This time last year everyone was talking about Bitcoin — so what happened?


December 29, 2018 06:40:15

A group catching up for a few drinks at a Sydney pub is not an unusual sight but this time last year, one gathering saw its numbers swell.

Key points:

Bitcoin meet-ups saw hundreds of attendees when prices were high, but price crash saw numbers dwindleEarly adopters say cryptocurrency bubble saw growth of scams and bad media attentionUnderlying blockchain technology continues to attract investment

Adriana Belotti coordinates a meet-up for Bitcoin enthusiasts and the higher prices climbed, the more people showed up.

“During the price hype, we were getting around 100 people per meet-up, so a hundred people every week, now we get about 10,” she said.

Another early adopter of Bitcoin, David Blunden, was dreaming of retiring on his profits last year but did not end up selling out at the peak.

“When I heard some of my co-workers who had never mentioned Bitcoin in their lives suddenly talking about Bitcoin and alt coins and how rich they were going to get, that’s when I knew there was a bubble,” he said.

“People go home [over the holidays], they’re bored, they start buying crypto — we saw it last year, it happens,” said cryptocurrency holder Alejandro Betancourt.

Bitcoin price surged amid cryptocurrency mania

The price of Bitcoin surged in 2017, from levels below $US900 ($1,276) in January to its peak of nearly $US20,000 ($28,363) in December.

Other cryptocurrencies were swept in the buying frenzy, and new alternatives started popping up, numbering into the thousands.

The Bitcoin bubble eventually popped, as people became nervous about the underlying value, possible government crackdowns and a series of high-profile hacking incidents.

“A lot of the speculators have left and there’s been a huge rationalisation in the industry, and a lot of people see that as good,” said Professor Jason Potts from RMIT.

The Bitcoin price peaked at $US19,783 last December. (Supplied: CoinMarketCap)

After steep falls through January and February this year, the Bitcoin price was fairly steady with a few peaks and troughs, before another fall in November, while the value of many newer so-called “alt coins” has come back to earth.

“A lot of these have gone back to very low levels — not all of them have disappeared but a lot are back at levels that probably reflect their true value,” said Professor Potts.

Early adopters welcome less attention

At their meet-up in Sydney, the Bitcoin enthusiasts welcomed the heat and hype coming out of the market.

Early last year before the latest bubble, Alejandro Betancourt attended meet-up events in Melbourne and said the gatherings were dominated by people genuinely interested in the technology.

A woman and two mean sit around a table at a pub.
Bitcoin meet-up events attracted big numbers when the price was higher but the early adopters remain. (ABC News.)

“They would do their own research at home and come to share their ideas and have their ideas challenged, and we saw a lot of collaboration between those early attendants,” he said.

“As the year went on, we saw a direct correlation between the price going up and the amount of people, and we had people coming in that were looking to make money, essentially.”

The community of early adopters were working together to finance projects and Adriana Belotti thinks that also drove the increasing mainstream attention

“When people got hold of this, ‘oh, people are getting their projects financed’, they realised that they could make a quick buck with it, and then there were a lot of scams and alt coins that don’t really help the system grow because it ends up getting a bad wrap,” she said.

The technology behind the bubble

The technology that drives Bitcoin — blockchain — has far-reaching applications beyond cryptocurrencies and is attracting investment from global banks.

“What it is, is distributed ledgers that enable us to record data,” said Professor Potts, who works in blockchain innovation.

“The applications of this extend … to things like supply chains and logistics and really any area where we need to keep records.”

Bitcoin enthusiasts believe the underlying value of the technology is not going anywhere, no matter the price movements in cryptocurrencies.

“The Bitcoin networks and all the blockchain technologies, they still have tremendous value, we just have disagreements as to what the value is right now,” said Alejandro Betancourt.

“This technology is literally just getting started and the next few years have a lot more in it than what we’ve seen in the last years.”

For Adriana Belotti, it is a part of her daily life — her clients pay her in Bitcoin and she uses it to buy things when she can.

A woman uses her phone to make a Bitcoin payment at a bar
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