Got a whale of a tale to tell you, lad, a whale of a tale about bitcoin. I'm Jonathan Strickland, and this is tech stuff Daily Seen. Has been a pretty phenomenal year for the cryptocurrency bitcoin. For those unfamiliar with the concept, bitcoin was created to be a decentralized digital currency that doesn't depend upon any governmental authority to regulate it. Bitcoin are released in chunks through a process called mining, which involves computers working on what amounts to
complicated math problems. There's a finite number of bitcoins twenty one million in fact, that will ever be released to the world. Once that last fraction of a bitcoin pops out in a chunk, the supply stops. At the beginning of twenty seventeen, the value of a bitcoin in US currency was just shy of one thousand dollars. In November, the currency's value shot up to ten thousand dollars per bitcoin,
and it didn't stop there. The value continue to rise above seventeen thousand dollars before experiencing a dip in December. Bloomberg Business Week reported in December that of all the bitcoins in circulation belong to just one thousand people. Bitcoin communities call these people whales. Whales have the potential to
really upset the bitcoin apple cart. If a whale starts to sell off bitcoin, others might take this as an indication that the value of the currency will decline, and it could lead to a digital equivalent of a run on the banks. To make matters more complicated, bitcoin is considered a currency, not a security or commodity. Because of that, there are few rules in place to prevent these whales
from colluding with one another. Nothing is stopping them from agreeing to buy up bitcoins to drive up the value before dumping a ton of them on the market to make a profit. The value of the currency could plummet as a result, but that would happen after the whales had cashed in. This so far hypothetical scenario is another argument against calling bitcoin a currency in the first place. For a currency to really be useful, it needs to
have a steady value. It's impossible to have a practical currency if the value fluctuates frequently and in large amounts. Imagine this situation. You walk into a candy shop. You want to buy a candy bar. The price is one dollar, so you pull out a crisp dollar bill, PLoP it on the counter, take your candy bar, and wish the proprietor a jolly good day. The next day, you find out the value of a dollar has increased tenfold. The dollar you spent yesterday on one candy bar could buy
you ten candy bars today. Worse yet, you find out the following day the value has increased again. Now you could have bought one hundred candy bars with that one dollar. You'd be terrified to spend any money. Your dollars wouldn't really be currency. They'd be a security or a commodity, something you'd hold onto as the value increases before you
got rid of it for something else. That's how bitcoin behaves, and while in the early days people would use bitcoins to buy stuff like pizza, today such an idea seems insane. You might pay the equivalent of twenty u s dollars and fractions of bitcoin today and find out the next day the amount of bitcoin you paid meant that Saint Pizza would have cost you two thousand dollars. This volatility has led some vendors to stop supporting bitcoin transactions entirely.
One of those vendors is Steam the online computer game store and community Steam is run by a company called Valve. Valve recently pulled support for bitcoin transactions off of the Steam platform. Valve representatives said that the currencies value changes so quickly that you couldn't even complete an online transaction without the values changing first. Even if you have a dynamic system that matches price to currency value as it changes.
That's an enormous headache, and it doesn't do anything for buyer's remorse once you've spent it. If whale illusion and value fluctuations aren't worrisome enough, there have also been some recent examples of mismanagement and criminal activity around bitcoin. On December seven, two thousand seventeen, Digital Trends reported that a website called nice hash was the virtual site of a digital bank heist. The company posted a statement acknowledging that
it had been the target of an attack. That attack was a successful security breach that resulted in four thousand, seven hundred bitcoins being stolen. At the time of the story, that amounted to about sixty four million dollars worth of the digital currency. At the time I'm writing this, Due to the fluctuations in bitcoin value, it was more like
seventy two point four million dollars. Both the revelation that so much money was stolen in a single heist and that the value of that heist changed by nearly ten million dollars over just two days are additional arguments against bitcoin being called a currency. As the value of bitcoin changes more than a few people have warned about an oncoming wreck ng in which the value quote unquote corrects itself.
That's financial speak to say the currency itself is inside a bubble that will eventually burst and as a result, will see the market value for bitcoins drop. That may or may not be true. At the end of the day, we have to acknowledge that bitcoins have value because people want them. As long as people do want them and are willing to pay for them, bitcoins will have that value. Should people stop wanting them or stop paying for them,
the value will diminish. Ultimately. This is true about any currency, though most state sponsored ones are backed by some other promise of value that gives the currencies more stability under normal circumstances. To learn more about bitcoins, cryptocurrency, and some of the craziest heights and tech, subscribe to the tech Stuff podcast. We publish on Wednesdays and Fridays, and take a longer, in depth look at technology. I'll see you again soon, won