Tracker Series

Bitcoin Bubble Tracker: December 6

Link to live trading on the various Bitcoin markets

Bitcoin Bubble Tracker | Week 1

Bitcoin Background

Every industry needs a good bubble and the payments industry’s newest bubble may just be bitcoin! 

Bitcoin was created in 2009 by an unknown person under the alias, Satoshi Nakamoto. The online financial network enables people to send payments from one to another, but with a twist – its most ingenious feature is that it’s truly the digital version of cash – untraceable and anonymous. Therefore, bitcoin has had its fair share of, shall we say, use cases that are not exactly the sorts of things that you’d want to bring up in front of your mother at the holiday dinner table. In recent weeks, the crescendo around bitcoin and its feasibility as a viable currency has increased, as has its value, which now hovers around $1,000. Hardly a day goes by now where bitcoin doesn’t make the news.

So, we thought it would be fun to track just what is going on with bitcoin – the people and the developments that are building and bursting this bitcoin bubble. Every Friday, we’ll dish up the latest and keep tally on whether the trendlines are for or against, and how that tracks to the value of a bitcoin.

Hope you enjoy, and if you have any news you’d like to share, please send it our way at contactus@payments.com.

Bubble Builders

Over the last few weeks, we’ve seen bitcoin acceptance range to those that offer space travel to those that offer things that make you feel like you’re in space. Transaction volume, fueled mostly by giddy speculators, nearly rivals that of players like Western Union and PayPal, prompting our outgoing Fed Chairman to comment that it may just have a place in the world after all. VCs, not wanting to miss a beat, jumped in with both fists full of cash hoping to turn one of those investments into a billion-dollar baby.

  • December 5, 2013 – Bitcoin can buy cars, a Tesla in Costa Mesa, CA and a Jeep in Overland Park, KS.
  • December 5, 2013 – China became the largest Bitcoin Market.
  • December 5, 2013 – Bank of America‘s research report on Bitcoin said the virtual currency could become a “serious competitor” to traditional money transfer providers. Bitcoin can help users avoid high taxes, capital controls and government seizures, but also it is highly volatile, the report noted. The digital currency could hit a market capitalization of $15 billion on its way to becoming similar to a store-of-value commodity like silver, David Woo, head of global rates and currencies research at BOA, said in a CNBC interview.
  • December 5, 2013 – The value of all daily Bitcoin transactions is now just about one-third less than transactions on online pay service player PayPal, around 80,000 transactions occur in Bitcoin daily. The dollar value of those transactions total around $257 million. Paypal has $397 million in transactions daily, which is greater than $216 million worth of transactions conducted by Western Union.
  • December 4, 2013 – Bitcoin is looking to expand to India and many Bitcoin miners in India believe that the big opportunities for Bitcoin are in the $70-billion overseas remittances segment and financial inclusion.
  • December 3, 2013 – The first South Korean transaction in Bitcoin occurred at a Paris Baguette store in Incheon.
  • December 3, 2013 – The first Bitcoin ATM launched and in the first 29 days of service has processed $1 Million in transactions.
  • November 30, 2013 – Venture capital firm Blackbird Ventures and a handful of individual investors have made the country’s first major Bitcoin investment, funneling $500,000 into Melbourne-based startup CoinJar.
  • November 29, 2013 – On Bitcoin Black Friday, Bitpay the world’s leading merchant processor for virtual currencies had the most popular day in the history of Bitcoin commerce with 6,296 transactions. BitPay continues to enroll new merchants at a rapid pace, onboarding more than 3,000 merchants in November to exceed a total of 14,000 Bitcoin-accepting merchants. Shopify’s integration of BitPay into its checkout process now makes BitPay available to 75,000 merchants using the Shopify ecommerce platform.
  • November 29, 2013 – The price of a single Bitcoin rose past the $1,000 mark.
  • November 28, 2013 – Excitement about Bitcoin has led to the spike in value of other cryptocurrencies or altcoins including Litecoin, Peercoin, Ananocoin and Zerocoin.
  • November 25, 2013 – Bitcoin can be used to pay tuition at The University of Nicosia in Cyprus.
  • November 25, 2013 – Richard Branson announced via his Twitter account that Virgin Galactic, his private spaceflight venture, will now accept Bitcoin as payment. A single ticket for a Virgin Galactic flight costs $250,000. While the company has yet to announce the date of its first flight, Branson teased that at least one person has already bought a ticket with Bitcoin.
  • November 20, 2013 – Two U.S. Senate Committees the week of November 18th helped publicize the economic benefits of virtual currencies.
  • November 18, 2013 – The Senate Committee on Homeland Security and Governmental Affairs held the first-ever congressional hearing on Bitcoin. There were no indications they were stepping up crackdowns or opening new regulatory fronts. They said current statutes were adequate for prosecuting criminals. As the Senate wrapped up the hearing Bitcoin reached new highs.
  • November 18, 2013 – Federal Reserve Chairman Ben Bernanke wrote to senators that virtual currencies “may hold long-term promise, particularly if the innovations promote a faster, more secure and more efficient payment system.”
  • November 18, 2013 – BTC China, the world’s largest bitcoin exchange by trading volume, secured $5 million in investments from institutional investors Lightspeed China Partners and Lightspeed Venture Partners.
  • November 12, 2013 – The Winklevoss Twins report that the Bitcoin market will hit $400 billion and asked regulators to not push innovation away from the US and into China.
  • November 9, 2013 – Bitcoin rises.
  • November 7, 2013 – A proposed federal rule suggested that political campaigns would be allowed to accept, but not spend, Bitcoin. A Federal Election Commission draft would require campaigns to first convert any Bitcoins collected as donations to dollars. It would count as an “in-kind” contribution like a stock or bond.
  • November 6, 2013 – ‘Silk Road 2.0’ opened with a new security feature that allows users to use their PGP encryption key as an extra authentication measure.

