Bitcoin has been in the headlines for a few years now. Dependling on your perspective, it may appear to be the symbol of a brave new world, rewarding the bold who embrace innovation. Or maybe you perceive bitcoin as a classic bubble that rivals some of the greatest boom and busts in history, such as the "Tulip Craze." Never heard of it? About 400 years ago, a speculative bubble swept through the Netherlands when tulip bulbs became a highly sought-after commodity. In 1636, they were being sold on stock exchanges with people trading fortunes to acquire rare tulip bulbs. Seems silly right? How can a flower be worth as much as a house? Well, ask yourself, the bitcoin bubble truly bursts, what exactly do you own? According to economist and Nobel Laureate Eric Maskin: "Bitcoin has a fundamental value of $0." At least you can hold a flower and enjoy its appearance and smell. All kidding aside, that tullp bubble ended in 1637. When those prices collapsed, realization quickly set in, and the panic to sell those once-valued tulips took over. As a result, some cashed out early and made fortunes, but many others lost everything. The vehicle is different today and comes with the promisa of technology backed by a revolution called blockchain, but human nature has not changed. How will this story end? Is no centralized computer that hackers can break inte Blockchain is not solely for currencies. A wide varlety companies, such as Unilever, the World Wild Life Fur Volkswagen, and Maersk (the shipping company), e already investing heavily in its development for their ow applications. In short, blockchain is a vehicle enablin efficient decentralized transactions, verification, and tracking. Some people have already made great gains, whereas others have lost heavily, but the question remains: what is the future of these cryptocurrencies? Do thay represent a revolutionary change, or are they just a simple footnote in history? Regardless of where you stand on this debate, one thing is clear, bitcoin and other cryptocurrencies are very speculative, high-risk, and high-reward trading options (at least for now). Let's look at the cryptocurrency boom. We will start by trying to understand the technology that makes it (blockchain) possible. We will also evaluate the trading history of bitcoin to help determine where we might go from here. The technology behind bitcoin may be far more valuable than the cryptocurrencies that were born from it. According to a definition by the BDC, "Biuckchain is a continuously updated digital record of who holds what. Information about transactions (time, date, amount, par-ticipants) is held and encrypted into a 'block' linked to other blocks to form a chain." Wired Magazine refers to blockchain as a "super-secure, hard-to-understand, tam-perproof database." In the bitcoin example, blockchain is a decentralized ledger where identical entries are stored simultaneously on more than 200 000 computers. There-fore, every node in the network records each crypto transaction instantly. All participants have access to encrypted informa-tion, which Increases transparency and permits constant reconciliation. The fact that this capability exists on many computers around the world means that there is no centralized computer that hackers can break int Blockchain is not solely for currencies. A wide variety companies, such as Unilever, the World Wild Life Fur Volkswagen, and Maersk (the shipping company) es already investing heavily in its development for their ov applications. In short, blockchain is a vehicle enablin efficient decentralized transactions, verification, and tracking. Bitcoin: The Great Roller Coaster Ride As discussed in Chapter 14, the bitcoin ride would rival any roller coaster; it is full of twists and turns. It has seen tremendous highs followed quickly by deep lows. By tracking the monthly highs for bitcoin over a three-year period (during the month of December), we see that it peaked at US$467.71 in 2015, at US$982.57 in 2016, and at US$19 870.62 in 2017. In isolation, this trend is unbelievablel It points to nothing but success. However, those who invested in bitcoin at its peak in December of 2017 lost two-thirds of their money by July 5, 2018, when the price stood at $6691.32. In other words, for every dollar invested, they were left with about 34 cents. The volume of traded bitcolns was also down considerably even after a slight rebound. Of course, there are no guarantees of the future direction despite good lessons and warnings from the past. At that very moment, bitcoin bulls were pumping the market and calling for another meteoric rise. In a CNBC interview, Tom Lee predicted that the cryptocurrency would be trading at $25 000 within a year, and he was not alone. Other supporters were calling for even higher figures, whereas many finance experts were predicting the demise of bitcoin as a modern-day reminder of the tulip craze. Still others were moving on to other crypto currencies such as Ethereum as a new door to the future. Regardless of which side is right, this is one of the-most volatile investments in the modern age, so it is up to the investor to BEWARE! QUESTIONS FOR DISCUSSION 1. What is the current price of bitcoin? Research the monthly trends since mid-2018. How volatile has the price been? How does the future look for bitcoin now? 2. Find recent articles about blockchain and identify companies that are investing resources in it. Name two high-profile companies and explain why they are using blockchain for their organization, 3: As you saw in this chapter, evaluating any potential investment requires an understanding of the risk-reward relation-ship. Do you belleve that the average investor in bitcoin fully understands both ends of this relationship? Explain your answer. 4. People who invest in bitcoin are simply investing in momentum and nothing else; therefore, this is a bubble that will burst once and for all. Agree or disagree? Conduct some research and back up your arguments with supporting facts