The Broadcaster

Editorial: Bitcoin is not worth the hype

Alex Elchev, Section Editor

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Bitcoin is just too dangerous to be useful.

According to CoinDesk, Bitcoin hit its highest price ever on December 17, 2017, briefly selling for over $20,000. Since then, the price has significantly dropped off by as much 67% in early April. Experts and amateurs alike had high hopes for Bitcoin after its impressive peak, and none of those expectations, as lofty as they might have been, have been met. Because of its unstable nature, Bitcoin is unlikely to have a significant impact on the economy of the future.

This chart shows the price of Bitcoin from October 8, 2017, to March 20, 2018. The largest drop, between December 22 and 23, 2017, saw a loss of almost $50 billion of equivalent value. (Coinmarketcap.com)

Bitcoin was created by an anonymous computer programmer in 2008. It is a cryptocurrency, which is defined by the fact that it is only circulated electronically and that it is decentralized. Decentralization refers to the fact that it is not inherently tied to any existing currency, such as dollars and euros. The second aspect of this, its decentralization, opens it to the extreme unpredictability that will be its Achilles heel.

Bitcoin is by far the most popular and expensive cryptocurrency in the world; according to Coin Market Cap, there is over $145 billion worth of Bitcoin currently circulating around the world. While it’s size is certainly impressive in the context of its origin, its value is not tied to anything. Because of this, the price of Bitcoin is extremely vulnerable to severe price fluctuations in the slightest sign of trouble, as investors sell or buy en masse. These fluctuations occur in some amount every day; for example, the price of a single Bitcoin rose over $300 dollars in just seven minutes on March 20, 2018.

These fluctuations can be devastating to large scale investors, are likely the largest obstacle to mainstream adoption. At the height of its sudden plummet, Coin Market Cap shows that the value of the entire Bitcoin market dropped 17.4% from December 22 to December 23, 2017, equivalent to almost $50 billion. For comparison, The Telegraph reports that at the height of the 2008 stock market crash and financial crisis saw a drop of 21% from October 3 to October 10, 2008.

This danger is what is preventing, and will always prevent, Bitcoin from becoming a household currency. Beyond the existing and slowly growing group of people who buy into the promise of Bitcoin, no person or market is willing to trade a physical good or service for something that might be worthless the next day.

On the other side of the same coin, customers are unlikely to spend something that can be worth more the next day. Bitcoin users argue that the buying power of the dollar also fluctuates, but the key difference is that the fluctuations are miniscule compared to those of Bitcoin, and are often minimized by the Federal Reserve, a regulating body that Bitcoin will never have.

Bitcoin is extremely enticing, but investors should know that their thousands could be worth pennies in just seconds. At least for now, Bitcoin is not worth significant investment.

About the Writer
Alex Elchev, Science and Technology Editor

Alex Elchev is the editor for the Science and Technology section. He is a junior at HHS and has been a part of the Broadcaster for two years. Alex enjoys...

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Editorial: Bitcoin is not worth the hype