Bitcoin’s value crossed the $15,000 threshold for the first time today, marking another milestone in its dizzying ascent. In recent months, the cryptocurrency has undergone a staggering increase in value; surging from roughly $3,500 in mid-September to its current price. And at the start of the year, a single Bitcoin was worth less than $800.
What happens next is anyone’s guess, and most analysts are united only in their uncertainty over the cryptocurrency’s future. Bitcoin long ago stopped being useful for actually buying things (partly because of its rocketing value and partly because of achingly-slow transaction times), so the questions facing speculators are: is this a bubble? And if so, when will it burst?
Some traders figure we’re getting close, and are preparing to short Bitcoin; that is, make bets that its value will decrease in the future. “[It’s] one of the greatest shorting opportunities ever,” cryptocurrency Lou Kerner told Bloomberg earlier this week. “You have a lot of zealotry, and a lot of people, including me, who think it’s the greatest thing to ever happen in the history of mankind. You have a lot of people who think it’s a bubble and a Ponzi scheme. It turns out both of them can’t be right.”
Although the general trend for Bitcoin’s valuation is only up, the cryptocurrency has been extremely volatile. On November 29th, for example, its value fell 20 percent in less than an hour and half; dropping from over $11,000 a tick above $9000. For true believers, such blips are only temporary, but skeptics caution that any plunge could end up being permanent. After crossing $15,000 earlier today it’s value quickly dipped down to around $14,800.
Read more: 2017 is the year cryptocurrency joined the financial system
Bitcoin’s skyrocketing valuation has also brought with it a new problem: energy costs. It takes enormous amounts of power to sustain the Bitcoin network, and, according to a report from Ars Technica, it’s estimated that the cryptocurrency currently consumes as much electricity annually as the whole of Denmark. Predicting exactly how this consumption will rise or fall in the future is difficult (it depends on things like the rate at which new bitcoins are mined and the number of transactions), but given that Bitcoin only currently has use as a speculative asset class, it seems unsustainable.
Meanwhile, financial experts are struggling to make sense of the phenomenon as a whole. One analyst quoted by the Financial Times, Walter Zimmerman, suggests that the best way to look at Bitcoin is as an absurd video game with no boundaries. “Users of other currencies find utility in a stable value. But not here in Bitcoin world,” writes Zimmerman. “The reality of Bitcoin is that users are also players. And the objective of this game is the highest possible score.” But how much higher can it go?
Comments
So this thing has no real use now, it only exists as a sport now.
By Gareck on 12.07.17 6:53am
You can buy Bitcoin and you can cash-in Bitcoin.
The only reason to buy Bitcoin is to sell Bitcoin.
By Acryion on 12.07.17 7:07am
Which is not what it was designed for. It was designed to be used like any other currency (buying things with Bitcoin and selling things for Bitcoin).
By MysteryMii215 on 12.07.17 8:36am
Which is why I think the talk of a bubble could be true. We’re in uncharted territory right now with Bitcoin though, but it has no real uses since basically nobody is buying stuff with it.
By Stone Cold Dan Quinn on 12.07.17 12:09pm
More like "…nobody you know is buying stuff with it". There are millions of people who use it – just not near you.
By D.C. Mike on 12.07.17 3:51pm
Who is accepting Bitcoin? From what I heard, some companies did it for publicity and don’t even accept it anymore.
By Stone Cold Dan Quinn on 12.07.17 3:52pm
My website accepts coin
By FYM Hot Sauce on 12.08.17 9:06pm
Or to use it to buy other more practical and useful cryptocurrencies. If there’s value in Bitcoin beyond speculation, it’s in its position as the "reserve" cryptocurrency.
By Sudano on 12.07.17 8:50am
Hey, I feel you are being a bit too general by saying Bitcoin is ONLY used to be bought and sold, in addition to diminishing its value in the economy.
You know what else people buy and sell? Goods and Products. Gold. Real Estate. Bitcoin is scarce in that no more than 21m can exist, like gold or other physical assets. It’s still new and the "market" is still speculating on it. Currently, it works really well as a store of value, a personal bank if you will, that could be used to send/receive large amounts of wealth in an instant and low fee relative to today’s standards.
The price is in a volatile flux at this time, cause it’s new and mainstream adoption is just starting. The supply and demand will stabilize it at some point. Which is where speculation comes in. Is it worth $16k? I think probably much more, in the long term. Just look at the trends. Short term it may go down until more people are willing to accept it.
By Vivi111300 on 12.07.17 10:15am
Gold can be used to make jewelry. People can live in real estate. Bitcoin is scarce, but it isn’t really being used. Imagine a housing market where 95% of the homes being bought and sold are just empty until it’s time to buy and sell again, without anyone living in them.
