Cryptocurrencies have taken investors on a wild roller-coaster ride, drawing cheers from market-watchers and criticism from naysayers. When Bitcoin first gained public hype in 2013, it was as a new innovative digital currency, and major companies such as Expedia and Dell began to accept payments in cryptocurrency. Bitcoin's wild price swings, skyrocketing to nearly $20,000 (Dh73,460) in December 2017 only to drop this year, has made its potential to be used as an everyday currency less likely. Ten years after Bitcoin's first mention in 2008, we take a look at the state of digital currencies as Bitcoin plunges nearly 70 per cent year-to-date to $4,518 at 11.43am Abu Dhabi time on Wednesday.
What is Bitcoin?
Bitcoin is the world's first and most popular cryptocurrency. It is the largest among a basket of more than 2000 coins with a market capitalisation of $78.5 billion, according to CoinMarketCap. Traded on marketplaces known as Bitcoin exchanges, investors can buy or sell using different currencies.
Bitcoin was created by the still-unidentified person using the alias Satoshi Nakamoto. In an academic paper in October 2008, Mr Nakamoto first outlined how the digital currency would work and described blockchain, the technology used to verify and record transactions, central to Bitcoin.
You can use Bitcoin to book a hotel on Expedia or buy an Xbox game. The frenzied hype about the currency is centered around people trading in it to get rich quick and regulation headaches for financial regulators.
What has happened to Bitcoin?
Cryptocurrency markets were thrown into turmoil this week as major coins suffered a rout, shaking confidence in the asset class. Bitcoin fell 25 per cent in the past week. The plunge has fueled a sell-off among competing coins Ether, XRP and Litecoin. Crypto-investors are left reeling at the sudden decline in November after months of relative stability. An outspoken Bitcoin critic and a professor at New York University, Nouriel Roubini, told the US Senate that Bitcoin is the "mother of scams and bubbles".
In October, Bitcoin began to slide to its lowest level since its December 2017 peak, hurt by tighter regulations worldwide and fading interest from retail investors.
Is this the end of cryptocurrencies?
Concerned US regulators and the extended rout have dampened sentiment. On Wednesday, Mr Roubini reacted on Twitter to the continued slide: "With BTC [Bitcoin] down almost 80% from peak (from 20K to 4K) & all other cryptocurrencies down 80% to 99% I rest my case that this crypto bubble went bust for good. I feel vindicated. So I will take a break for a few days from this toxic Crypto Twitter. Waste of time to convince zealots."
The US Department of Justice is reportedly investigating whether the Bitcoin rally in December was partly driven by manipulation, with traders propping it up with Tether, another popular digital coin, that may have illegally been used to move up prices, Bloomberg reported.