Fans of bitcoin contend that it will revolutionize the world of digital currency, taking the place of dollar bills as a way to pay and be paid. But, at the moment, bitcoin is getting more attention because some people are trading it like an investment.
Which is why I called Stephen Pair. He first bought bitcoin for $1.10 apiece. Now, almost seven years later, bitcoin is trading north of $15,000. "I keep expecting a sharp pullback," Pair told me.
Pair, 46, co-founded BitPay, an Alpharetta, Ga.-based company that claims to be the world's largest payments processors for bitcoin transactions. His customers include Microsoft, which lets people use bitcoin to pay online for Xbox games.
As bitcoin prices spike, digital currency attracts more attention. Which, Pair said, convinces more people to try bitcoin. Which creates more business for BitPay. "Think about it the way you think about a high-tech growth stock in the very early days of the company's formation," he said. "It is very high risk."
The last time he bought bitcoin it was less than $100 each. Still, he thinks a variety of digital currencies will become widely used, and that whatever particular versions win out could be valued at $500,000 to more than $1 million each.
Bitcoin isn't controlled by any government or centralized entity. And it can be used anonymously, helpful for illicit online transactions.
Jamie Dimon, CEO of JPMorgan Chase, has said people who buy bitcoin are "stupid" and will "pay the price for it someday," according to CNBC.
It's a pain to actually buy bitcoin as operators of exchanges try to verify you are who you say you are. And fees tied to completing bitcoin transactions, once a penny or less per transaction, have climbed to average more than the equivalent of $5 per transaction, with spikes soaring to more than $20.
Some of BitPay's customers are pushing to instead accept different cryptocurrencies with lower costs. And gaming platform Steam recently stopped accepting bitcoin because of soaring fees and extreme price volatility.
Bitcoin right now is so volatile that we really don't have any clue what it will be worth next week. And there are costs to spend bitcoin money. Cover your ears. I think a bubble's about to pop.
Editorial on 12/17/2017