By Stone Cold Dan Quinn on 12.07.17 12:48pm
Gold price isn’t set by jewelries, you’re mistaking cause and effect. Jewelries prices don’t cause gold prices to move, but large movements in the price of gold causes jewelry prices to change. Therefore, the value of gold is independent of jewelry prices. The fact is, gold is a de facto store of value that isn’t justified at all by its uses.
In Toronto and Vancouver, a lot of houses really do sit empty, as it’s a way for foreign buyers to park their money overseas and potentially make a return I imagine a lot of buyers are doing the same using cryptos.
That said, I’ve personally converted to fiat most of my crypto holdings. The recent non-stop rally is indicative of a huge correction, and $16000 for a BTC is obscene.
By OpssYourBad on 12.07.17 4:05pm
I did not say the price was set by jewelries. I’m saying gold has other uses than just buying to sell later. And I’m not saying nobody does that with houses, but they are the minority.
By Stone Cold Dan Quinn on 12.07.17 4:11pm
The price of gold isn’t justified by those other uses. If gold was traded purely by its utility functions, I doubt it would cost so much more than other metals. Historical happenstance and rarity made gold the store of value it is today. Technically there’s nothing inherent in its value that justifies its lofty price.
There’s enough people buying houses and letting them sit empty in Vancouver and Toronto that new taxes were levied on people who don’t live in them (to help cool the overheated housing markets). If by minority you mean less than 50%, then I agree. If by minority, you mean insignificant, then facts show that’s not true.
The point I’m trying to make is this: Even in traditional markets like housing and commodities, some portion of its price is not supported at all by anything intrinsic. Bitcoin is not worth $0 as it facilitates transactions between fiat and other smaller cryptos, but there’s also undeniably a lot of froth at the current $16000 price. People thinking Bitcoin will ever hit anywhere near $0 is horribly misguided, and so are the people who argue it has "no value". Human society has long moved past "value = physical".
By OpssYourBad on 12.07.17 4:23pm
Imagine? No need. London UK is like that in some places.
By Dobba Jenkins on 12.08.17 12:49am
Greater fool theory
By zzd911 on 12.07.17 8:57am
The more the price rises, the less liquid Bitcoin gets as an asset and the more risky it becomes.
It’s not like holding dollars, it’s like holding real estate in 2006.
By Abattoir on 12.07.17 6:58am
The fact that this gets so many upvotes tells me a lot of people know absolutely nothing about cryptos or bitcoins.
Bitcoin can be divided down to 8 decimal places, so unless Bitcoins cost billions of dollars each, no one will have trouble affording Bitcoins. The liquidity depends on volume, and there’s a LOT of it (17.5+ billion dollars in the last 24 hours).
By OpssYourBad on 12.07.17 4:10pm
Wish I bought a couple bitcoins back when it was like $200 a pop. I’d totally cash out now and pay off debt.
By Black Dude on 12.07.17 7:03am
I guarantee you that in that case, you would have withdrawn the money when around…$400 or so, enough profit XD
Now you have the same opportunity, buying it at $15,000 and to not regret in… one year?
Shall we play?
By Riz3ky on 12.07.17 7:13am
I would’ve held onto it. I have other investements from then that haven’t had nearly as much ludicrous growth. Around that time I had about $500 I wanted to invest to see how it’d all play out. Ended up trippling my money today but had I put that in Bitcoin.. well.. yea.. would’ve been a nice cash out.
By Black Dude on 12.07.17 7:27am
Don’t beat yourself up. If as much people had bought bitcoin and hoarded it it’s value probably wouldn’t have skyrocketed to what it is today.
By ferroso on 12.07.17 8:12am
Actually, if more people bought bitcoins (increased demand) and then refused to sell it (reduced supply), the value would probably be more.
By OpssYourBad on 12.07.17 4:12pm
What Riz3ky is basically referencing is that you’re only saying you wish you bought at $X because you know it got to $X, and you’re countering to say you are more of a risk taker. If taking risks for high reward is your thing, he’s wondering if you’ll play the game now at $15k on your hope it goes to $X.
There’s also a reason you didn’t buy at $200. Hindsight always seems a little more certain for some reason. But yeah, imagining the cash we’d all have right now if we bought it long ago is a fun part of this game of risk.
By donnybeee on 12.07.17 11:16am
Why do you guarantee that? I bought 10 at ~$100 each in 2013, I still have them now… And I’m still not selling them.
By SirMaster on 12.07.17 12:21pm
You got balls of steel. I would be too scared to lose that chunk of money. But actually you do it right. It should be about the initial amount of invested money, not about the hypothetically lost money. Best case you become a millionaire, worst case you lose a thousand bucks. Do you have a certain threshhold in mind you will sell at?
By Mrogi on 12.07.17 1:02pm