Dig­i­tal cur­ren­cies re­main too risky

Houston Chronicle Sunday - - BUSINESS - CHRIS TOM­LIN­SON

Bit­coin will turn 10 years old next month, so it’s time to check with the bit­coin trad­ing desk, where the cryp­tocur­rency craze ap­pears just as fool­ish as it did a year ago.

One bit­coin is trad­ing at $6,425, down from $19,650 on Dec. 16, 2017. Other pop­u­lar cryp­tocur­ren­cies have dropped even far­ther. We’re still wait­ing for last year’s pre­dic­tions of $50,000 bit­coin to come true.

If they do, com­puter-driven trades will al­most cer­tainly have ma­nip­u­lated the mar­ket, ac­cord­ing to a new re­port from The Wall Street Jour­nal. And this per­fectly le­gal games­man­ship is prob­a­bly the only thing keep­ing bit­coin afloat, along with money laun­der­ers.

Bit­coin re­mains a largely un­reg­u­lated, imag­ined cur­rency that trades strings of code us­ing blockchain tech­nol­ogy. The blockchain ver­i­fies the amount of bit­coin avail­able, records each trans­ac­tion and shares a block of code as proof of own­er­ship.

The blockchain is shared on all of the com­put­ers par­tic­i­pat­ing in the mar­ket while still guar­an­tee­ing anonymity. There is no cen­tral bank nor cen­tral reg­u­la­tory author­ity since bit­coin is transna­tional. This state­less­ness

Games­man­ship is prob­a­bly the only thing keep­ing bit­coin afloat, along with money laun­der­ers.

is what draws lib­er­tar­i­ans, crim­i­nals and spec­u­la­tors to bit­coin, the most fa­mous of the cryp­tocur­ren­cies.

This time last year, bit­coin cap­tured the global imag­i­na­tion. Peo­ple around the world cre­ated dig­i­tal wal­lets and bought bit­coin, driv­ing the price up from $909 at the be­gin­ning of 2017 to nearly $20,000 at the end.

“Strings of com­puter code will never be­come a true cur­rency ca­pa­ble of hold­ing value over time,” I wrote at the time. “And just as grav­ity holds us to

Mark Mul­li­gan / Staff pho­tog­ra­pher

Ar­rays of video cards sit in a cryp­tocur­rency min­ing rig op­er­ated by Hous­ton-based Snap­stream.

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