This week’s bitcoin review looks at how the PayPal’s decision to embrace bitcoin affected the price.
The PayPal boom, then bust
Last week, bitcoin was suffering a flash crash as it plunged below $400. This week, though, shows that a price around $400 may be the new normal.
While other major news events have been failing to move the needle on bitcoin price, the news that PayPal will accept bitcoin sent the price skyrocketing up 9.15 percent to close on Tuesday at $435.38.
However, the price and the buzz about PayPal has fallen to the way side.
As we reported on Tuesday, PayPal’s acceptance is only for its digital payments hub and is processed by the three major payment processors in bitcoin: GoCoin, BitPay and Coinbase. The company was only barely dipping its toes into the cryptocurrency pool, and had strong words against supporting bitcoin fully at this point. However, bitcoin fans on Reddit are starting to realize that nothing is available for sale yet. Once items become available, it will be interesting to see if the price bounces once more — or if it will continue downward as people sell their bitcoin to buy whatever digital goods they desire.
The market this week
Despite the spike in price in the middle of the week, bitcoin closed Thursday at $408.80. It’s dropped a little lower to $403.61 as of 4:30 p.m. PT.
For background on why we’re using Coindesk’s Bitcoin Price Index, see the note at the bottom of the post.
In other news we wrote about this week:
- Butterfly Labs was shut down by the FTC after it sold mining equipment that was effectively just a “room heater.”
- Meanwhile, a Texas man was fined $40 million for a bitcoin ponzi scheme.
- In a “big milestone” for Ripple, the payments protocol signed up its first two U.S. banks, enabling instant payments between the U.S. and Western Europe.
Here are some of the best reads from around the web this week:
- The state of New Jersey demanded four MIT students release their original source code behind Tidbit, a mining tool they developed at a hackathon in late 2013, according to Wired. The now defunct tool intended to offer users a different way to kill online ads by letting them mine bitcoin when they visited a website instead of seeing an ad.
- While cryptocurrencies are obviously highly volatile (just re-read the top of this post if you disagree), the time to invest may be now, said Javier Espinoza in the Wall Street Journal.
- According to NBC News, the U.S. government is investigating ties between digital currencies and the terrorist group ISIS. Representatives from the Bitcoin Foundation and the U.S. Special Operations Command met in Florida “for a daylong discussion Monday on the role of so-called cryptocurrencies—of which bitcoin is the best known—in illicit finance.”
- Is bitcoin going to end up like Napster? CoinDesk’s Daniel Crawley made a point that “Napster has certainly had a impact, but it failed to ever live up to its potential as a business. As such, the company’s history may provide an important warning for the bitcoin industry.”
- Square CEO Jack Dorsey hinted that a bitcoin and Apple Pay register could be in the works for the payment company.
- Today’s bit of fun: Industry journalist Ryan Selkis, or TwoBitIdiot, published a guide on how to sound smart at a bitcoin conference. Memorize his list if you want to sound like you know a thing or two about bitcoin.
Bitcoin in 2014
The history of bitcoin’s price
A note on our data: We use CoinDesk’s Bitcoin Price Index to obtain both a historical and current reflection of the Bitcoin market. The BPI is an average of the four Bitcoin exchanges which meet their criteria: Bitstamp, BTC-e, LakeBTC and Bitfinex. To see the criteria for inclusion or for price updates by the minute, visit CoinDesk. Since the market never closes, the “closing price” as noted in the graphics is based on end of day Greenwich Mean Time (GMT) or British Summer Time (BST).
Disclosure: I currently own a very small amount of bitcoin for product testing purposes.