Bitcoin hit a record high of $16,570, on Thursday, December 7, making it the most valuable cryptocurrency, monopolizing the market with a whopping 167 billion dollars of total worth. On December 8, bitcoin fell to about $14,500, which sparked fears of a market collapse; but the price began, again, to increase on the ninth, to $15,200, as of 3:25 pm, pacific standard time.
Bitcoin is an online, digital currency, with no physical backing, that can be exchanged by internet users, for physical currencies or services, while keeping its traders anonymous. When it was released in 2009, by anonymous coder, Satoshi Nakamoto, critics dismissed it as nothing but a futuristic dream. It then became a preferred currency of many buying from the black market and dark web, seeing as bitcoin’s advanced cryptography kept its users’ financial information secure, and making data breaches extremely difficult, but not impossible. Not only was it used by criminals, but some big businesses embraced the bitcoin, such as Expedia and Microsoft.
At the very end of 2015, Bitcoin priced at about $430, but raised during the coming year, to $530, during June of 2016. Surprising to many individuals, on the last day of 2016, the price sat at $966, more than doubling the cost per coin, from the start of 2015. In 2017, The price continued to rise, steadily crawling into the thousands, almost reaching $7,000 at the beginning of November. The cost then rose every day, a few hundred dollars at a time, until it skyrocketed during the beginning of December, capping out at $16,615, during December 7.
Much like the dot-com boom, the success of bitcoin opened the floodgates to thousands of crypto-competitors, and their investors, trying to cash in on the success of online currencies. Other growing crypto-currencies, which are being called altcoins, include Ethereum, Zcash, Monero, Dash. Many altcoins promise greater security, safety, and anonymity, than that offered by bitcoin.
Though this cryptocurrency boom is welcomed by many, some nations have outlawed the exchange and use of the currency. The Central Bank in China has shut down exchanges of the coin, while indonesia and bangladesh have banned it as a payment tool, altogether. The Indian Central Bank has stated in a warning that users, holders, and traders of virtual currencies, including Bitcoin, will face economic, financial, operational, legal, and security-related risks.
Andrew Miller, an associate director of the Initiative for Cryptocurrencies and Contracts, says, “Anyone investing in technology understands that there will be many failures. It seems to be the case with cryptocurrencies that the speculation is funding what is hopefully a really important infrastructure development.”
“Unless there’s a real technological breakthrough, I don’t think we’ll get to the point where we’ll pay for groceries using crypto.” says Vipul Goyal, a professor on blockchain and cryptocurrencies at Carnegie Mellon University.
A major technological problem, which could potentially derail cryptocurrencies, is transaction speed. Ethereum can only handle about 13 transactions at the same time, which would be around 200 times too slow to host a database of 10 million. With bitcoin, to make a transaction, you need approval from half of the active nodes, making transactions take 30 minutes. A node is a basic unit used to make data structures.
Some speculate that once this boom has run its course, only a handful of altcoins will remain, taking their places as the only viable cryptocurrencies; and that bitcoin may not even be at the top anymore, by that time.