Bubble Busters

Well, not so fast. China may be the largest bitcoin market but the central bank there just said ‘no way jose’ to FI’s handling it. So much for that market opportunity. The Bank of France is sort of leaning the same way and a former Fed Chairman, Alan Greenspan more or less said that figuring out why bitcoin is so valuable is above his pay grade, paid in dollars, that is. The general council of the Bitcoin Foundation said, under oath, that bitcoin is both experimental and high risk. Enterprising young hackers have jumped onto the bitcoin bandwagon, holding files for bitcoin ransom to get them back. Those bitcoin marketplaces just can’t seem to keep their doors open – Silk Road was shuttered by the Feds, only to spawn a copycat that is also closing because someone drained its bank account.

And because bitcoin is untraceable and anonymous, no one will ever know who did it!  Unless, of course, they write a tell-all book one day.

  • December 5, 2013 – China’s central bank, the People’s Bank of China, ruled that Bitcoin is not a proper currency and banned financial intuitions from handling it. After the announcement trading fell from $1,240 on Wednesday night to $870 early Thursday. It’s since recovered somewhat, trading at just about $1,000.
  • December 5, 2013 – The Bank of France warned about risks related to Bitcoin, saying the price in legal currencies is inherently volatile and users may find it difficult to convert to real money. The price of the digital currency rose over $1,000 last month for the first time, extending a 400 percent surge in less than a month and fuelling concerns of a bubble in the making. Also the anonymity that Bitcoin offers raises the risk that they could be used for money laundering and financing of terrorism.
  • December 5, 2013 – Alan Greenspan, former U.S. Federal Reserve Chief called Bitcoin a bubble – “It’s a bubble,” Greenspan, 87, said today in a Bloomberg Television interview from Washington. “It has to have intrinsic value. You have to really stretch your imagination to infer what the intrinsic value of Bitcoin is. I haven’t been able to do it. Maybe somebody else can.”
  • December 3, 2013 – Sheep Marketplace that opened after the closure of the Silk Road, the encrypted online black market, has announced that it will cease operation in the wake of a $6 million Bitcoin heist.
  • December 2, 2013 – A new computer virus called CryptoLocker that was spreading like crazy in the U.K. last month and is now crossing over to infect U.S. computers and sends pop-up notices on computers to pay if you want your files back. The hackers often demand Bitcoins as payment.
  • November 22, 2013 – Major investors in Bitcoin, Cameron and Tyler Winklevoss, the young Harvard students who famously fought over the rights to Facebook with Mark Zuckerberg, struggle to explain Bitcoin.
  • November 24, 2013 – Patrick Murck, general council for Bitcoin Foundation, a nonprofit devoted to “fostering the Bitcoin ecosystem,” acknowledged in a Senate that Bitcoin, “It’s very much still an experimental currency and it should be considered a high-risk environment for consumers and investors at the moment.”
  • November 18, 2013 – The International Centre for Missing and Exploited Children noted how anonymity offered by Bitcoin has made it the currency of choice for predators. The nonprofit group’s president, Ernie Allen, says he’s not against the digital economy. But he wants it less private.
  • November 18, 2013 – Edward Lowery III, who leads the Secret Service’s criminal investigative division, reported that the technologically complex Bitcoin system makes it hard for everyday agents to stay on targets’ tails. The Secret Service will need more tech-savvy investigators than the agency can currently afford.
  • November 18, 2013 – Payments Industry expert, Karen Webster, analyzes the Bitcoin industry and the dangers behind the growth of Bitcoin.
  • November 15, 2013 – U.S. Bank closed down bank accounts for small Bitcoin clients.
  • November 12, 2013 – An online exchange that trades Bitcoin in the Czech Republic says it has been attacked by hackers.
  • November 12, 2013 – A Chinese Bitcoin exchange holding $4.1 Million for 1,000 customers has disappeared.
  • November 10, 2013 – Bitcoin crashes nearly 25% .
  • November 8, 2013 – An Australian man who operates a virtual bank for holding digital currency claimed that hackers stole more than AUS $1M or (USD .9M) and it is difficult to recover because the police don’t have access to any more information than the user does and are virtually impossible trace.
  • November 7, 2013 – CoinLab Inc. was ordered to produce and deliver the virtual currency to a New York investment firm that accused it of reneging on their contractual agreement.
  • November 4, 2013 – Two computer science researchers from Cornell University reported that they uncovered a fundamental flaw in Bitcoin. They say that when too many miners gang together, they can obtain more than “their fair share” of bitcoins and this can lead to a monopoly over the whole system. They reported “ … the problem is intrinsic to the entire way Bitcoin works … a minority group of miners can obtain revenues in excess of their fair share, and grow in number until they reach a majority. When this point is reached, the Bitcoin …  the currency … is no longer decentralized; the controlling entity can determine who participates in mining and which transactions are committed, and can even roll back transactions at will.”Their solution, they report, is to change how bitcoin mining works so a single pool of miners can never control more than 25% of the available mining power.
  • October 17, 2013 – Industry expert, David Evans, comments on how regulators will react to Bitcoin.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The May 2019 PSD2 Tracker Report, is a go-to, monthly resource for updates on trends and changes regarding PSD2 and other privacy and data protection regulations.

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