The cryptocurrency may have no physical form but the returns from trading it can be very real and for some theyre worth giving up your job for
On a sunny afternoon in west Beijing, on the auspicious eighth floor of a nondescript concrete high-rise, Huai Yang sits with the curtains drawn in his apartment, making his own luck.
For the past six months, 27-year-old Yang has worked mainly from home, mainly from his sofa, tracking and trading bitcoin, and watching the money roll in. The flat itself is modestly sized; Yang moved in in his pre-bitcoin days when he worked variously for a crowdfunder start-up, a branding consultancy and dabbled in hedge-fund management, all of which he describes as creative financial work. Now, though, his main focus is bitcoin, which is much younger, more fun, and much more money. Yang claims to make up to 1m yuan (116,000) a month, under the radar of the taxman, purely from trading the online cryptocurrency.
Bitcoin has no physical form but the rewards are very tangible; Yangs home is packed full of expensive gadgetry, most prominently a mega-sized flat screen smart board, over a metre wide, which Yang uses to chart bitcoins rise and fall in HD.
Normally, the graphs on Yangs screen show bitcoins and his own fortunes going up and up. At the time of writing, one bitcoin is worth 6,600 yuan (768) recent months have seen the value hover well above 8,000 yuan. The global worth of bitcoin is over $14bn USD (11.3bn), of which over 90% is in yuan, and Yang and his peers are cashing in. I want a more splendid life, he says.
Ripple, also known as XRP, peaks at more than $100bn and surpasses Ethereum to become second most valuable cryptocurrency after bitcoin
If 2017 was the year of bitcoin, the pioneering cryptocurrency that neared $20,000 in December, will 2018 be the year of Ripple?
The market value of Ripple, also known as XRP, rose more than 50% on Friday, to a record $85bn. Ripple continued to climb over the weekend, peaking at over $100bn, and now surpasses Ethereum ($72bn) as the second most valuable cryptocurrency after bitcoin ($237bn).
Friday’s sharp run-up puts the currency on track to have risen in value by more than 35,000% over the course of 2017. It began the year trading at around $0.006 and now sits at $2.25, according to coinmarketcap.com. Just three weeks ago, the currency was trading at 25¢.
According to Bloomberg, Ripple’s gains in 2017 have far outpaced the gains of Ethereum and bitcoin, which have gained roughly 9,000 and 1,400% year-to-date, respectively.
Ripple’s CEO, Brad Garlinghouse, said on Twitter on Sunday: “Proud to be ending 2017 with incredible momentum on a number of fronts! A huge, heartfelt thank you to the amazing @Ripple team, our great partners and an incredibly supportive $XRP community.”
The gains come as Ripple has made steps to establish itself as a coherent currency used by institutions. Established in 2012 and designed for interbank payments and settlements, Ripple has articulated a vision to ease the intense volatility experienced by other cryptocurrencies by establishing the structured sale and use of its currency.
The company has more than 100 banks signed on to its platform, RippleNet, and was recently accepted for testing by a consortium of Japanese banks. Global banks including Bank of America, RBC and UBS are also customers.
The company initially created 99bn XRP, and has released around 38bn. In May, Garlinghouse announced the company would place 55bn of its XRP into escrow and will unleash up to 1bn into the market each month.
Garlinghouse, formerly a senior executive at Yahoo and AOL, and CEO of the file transfer site Hightail (formerly YouSendIt), told the Wall Street Journal that the recent gains are a reflection of confidence in the coin’s development.
“We have real customers, really in production using this,” Garlinghouse, 46, said, “not science experiments. Science experiments are not a business model.”
But now, bitcoin is starting to look less important than the engine that drives it the blockchain. It was created to solve a problem that had been puzzling digital activists for decades: how to create digital property without a central authority keeping track of who owns what.
Rising price of the cryptocurrency, now worth four times as much as an ounce of gold, has led to warnings of a bubble
The price of bitcoin has smashed through $5,000 to an all-time high.
The cryptocurrency rose by more than 8% to $5,243 having started the year at $966. Bitcoin has soared by more than 750% in the past year and is worth four times as much as an ounce of gold.
But the price has been volatile. The digital currency plunged below $3,000 in mid-September after the Chinese authorities announced a crackdown. Beijing ordered cryptocurrency exchanges to stop trading and block new registrations, due to fears that increasing numbers of consumers piling into the bitcoin market could prompt wider financial problems.
Jordan Hiscott, the chief trader at Ayondo Markets, said: “The returns are truly remarkable, especially given the recent ban on bitcoin trading in China, where demand had previously accounted for at least 10% of all global volumes.”
Vladimir Putin, the Russian president, called this week for regulation of cryptocurrencies, saying their use “bears serious risks” such as money laundering, tax evasion and funding for terrorism. But he also warned against imposing “too many barriers,” which appears to have given bitcoin a boost.
Two weeks ago, Japan’s government implemented rules that recognise bitcoin as a payment method. Celebrities have also got involved, with the boxer Floyd Mayweather, the socialite Paris Hilton and the actor Jamie Foxx promoting coin offerings.
Using bitcoin allows people to bypass banks and traditional payment processes to pay for goods and services directly. Banks and other financial institutions have been concerned about bitcoin’s associations with money laundering and online crime because transactions take place anonymously.
The soaring value of bitcoin and other cryptocurrencies comes despite growing warnings over a price bubble.
The starkest warning came from the JP Morgan chief executive, Jamie Dimon, who said bitcoin was a fraud that would ultimately blow up. Speaking last month, he said there was a limited market for the digital currency, arguing that it was only fit for use by drug dealers, murderers and people living in countries such as North Korea. He pledged to sack any JP Morgan trader investing in Bitcoin, but also admitted he had not been able to dissuade his daughter from investing.
Dimon declined to comment on the surge in bitcoin during an earnings call on Thursday. “I’m not going to talk about bitcoin any more,” he said.
Kenneth Rogoff, a professor of economics and public policy at Harvard University and a former IMF chief economist, has predicted that the technology behind cryptocurrencies will thrive, but the price of bitcoin will collapse.
“It is folly to think that bitcoin will ever be allowed to supplant central bank-issued money,” he wrote in the Guardian this week.
“It is one thing for governments to allow small anonymous transactions with virtual currencies; indeed, this would be desirable. But it is an entirely different matter for governments to allow large-scale anonymous payments, which would make it extremely difficult to collect taxes or counter criminal activity.”
Daniel Murray, global head of research at EFG Asset Management, noted that in 2013, bitcoin soared twelvefold in just four months but within a month had lost a third of its value and four months after its peak had lost 60% of its value.
“Investors buy [an] asset because they are seduced by the prospect of further rapid gains without necessarily thinking about intrinsic value,” he said. He noted that historically currencies were backed by precious metals, and these days most currencies were based on macroeconomic fundamentals such as inflation, interest rates and growth, and were backed by a central bank and government. None of this applied to bitcoin, although the supply is carefully controlled.
“It is hard to argue that bitcoin does anything better than existing currency arrangements whilst it does some things to a lower standard,” Murray added. “Individuals are already able to transact electronically using a plastic card.”