Bitcoin road was always going to be bumpy

Values have already begun to recover following a 30% fall

One wonders if economists of the future will talk about the “Iced Tea Test” as a measure of asset bubbles. Long Island Ice Tea Corp in the United States, which has never reported a profit, saw its shares surge 500 per cent on Thursday morning.

The secret of its sudden success? A pivot towards “the exploration of an investment in opportunities that leverage the benefit of blockchain technology”.

That, and a re-branding as Long Blockchain Corp.

The soft-drink maker’s sudden rise in fortunes, following similarly successful, strategies by smaller companies such as tobacco firm Rich Cigars and trade-finance specialist Longfin, is yet more proof for sceptics that Bitcoin – even more unorthodox in nature as an asset – is a bubble that is all set to burst.

The end of the rally appeared to have well and truly arrived last week for Bitcoin.

The currency dropped by more than 30 per cent in value over the past five trading days, with the US’s largest Bitcoin exchange, Coinbase, having to suspend trading temporarily due to heavy traffic.

While 2017 marks the year when Bitcoin truly went mainstream, it remains next to useless as a working currency

The Bitcoin sceptics certainly have a point: the cryptocurrency approaches its ninth birthday in January, however, plenty of questions remain about what its true purpose is, and whether it really can be trusted. The cryptocurrency hasn’t been able to shake off its shady reputation as the payment mechanism of choice for scammers and other criminal elements.

While 2017 arguably marks the year when Bitcoin truly went mainstream, it remains next to useless as a working currency, given its extreme volatility.

But it would be unwise to write off cryptocurrencies just yet. Last week’s steep correction in prices will no doubt scare off many investors and speculators, just as the dotcom bubble burst of 2000 saw thousands of flimsier start-ups go under.

Such a reckoning however, was ultimately of benefit to the e-commerce sector as a whole, which has only gotten stronger in the past decade.

Bitcoin and other cryptocurrencies posted gains in early trading yesterday, suggesting a return to stability of sorts, at least temporarily.