Are cryptocurrencies just another asset bubble?
Transformative technology? Asset bubble about to pop? Garden-variety fraud? Bitcoin and other cryptocurrencies have no shortage of fans and detractors, and there is no lack of opinions about how real the phenomenon is – but they have caught the world’s attention, at least for the moment. Bitcoin was invented by libertarians who wanted to circumvent governments and financial institutions by creating a currency that was anonymous and untraceable. But the speculative frenzy that surrounded it, of a kind once reserved for hot tech IPOs, took off in earnest in 2017: Bitcoin’s price shot up to more than $19,700 in December, then fell in January almost as steeply as it had risen. Bitcoin uses a technology called blockchain, a public digital ledger run by computers that promises to be both transparent and unhackable. Even bitcoin critics call blockchain an innovative technology that could have wide applications in many areas of the economy.
Some key takeaways:
Bitcoin’s rise has spawned more than 1,300 rival cryptocurrencies, some of which seek a competitive edge against it by offering greater anonymity or faster processing speeds.
While free from government and its regulation, cryptocurrencies offer no investor protection on investments that have been subject to great market volatility.
Cryptocurrencies are not widely held and attract a criminal element because of their offer of anonymity, making the market potentially vulnerable to manipulation.
Resources for Further Study
Narayanan, Arvind, et al., “Bitcoin and Cryptocurrency Technologies: A Comprehensive Introduction,” Princeton University Press, 2016. Professors from Princeton, Stanford and the University of Maryland provide a comprehensive introduction to the revolutionary technologies of digital currency.
Angel, Jim, “Approving bitcoin ETFs will lead investors to slaughter,” The Hill, March 7, 2017, https://tinyurl.com/
Bustillos, Maria, “The Bitcoin Boom,” The New Yorker, April 1, 2013, https://tinyurl.com/
Cuthbertson, Anthony, “North Korea Hacking War on Bitcoin Exchanges Is Part of ‘Biggest Global Sting,’” Newsweek, Dec. 19, 2017, https://tinyurl.com/
DeRousseau, Ryan, “There’s a Hidden Bitcoin Tax You Need to Know About,” Money magazine, Nov. 2, 2017, https://tinyurl.com/
Galland, David, “5 Industries That Blockchain Will Likely Disrupt by 2020,” Forbes, March 29, 2017, https://tinyurl.com/
Greenberg, Andy, “Monero, the Drug Dealer’s Cryptocurrency of Choice, Is on Fire,” Wired, Jan. 25, 2018, https://tinyurl.com/
Kharif, Olga, “The Bitcoin Whales: 1,000 People Who Own 40 Percent of the Market,” Bloomberg Businessweek, Dec. 8, 2017, https://tinyurl.com/
McMillan, Robert, “The Inside Story of Mt. Gox, Bitcoin’s $460 Million Disaster,” Wired, March 3, 2014, https://tinyurl.com/
Popper, Nathaniel, “How the Winklevoss Twins Found Vindication in a Bitcoin Fortune,” The New York Times, Dec. 19, 2017, https://tinyurl.com/
Rosic, Ameer, “What is Blockchain Technology? A Step-by-Step Guide for Beginners,” Blockgeeks.com, February 2017, https://tinyurl.com/
Seidel, Marc-David L., “Bitcoin is making banks nervous. Here’s why,” Agenda, World Economic Forum, Oct. 6. 2017, https://tinyurl.com/
Wu, Tim, “The Bitcoin Boom: In Code We Trust,” The New York Times, Dec. 18, 2017, https://tinyurl.com/
Reports and Studies
Nakamoto, Satoshi, “Bitcoin: A Peer-to-Peer Electronic Cash,” Satoshi Nakamoto Institute, Oct. 31, 2008, https://tinyurl.com/
The Next Step
Clay, Melanie, “Canada Should Listen to UK Treasury’s Questions About Digital Currency Investing,” Coinsquare, Feb. 26, 2018, https://tinyurl.com/
Ligaya, Armina, “Canadian Securities Exchange to launch blockchain-based clearing house,” The Toronto Star, Feb. 13, 2018, https://tinyurl.com/
Wilkins, Carolyn, “Project Jasper: Lessons From Bank of Canada’s First Blockchain Project,” Coindesk, May 19, 2017, https://tinyurl.com/
Al Ali, Nour, and Chris Kingdon, “Musk: I Am Not Bitcoin’s Satoshi Nakamoto,” Bloomberg, Nov. 28, 2017, https://tinyurl.com/
Brandom, Russell, “Self-proclaimed Satoshi Craig Wright is being sued for stealing his partner’s bitcoin,” The Verge, Feb. 26, 2018, https://tinyurl.com/
Wile, Rob, “Bitcoin’s Mysterious Creator Appears to be Sitting On a $5.8 Billion Fortune,” Money Magazine, Oct. 31, 2017, https://tinyurl.com/
American Cryptocurrency Association
Association dedicated to bitcoin advocacy and dissemination of bitcoin news.
The Bitcoin Foundation Inc.
1 Ferry Building, Suite 255, San Francisco, CA 94111
Organization dedicated to educating the public and media about the benefits of bitcoin and its technology.
Chamber of Digital Commerce
Trade association and political action committee working on behalf of digital commerce and technology innovations, such as blockchain.
DC Blockchain Innovation Center
1133 15th St., N.W., 12th Floor, Washington, DC 20001
Blockchain innovation center created by the Chamber of Digital Commerce.
Global Blockchain Business Council
1440 G St., N.W., 9th floor, Washington, DC 20005
A group that seeks to advance understanding of blockchain technology and promote its adoption.
Wall Street Blockchain Alliance
Trade association working to guide and promote comprehensive adoption of distributed ledger technology across financial markets.