When I checked earlier in the week, bitcoin was trading at Dh20,786.55 to one.
Up 500 per cent at one point since the start of the month, early adopters continue to report staggering returns. More than 50,000 per cent for Wikileaks founder, Julian Assange.
But big names in business and finance can’t agree on whether it is worth anything at all.
"It’s a fraud," is what the head of the US’s largest bank had to say about it last month. JPMorgan’s Chairman and chief executive Jamie Dimo added: "If you're stupid enough to buy, you'll pay the price for it one day."
Warren Buffett issued a similar warning: "Stay away from it. It's a mirage, basically ... The idea that it has some huge intrinsic value is a joke in my view."
Then this week: "I think it's just going to implode one day. It's Enron in the making." That was the Saudi billionaires investor Prince Alwaleed bin Talal.
However, also this week, Apple co-founder Wozniak stated that it’s better than gold – and the “phony” US dollar.
Bitcoin is the cryptocurrency dominating the headlines right now, but there are others out there, including ethereum, the second-largest digital currency by market cap, up by more than 4,000 per cent at one point this year.
Cryptocurrencies are big business: the bitcoin market alone has been valued at nearly $100 billion. On Friday October 13, the combined value of all cryptocurrencies crossed the $170bn mark.
But two days later I checked the bitcoin to AED rate; the cryptocurrency markets posted a US$3 billion dollar with ethereum and bitcoin leading the way.
The cryptocurrency phenomenon is being compared to the tulip mania of 1637, the South Sea bubble of 1720 and the internet bubble of 1999.
How do you value something that has no value?
Cue speculation, and the holy grail of making effortless money. It will end in tears for many – we just don’t know when.
The bitcoin, a virtual currency not backed by any government, came about in reaction to the global financial crisis. The idea was to create a system beyond the control of governments, bypassing banks and the mainstream financial system - one that enables individuals to transfer ‘value’ to each other and pay for goods and services.
It’s a system that is interesting the criminal element as well as investors/ speculators – you only have to Google ‘digital currency theft’ to see hacker heist headlines totalling many tens of million dollars a piece.
Bubble or no bubble, this could be the thing that breaks cryptocurrency: digital currency theft because it erodes trust. And trust is the currency of cryptocurrency. It’s what it’s based on: people trusting each other to exchange it at a particular value. The value is only derived from the willingness of the participants to put value to it, and not being able to tamper with the blockchain - the technology that records the transactions of the ledger, where crypto assets can be stored, in a non-corruptible way.
This pivots on no one entity owning more than 50 per cent of the blocks in the blockchain. Guess what. It was reported in 2014 that a mining pool – Ghash.oi – broke the 51 per cent barrier thus eroding the case for bitcoin’s trustworthiness. Yet bitcoin is still around making the headlines.
What we don’t know is whether the blockchain has been tampered with, because, if you have access to more than 50 per cent, the blockchain process breaks down because you can make changes not only to your 50 per cent but also to the other 50 per cent. And these changes may not be detected.
Fraud or fad - bitcoin has made fortunes, but with all the Wall street hype of late, it’ll be wiping some people out.
Nima Abu Wardeh is a broadcast journalist, columnist and blogger. Share her journey on finding-nima.com