Bitcoin boom threatens to turn it into pure gold

Bitcoin boom threatens to turn it into pure gold

Bitcoin is back, along with the debate over its value. The price of the digital currency is soaring and last week it hit more than $40,000 for the first time, having doubled in less than a month.

Its price has jumped by more than 700% since the pandemic was first declared in March last year, rising from about $5,000.

But breathless headlines are nothing new for the 12-year-old cryptocurrency. Bitcoin has been here before, in the previous decade, when it went on a tear with a predictable outcome. Drawing parallels with the tulip mania of the 17th century, bitcoin soared from just below $1,000 at the start of 2017 to come close to $20,000 within 12 months, then crashed to about $3,000 within a few weeks in early 2018.

Bitcoin/dollar price

Back then, most mainstream investors, central bankers and financiers wrote it off as a dangerous, anonymous instrument for fraudsters and terrorists, warning it was a disaster waiting to happen for unwitting punters who risked being dragged in. Among its biggest critics at the time, Jamie Dimon, the chief executive of JPMorgan, labelled it a “fraud” that would blow up, telling a conference of bankers in late 2017: “If you're stupid enough to buy