Bitcoin Forums In Buffalo Thrive Despite Huge Price Swings

Bitcoin 101 : What you need to know about the volatile digital currency

Dave Debo
January 19, 2018 - 6:45 am

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(WBEN) Slowly there is a growing number of people talking about -- and investing in -- Bitcoin in Buffalo,  depite crazy price swings that saw the virtual currency lose half its value in one day earlier this week. 

Buffalo hosts at least two regular discussion forums where enthusiasm-- if not profit-- runs high, and where people gather weekly to talk trends and discuss strategy.

"On our meetup we have about 300 followers," says David Jeffreys, one of the BitcoinBuffalo organizers. "The meetups have got really popular, with maybe 25, 30 people. It's interesting to see people come into the space and learn about it and ask questions. It's pretty cool."

Interest in the alternative currency is up locally despite massive volatility on display again Wednesday, as Bitcoin briefly fell below $10,000 before rebounding back above $11,000 in the U.S. afternoon. With the drop below $10,000, bitcoin had lost about half its value since hitting a high above $19,000 in mid-December. Other digital currencies bounced around as well.

Related: Should you invest in Bitcoin?

WHAT IS BITCOIN?

"Jill on Money" ( Saturdays 4 pm)  host Jill Schlesinger on the WBEN Liveline

In Studio, In-Depth: Ed Hutton, Director, Niagara University's Financial Services Laboratory, with WBEN's Susan Rose and Brian Mazurowski

"Bitcoin is one particular type of an alternative to money. It basically is an electronic payment system," says Ed Hutton, Director of the Financial Service Laboratory at Niagara University.  "A lot of people are proposing alternatives to money.  Basically it is a type of payment that you would be able to use from country to country, and person to person, and between companies and their customers." 

Think of it like the Canadian dollar or any other foreign currency you would pay to buy into up front,  and then use globally based on current supply or demand. The difference is it is not based on the standard and faith of any particular country.  Price is decided by a virtual online trading system called Blockchain but Bitcoin is extremely hard to value because it has no country or central bank backing it and it’s not widely used to make transactions.

"It's a a peer- to per- digital cash system without a bank or third party in the middle," Jeffreys says, adding that the exciting part of being involved with it is how it can be used to invest in global technology.

AUDIO: Hear More with Hutton, Rose and Mazurowski:

BLOCKCHAIN: The next internet?

 As director of  Z80 Labs, an internet technology  incubator in Buffalo,  Jon Spitz hosts a Buffalo-area forum Tuesday mornings at 8 am at the Medical Campus's Innovation Center.  Involved tangentially with Bitcoin, his discussion group focuses on the underlying Blockchain technology. -the encryption and pricing systems that transfer Bitcoin worldwide.

The technology of Bitcoin has enticed many companies to look into online validation and computer connectivity. Some experts believe Blockchain is the next internet, at the very least something that is likely to become a new way of linking computers and developing security protocols for years to come.  

Read More:  Blockchain Buffalo Facebook Group

 "That's where the next wave of startups and innovation is going to come from and I think it's critically important that Buffalo doesn't miss out on that." Spitz says.

But he admits that Bitcoin hasn't caught on as a currency for buying things, as intended.

"I don't think anybody is really spending it to be honest. You can spend it, there are a several websites that accept it. Overstock.com was a big one that said they'd accept it back in the day. But I think most people are just holding it," Spitz says. 

 In that regard, Bitcoin has drawn huge interest from traders, and its price has soared over the past year, but it has also had several sharp drops.

VIDEO: Why Overstock.com accepts Bitcoin :


VOLATILITY:

Bitcoin's value is tied only to what people believe it is worth at any given time.  Partly for that reason, it’s gone through numerous highs and lows in its brief history since being formed in 2009: After a plunge in November 2013, it lost about half its value in 2014. The huge rally in 2017 also came with some sharp selloffs, although those wound up being temporary.

Bitcoin has slumped 20 percent this week as traders worry that regulators in South Korea will crack down on trading of digital currencies. The price of Bitcoin fell as much as 50 percent Wednesday, but later recovered and was nearly flat at $11,392 around 5:10 p.m. Eastern Time, according to Coindesk.

The price of one bitcoin went from $1,000 at the beginning of last year to nearly $20,000 in mid-December. The latest plunge brings the price back to where it was in early December.

Many financial pros believe bitcoin is in a speculative bubble that could crash any time.

Bitcoin is extremely hard to value because it has no country or central bank backing it and it’s not widely used to make transactions. Its value is tied only to what people believe it is worth at any given time.

Partly for that reason, it’s gone through numerous highs and lows in its brief history since being formed in 2009: After a plunge in November 2013, it lost about half its value in 2014. The huge rally in 2017 also came with some sharp selloffs, although those wound up being temporary.

The possibility that South Korea will ban or restrict virtual currency trading has weighed on traders’ minds the last few weeks because the nation is a major market for currencies like bitcoin.

Those worries have also depressed the prices of other digital currencies that gained sharply in recent months.

Bitcoin and other digital currencies trade on private exchanges that have little regulation or protection for investors. In December two major financial exchanges, the Cboe and CME, started trading in bitcoin futures, which allow investors to make bets on the future price of bitcoin without actually holding bitcoins.

Bitcoin futures on the Cboe were little changed while CME-traded futures slipped 2 percent. Earlier they hit their lowest levels since trading began last month.

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