SALT LAKE CITY — An increasingly well-known digital currency — bitcoin — is making big waves in investment circles nationwide, but experts caution the cryptocurrency’s skyrocketing value may be more virtual than actual.
The price of bitcoin has topped $18,000 this year, an exponential leap above the price of just over $775 only 12 months ago, according to Coindesk. And while the meteoric rise in value has been dramatic, analysts are concerned the “bubble” will burst in the not-so-distant future, leaving many would-be millionaires in financial shambles.
Launched in 2009, the price of bitcoin last week alone jumped from $11,000 to well over $17,000. That rocketing level of appreciation smells a lot like an irrational investor mania to many economists and financial pros, the kind that sent prices for unprofitable startup internet companies soaring in the dot-com boom. Those prices eventually came crashing down.
Aaron Thorup, Coindesk
“I don’t see any justification for bitcoin increasing to the level and degree that it has risen over the past year,” said Robert Spendlove, economic and public policy officer for Zions Bank. “It’s a typical bubble consistent with the kind of mania that we’ve seen in past bubbles.”
Though he is concerned about the nature of bitcoin’s rapidly rising price, he said there is some value in the technology behind it called blockchain. It’s a kind of digital ledger that securely records transactions and prevents the same bitcoin from being spent twice.
He said his concern is for those investors who put “their life savings” into something like bitcoin, leaving them exposed to “an enormous amount of risk.”
“If someone is sophisticated and prepared to…