Bit­coin ... the way to the fu­ture or path to fi­nan­cial ruin?

The Record (Troy, NY) - - BUSINESS -

Bit­coin, hailed in some quar­ters as the fu­ture of cur­rency, is hav­ing a rough week, with a flurry of ru­mors that China will shut down ex­changes and the head of a ma­jor U. S bank call­ing bit­coin a “fraud.”

Plum­met­ing prices have again raised ques­tions about the wis­dom of own­ing it, if not its le­git­i­macy.

The dig­i­tal, or cryp­tocur­rency, tum­bled 15 per­cent Thurs­day to about $ 3,300 against the dol­lar. Bit­coin, which has had bouts of volatil­ity in the past, has shed about a third of its value since Sept. 1. But it’s still up about $ 600 com­pared with last year at this time.

Still get­ting up to speed on bit­coin? Here’s a quick run­down.

What is bit­coin? Bit­coin is a dig­i­tal cur­rency cre­ated and ex­changed with­out the in­volve­ment of banks or gov­ern­ments. Trans­ac­tions al­low anonymity, which has made it pop­u­lar with peo­ple who want to keep their fi­nan­cial ac­tiv­ity, and their iden­ti­ties, pri­vate. The dig­i­tal coins are cre­ated by so­called “min­ers”, who op­er­ate com­puter farms that ver­ify other users’ trans­ac­tions by solv­ing com­plex math­e­mat­i­cal puz­zles. Th­ese min­ers re­ceive bit­coin in ex­change. Bit­coin can be con­verted to cash when de­posited into ac­counts at prices set in on­line trad­ing.

Is this bit­coin’s swan­song?

Not nec­es­sar­ily. Let’s take a look at re­cent data: In mid- July the value of bit­coin was around $ 1,900 per dol­lar, drop­ping from nearly $ 2,500 at the end of June. Users forced a change in the com­puter code, which was de­signed to im­prove ca­pac­ity on the in­creas­ingly clogged net­work. The ma­neu­ver worked, help­ing to avoid a split in bit­coin and driv­ing the value up to roughly $ 2,800 by the end of July.

Bit­coin’s value has fluc­tu­ated since then. At the be­gin­ning of Au­gust bit­coin’s value stood at about $ 2,710 and shot up to more than $ 4,700 by month’s end. But there’s been a steady de­cline this month, with the value slip­ping to ap­prox­i­mately $ 3,300 on Thurs­day, ac­cord­ing to Blockchain. info.

THE ASSOCIATED PRESS FILE PHOTO

TimMcCor­mack, of Bos­ton, in­serts cash into a Lib­erty Teller ATM while pur­chas­ing bit­coins at South Sta­tion train sta­tion, in Bos­ton.

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