In today's edition of the Mercury, I wrote a news story about bitcoin and how it is making inroads into the local tech world and various local businesses. A few weeks ago, when I sat in on the meetup group I wrote about in the piece, bitcoin was on a huge upswing. As I wrote:
The day before their gathering, the US Senate held its first hearings to discuss bitcoins. It was a welcome stamp of legitimacy from the federal government that came with an added bonus: Bitcoins nearly quadrupled in value as a result.
As I worked on the article I saw its valuation spike at over $1,000. When I turned in my copy, it was sitting around $800.
Well, by the time I woke up this morning, bitcoin's value had plummeted nearly 60%, with many investors dumping their stores of the virtual currency, and financial pundits looking for the deflation of what they view as a bubble.
The reason for the steep drop was a decision made by China's biggest bitcoin exchange to stop accepting cash deposits and, according to South China Morning Post, the People's Bank of China "banning all transactions by third-party payment providers involving digital currencies."
So, what gives here? Does this mark the beginning of the end for bitcoin's glory days? As ever, it depends on who is being asked.
The New York Times' Dealbook blog wrote a bit about today's price drop, with Boston University finance professor Mark Williams saying that we should expect to see more regulation like this in the future and that "bitcoin had followed the trademark patterns of past asset bubbles, and he predicted that the value would fall to as low as $10 next year."
But on Reddit's Bitcoin discussion group , when folks aren't jokingly posting the numbers for suicide hotlines around the world, advocates are urging users to stay strong. As user FreeToEvolve put it: "[Don't] listen to the people saying bitcoin is dead... don't listen to the 'to the moon; guys or the complete naysayers. Bitcoin can only be worth what its infrastructure can handle. There are many massive improvements and new features to come. We have a looooooooonnnnnnggggg road ahead of us."