The digital currency bitcoin experienced tremendous growth recently, but along with that raised many concerns amongst those involved.
Bitcoin prices skyrocketed recently to a worth of $10,800 per coin as of Jan. 26. The price of the same single bitcoin in 2010 topped at $0.39, according to buybitcoinworldwide.com
The value of bitcoin slowly grew over the past eight years, and is now the de facto face of the digital currency market. Its tremendous monetary boost created a cause for celebration of those currently invested.
Hunter Little, a freshman computer science major who has previously invested in bitcoin, doesn’t buy it its ability to sustain at its current purchasing power.
“I believe bitcoin is going to plummet real low within the next five months, be forgotten about and then re-emerge eventually,” Little said.
While the price soared over the last two years, it changed consistently, because of how bitcoin works. Its value is determined by the cost at which people are buying and selling the digital currency, similar to the U.S. stock market.
“That’s how most stocks are. It gets big and then it crashes and over time goes through dips, but I think it will get more common as time goes on,” Little said.
The problem with digital currency like bitcoin is that the constant fluctuation leaves many investors unsure of its future. Unlike stocks, which are regulated by the government, bitcoin is controlled by a peer-to-peer network.
People following the market like freshman computer science major Zachary Harvey explained the volatility of the market.
“If everyone thought it was worth $100,000, it would be worth $100,000. It could also be worth nothing. It’s all based on how people value it,” Harvey said.
Bitcoin was the first digital currency to be adopted by the public and have long-term value. However, as more people became aware of the market, the more other digital currencies known as “altcoins” began popping up. Many altcoins serve the same purpose as bitcoin, but fixed some of the problems that plague bitcoin.
“Right now people like bitcoin, but there are some moving away from it because of slow transactions and high transaction fees,” Harvey said.
These altcoins go by many names such as litecoin, ethereum or even dogecoin. There are thousands of alternatives to bitcoin that can be used by the market, although many still use bitcoin, as the dominant digital currency on the market.
The current number of unique active users of digital currency is estimated to be between 2.9 million and 5.8 million, according to a study done by University of Cambridge Judge Business School. That’s about 0.00008 percent of the global population.