After a massive surge in the value of bitcoin in 2017, a little bit of panic set in Friday after the value of the cryptocurrency plunged and one of the leading bitcoin exchanges was forced offline ahead of the holiday weekend.
Coinbase, a major hub for bitcoin trading, told its users that “all buys and sells have been temporarily disabled” Friday morning after the value of bitcoin plunged about 30 percent from its Thursday high of $15,500, recovering modestly as of this writing at $12,879. The currency was trading around $19,000 earlier this week, right around the time that talk of people taking out big loans to buy bitcoin started to circulate and fledgling companies saw massive increases in their stock price simply by announcing a bitcoin “strategy.”
Bitcoin is a digital currency based around the blockchain, a novel method for creating a public record of a transaction between two parties that cuts out the middleman. It has been around for several years but interest in bitcoin exploded in 2017 as the price rose many times over, financing strategies called “initial coin offerings” gained steam, and services such as Coinbase allowed average people to join in the fun.
The cryptocurrency is either the future of our economic system or a digital tulip craze, depending on who you talk to. Even after Friday’s sell-off, anyone who has held bitcoin for longer than a month is still in the black, and mini-panics like Friday might scare away inexperienced investors looking for a quick buck. But it’s much harder to cash out of bitcoin than it is to get in, especially if services like Coinbase are unable to scale with demand.
Update 10:57am: Coinbase is now open again for bitcoin trading. “We are monitoring for stability,” it said in a status update.