winding. Well see many more rallies and retreats along the way.

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Why Bitcoin Just Dropped 30% - Fortune

What a crazy week for bitcoin. The digital currency is famous for its volatility, but in the last few days, it soared from $2,000 to nearly $2,800 . And after a $400 plunge on Thursday, it is sitting around $2,450. Oh, and if you're keeping track, bitcoin is up about 100% since the start of the month.

There are various explanations for the price surge, which include: a flood of new investors from Japan and Korea; blockchain technology (which drives bitcoin) going mainstream; and, of course, speculative mania.

But the most intriguing theory about the bitcoin boom involves national governments. Specifically, are central banks acquiring bitcoin to hold as reserves alongside gold and foreign currencies?

Vinny Lingham, a well-known entrepreneur and digital currency enthusiast, predicted last year that a price surge could lead governments to take a strategic interest in bitcoin as an asset.

"If Bitcoin started to surge globally, and as a result of strategic interests from any one government, if other governments decided to own a piece of the limited 21m coins in issue, I believe this would trigger something akin to a digital commodity race. Imagine if China started buying up large amounts of Bitcoinwould the rest of the world governments stand idly by and watch?" he wrote in a blog post.

Lingham made the point again on Twitter this week, citing a possible rivalry between Asian countries:

It's not clear if Lingham is being entirely serious. (A subsequent tweet hinted the Japan comment might have been in jest.) But the idea of central banks acquiring bitcoin is hardly far-fetched. The Central Bank of Barbados, for instance, published a research paper on whether the country should buy digital currency.

And other CEOs have made the same suggestion:

From a theoretical standpoint, bitcoin possesses many of the same attributes of gold, which makes it an attractive store of value for central banks. Specifically: There's a limited supply of bitcoin, it's easy to trade, and its price is not dependent on governments or regular financial markets.

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As to whether Asian governments are actually acquiring bitcoin, there is so far no hard proof. But bitcoin investors have long looked nervously at the extensive mining operations in China, which are effectively under control of the government.

The prospect of Chinese control, along with the incredible surge in bitcoin's value, is something that could spur the governments of Japan and Koreawhere bitcoin is trading higher than anywhere elseto acquire the cryptic currency.

Finally, some fear bitcoin is still vulnerable to a so-called 51% attack an existential threat in which more than half of the world's bitcoin miners join forces, allowing them to manipulate the blockchain records on which all bitcoin transactions are stored. Today, such an attack is considered too big for anyone to pull offexcept, perhaps, a nation state.

National governments jostling for control of bitcoin could also trigger new forms of crime or economic aggression on the Internet. (If that sounds far-fetched, consider how North Korean attackers robbed the central bank of Bangladesh through the SWIFT banking system).

For now, all of this is just speculation. It's entirely possible that what we're seeing is yet another instance of a speculation-fueled bitcoin bubble that will be followed by a crash. But if national governments are in the mix, it's a whole new ballgame.

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Bitcoin's Price Surge: Are Government's Behind It? | Fortune.com - Fortune

Barron's

Bitcoin is Soaring; Should You Buy? Barron's The price of the digital currency bitcoin swung wildly this week, hitting record highs and then plunging dramatically, day after day. It jumped to a new record of $2,791.70 on Thursday, and has more than doubled this year. That said, it's also had 300 ...

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Bitcoin is Soaring; Should You Buy? - Barron's