BITCOIN is a “failed experiment” and most other cryptocurrencies are “doomed to die”, experts have told The Sun.
Once hailed as the future of money, Bitcoin is now worth 70% less than last year’s high – and the outlook is bleak for wannabe ‘Bitcoin billionaires’.
Since its quiet launch in 2009, Bitcoin has soared from a value of less than 10p to dizzying heights of nearly £15,000.
But a single Bitcoin is worth just under £5,000 today – a massive fall from grace since last December’s high.
According to tracker site Deadcoins, more than 830 cryptocurrencies are now considered extinct.
“At least 90% of all cryptocurrencies that exist right now are doomed to fail, die, or will basically be rejected, because the people who are primarily interested in them are money makers,” Evgeny Chereshnev, founder of tech firm Biolink.Tech, told The Sun.
“They’re not businesses, scientists, academics or retailers. In most cases, this is due to the initial supply and demand, and it basically just enables them to make fast money.”
Evgeny describes cryptocurrencies as being like a “pyramid scheme”.
“People invest to drive interest which, in turn, means others invest more money – and that drives the price,” he explained.
He said this inevitably leads to the price collapsing, killing off the currency for good.
What is Bitcoin?
Bitcoin got you baffled? Here’s what you really need to know
- Bitcoin is a virtual currency
- It’s traded between people without the help of a bank
- Every transaction is recorded in a public ledger, or ‘blockchain’
- Bitcoin is created by mining
- Mining involves solving difficult maths problems using computer processors
- Bitcoin can be traded anonymously, which makes it a popular way of funding illegal activities
- A single Bitcoin is worth over £12,000 today, but the value fluctuates wildly
- Bitcoin is one of many different cryptocurrencies, but by far the most popular
Deadcoins lists a whole host of reasons for virtual currencies dying off. These include simply being shut down, hacked, exposed as a scam, or revealed as a parody coin.
Part of the problem is that Bitcoin doesn’t have any value on its own – unlike traditional currencies.
“Cryptocurrency is ultimately an experiment that for all intents and purposes failed,” Ross Rustici, Senior Director of Intelligence Services at Cybereason, told The Sun.
“It never achieved acceptance as a fiat currency that has intrinsic value on its own, and the marketplace is too unpredictable and prone to disruptions.”
That’s led to huge numbers of Bitcoin rivals springing up, hoping to make some quick cash from greedy investors.
“Because of the success of Bitcoin there will always be an influx of copycat or similar currencies trying to share the success of Bitcoin itself,” Mark James, a security specialist at online safety firm ESET, told us.
“Cryptocurrency has made people a lot of money, and of course with any varying market, there is always a chance to lose money too – but that’s the nature of gambling.”
It’s easy to see the allure of Bitcoin – the price has fluctuated wildly over the years, making it possible to earn huge sums of money.
In early 2010, it traded for just a few US cents, rising to $1 in early 2011.
The first “bubble” was in Jule 2011 where it hit a high of $31 – only to fall down to $2 by December that same year.
Bitcoin then grew quickly in recent years:
- April 2013 – $266
- November 2013 – $1,000
- April 2017 – $2,000
- September 2017 – $5,000
- November 2017 – $7,300
- December 2017 – $14,851
If you bought 100 Bitcoin for $100 (£75) in 2011, it would now be worth $500,000 (£380,000).
But if you’d sold those Bitcoin last December, you’d have made $1,485,100 (£1,125,000) instead.
The fact that Bitcoin is still worth so much these days means not everyone is convinced the Bitcoin “fad” is over.
Bitcoin ISN’T dead – the experts who think cryptocurrencies are here to stay
Some experts believe Bitcoin will continue to grow…
Bob Loukas, founder of Bitcoin.Live:
- “The Bitcoin hype is definitely not over.
- “With mainstream uses being created every day, we are only beginning to see what this phenomenon can do.
- “One of the biggest misconceptions about Bitcoin and cryptocurrency is that it is a passing fad, or at best a bubble that will eventually pop.
- “The reality still remains that Bitcoin is one of the best performing assets of the decade across the board.
- “A good investor will know that the key to successful investment is to invest for the long term, not the short term and that they shouldn’t panic sell when the price falls.”
Alexey Burdyko, CEO and Founder of Play2Live:
- “Bitcoin is currently going through the bear market and will, as it has done before, come out the other side and whilst it might not hit the heights of late 2017, it will still have considerable value.
- “It’s fair to say 2018 has not been the best for the coin, with more than one hack affecting the price.
- “The market is unregulated and is incredibly volatile.
- “Anyone considering investing should be prepared to lose vast amounts before they begin to see a profit.”
“Bitcoin is roughly triple its value a year ago,” explained Ben Herzberg, director of threat research at Imperva.
“Some cryptocurrencies were (and still are) over-valued, as many people bought them based on the economic analysis of ‘I hear that a friend of a friend made money by buying something’.
“Those same people panicked and sold for losses, while the ‘whales’ are profiting on these waves of ignorant investors.”
It’s not just the unpredictable price that’s frustrated Bitcoin critics.
The virtual currency is also notorious for its assocation with crime.
Hack attacks are also common – Bloomberg reports the following thefts:
- December 2017 – NiceHash, a crypto-mining marketplace reported $63million Bitcoin stolen
- November 2017 – $31million worth of tether tokens reported stolen, and then converted to Bitcoins
- April 2017 – 4,000 Bitcoin stolen from the YouBit exchange in April
- August 2016 – about $65million worth of Bitcoin stolen in Bitfinex hack
- May 2016 – $2million worth of Bitcoin stolen from the Gatecoin exchange
- January 2015 – $5million worth of Bitcoin stolen from Bitstamp exchange
- February 2014 – Mt. Gox exchange reported $480million worth of Bitcoin missing
- September 2012 – BitFloor exchange reported about $250,000 worth of Bitcoin stolen
There’s an ongoing investigation into Bitcoin price manipulation too, which kicked off in May 2018.
Traders here in the UK (as well as in the US and South Korea) are being investigated for profiting from rogue price-fixing tactics.
But Andy Norton, director of threat intelligence at Lastline, says the days of Bitcoin being seen a criminal tool are nearly over.
“Far from being over, the Bitcoin ‘fad’ is simply moving away from the illegitimacy of its origins,” Andy told us.
“Where it was once used as a money laundering playground for terrorists and criminals, or a largely untraceable method of purchasing illegal goods online, it is now well on the way to becoming a legitimate currency, which we will see being accepted by more and more businesses and countries in coming years.”
Bitcoin may be able to ditch its criminal appearance, but it’s unlikely to ever lose its notoriety – the value has fallen £80 since we started writing this article.
That’ll only increase the thrill for investors hoping to become the next Bitcoin billionaire.
“I believe cryptocurrencies will become part of our daily lives,” said David Sapper, a Bitcoin expert at Blockbid.
“I believe that the hype has barely even begun.”
Do you think Bitcoin is finally dead? Let us know in the comments!