In 2017, the world went mad for Bitcoin. One of the first and certainly the most hyped of the so called “cryptocurrencies”, Bitcoin was one of the best performing investments in the world last year, trading at $1,000 on 1st Jan 2017, rising to $19,843 on 17th December (a 20-fold increase) before finally finishing 2017 at $14,129 per coin. On 17th December, Bitcoin had a worldwide market capitalisation of US$321.4 billion. Compare this to the value of Bitcoin on 22nd May 2010, when a little-known developer called Laszlo Hanyecz proudly announced his purchase of two pizzas using 10,000 bitcoins. Let’s hope he held a few back because 10,000 bitcoins would have bought 19.4 million pizzas on 17th December 2017! Since then, Bitcoin’s fall from grace has been meteoric and at the time of writing had plummeted 60% to $8,465 from its peak.
In this overview we chart the inexorable rise and recent plunge of Bitcoin’s value and explore the credibility and future of cryptocurrencies in general. We consider the key foundations for any currency – demand, scarcity and security – and ask if Bitcoin has what it takes to be a viable long-term alternative.