Bitcoin’s sharp rise increasingly getting investors’ attention
As he watches the value of bitcoin soar seemingly every day, Jad Mubaslat has just one regret.
“I wish I would have sold less on the way up,” said Mubaslat, 25, who co-founded a bitcoin club at Ohio State University when he was a student there. Mubaslat is now in graduate school at Wright State University.
Bitcoin is all the buzz among investors these days. The crypto currency routinely jumps or falls in value by $1,000 or more each day, at times within a few minutes.
Just take Thursday. The frenzy pushed the value of bitcoin to $19,340 before it fell by 20 percent to $15,198.
“There’s no economic basis (for the value),” said James Thurston, spokesman for the Ohio Bankers League. “With that volatility comes a lot of risk and a lot of danger.”
Interest in bitcoin likely will be turned up a notch when trading in the digital currency begins on two established U.S. exchanges. Futures for bitcoin will start trading on the Chicago Board Options Exchange on Sunday evening and on crosstown rival CME Group’s platforms later in the month.
Bitcoin is the world’s most popular virtual currency. Such currencies are not tied to a bank or government and allow users to spend money anonymously. They are basically lines of computer code that are digitally signed each time they are traded.
A debate is raging on the merits of such currencies. Some say they serve merely to facilitate money laundering and illicit, anonymous payments. Others say they can be helpful methods of payment, such as in crisis situations where national currencies have collapsed.
The origins behind the currency, launched in 2009, are somewhat of a mystery. Bitcoin is mined by “miners” using their computers to make complex calculations that verify transactions in bitcoins.
Since its launch, the currency has gained traction among a growing number of tech enthusiasts, speculators and even criminals.
Pegging the value of bitcoin can be tough, though. Unlike gold and other kinds of commodities, there is nothing tangible to use as a basis to support the value of bitcoin.
The rise of bitcoin has gotten the banking industry’s attention because of blockchain, the technology used to verify bitcoin transactions, Thurston said. Blockchain now is being developed by banks as a means to secure financial transactions.
Mubaslat said more investors are buying the notion that bitcoin will become more valuable over the long term, especially with younger investors.
“People are starting to see the fundamental features in a stored value,” he said. “It’s similar to gold, but more convenient to hold than gold.”
Speculators are behind much of the recent massive gains in price in bitcoin, and a correction likely is coming, maybe even as much as 75 percent, he said.
“People will panic. People will say it’s dead,” said Mubaslat, who also invests in other crypto currencies.
Mubaslat says he believe the price of bitcoin could top $100,000 10 years from now, regardless of what happens on the short term.
“I have to tell myself, ‘don’t look at the price.’ Just look at the price five years ago,” he said when bitcoin was much cheaper. “Twenty years from now, bitcoin is going to be the thing.”