Tales From Inside The Bitcoin Bubble

Last week a Bitcoin was worth $100. Yesterday: over $200. Today: ?

Yesterday, on Reddit’s /r/bitcointip, a subreddit dedicated to the bot service that allows redditors to easily “tip” or transfer bitcoins to other users, an anonymous Redditor under the moniker “bitcoinbillionaire” gave away an estimated $13,627 in Bitcoins during a surprise charity spree. While it’s uncertain if the indiscriminate donations were a joke or an elaborate act of trolling (at one point during the spree the benefactor even exclaimed “I am bitcoin!”), the money was undoubtedly real.

One recipient of the random cash, a Redditor who goes by “karelb,” posted yesterday that she “wish[ed] for the price to crash” and minutes later recieved a $20 BTC (or $4680 USD) tip from “bitcoinbillionaire”.

“I have no idea who he was, what he liked so much about my frankly stupid comment and I was frankly quite shocked,” Karelb, a computational linguistics student from the Czech Republic told BuzzFeed. Karleb, who has already used some of the money to buy a mobile phone, noted that, while she’s a casual early adopter of the currency, she’s worried about volitility. “I think that if it should work as a currency, it should be *stable* and not grow this fast. I actually think that if it will crash, people will stop taking it as an investment and start taking it as a currency again.” Shortly after our conversation, Bitcoin’s value fell by nearly half.

This morning BuzzFeed also spoke with a source at a popular Bitcoin-based online retailer who noted the site has been putting up “some pretty insane numbers” over the past few days and is looking to expand its staff to meet demand. While the employee wouldn’t comment on exact figures, anecdotal evidence based on a dollar counter on the site’s homepage shows a near $100,000 increase in store purchases in less than 24 hours. When asked if that was representative of the retailer’s current numbers, the employee described the estimate as “somewhat accurate.”

Speaking on his own behalf, the employee was bullish on Bitcoin’s valuation and extremely supportive of the currency’s rise. “I don’t believe there will be a crazy crash where it goes to $9 or $24 dollars,” he said. “I see a rise to about the $400-$500 mark and then a dip of about $50 here and there. I don’t think its anything people should be afraid of.”

It’s not hard to understand this kind of enthusiasm. For retailers well inside the bubble that have quietly amassed the currency, Bitcoin’s meteoric rise means, in some cases, quadrupling wallet values almost overnight.

In reality, Bitcoin remains highly volatile. During the writing of this piece, Bitcoin’s value plummeted nearly 60% to a low of $105. During Bitcoin’s afternoon free fall, which consumed chatter on Twitter and Bitcoin-centric subreddits, Karleb emailed BuzzFeed to futher validate her suspicions. “If you look at the price now — it rose from 200 to 260 in few days, now from 260 to 160 in few HOURS….this is not sustainable. Some stable price would be nice,” she wrote.

For true believers though, these fluctuations are of little consequence. Yesterday, in an interview with BuzzFeed, Bitcoin devotee and prominent /r/bitcoin contributor Eric Vorhees embraced the idea a Bitcoin bubble collapse:

“It’s fine. Those of us who are building this stuff (including all the new people who are being attracted over the past few months of frenzy) will hunker down and keep building. So what will I tell people? If you don’t want your coins, sell them! That’s the beauty of a free market, each person is in control for themselves. Nobody is forced to use, or to hold, Bitcoin.”

Today, when asked over chat about Bitcoin’s falling valuation Vorhees seemed amused by the spectacle, replying “lol yeeehaw!” Vorhees noted that “almost more interesting than the price itself is the “trading lag” at [Mt.] Gox,” that reached 40 minutes this afternoon — which some attributed to load, others to a possible DDoS attack.

Check out more articles on BuzzFeed.com!

Facebook Conversations
          
    More News
    Now Buzzing