Bitcoin continues to see a sharp rise in value, but a bubble burst may be on the way.
Bitcoin’s value rose 23 percent overnight after the CBOE Options Exchange, the world’s largest options exchange, launched a Bitcoin exchange on Sunday. The cryptocurrency is currently valued at $16,552.91 as of early Monday.
Heavy traffic caused the CBOE’s website to break when more than 800 Bitcoin future contracts were signed in two hours.
Future exchanges often allow investors to speculate about future values of a product. Right now, future contracts can be bought for $18,630, with a Jan. 7 expiration, and $19,140 for a Feb. 14 expiration, according to Mashable.
Bitcoin future exchanges and contracts will launch on the Nasdaq and CME this month and in January, too.
“The launch of Bitcoin futures on major U.S. exchanges is especially important as it lets large investors (including institutional ones) to invest without actually buying Bitcoin,” according to Mashable.
Experts told Quartz that this “very bullish open” might lead to Bitcoin’s “wild rally to continue,” according to Quartz.
Bitcoin’s seen an unexpected rise in popularity this winter. As the Deseret News reported, Bitcoin’s value jumped considerably despite experts warning that its run would end sooner rather than later.
Don’t let the shine fool you. The Atlantic’s Derek Thompson wrote that Bitcoin may be “the most obvious bubble ever.”
Thompson compared the price per Bitcoin to the “dot-com era,” when websites were valued exceptionally high before the bubble burst and their long-term value was a lot less than previously expected.
No one knows how to truly value bitcoin either, he wrote.
“How can one be so sure bitcoin is a bubble if we don’t even know what the proper comparison is — dollars, silver, Beanie Babies, or the Internet?” Thompson wrote.
But he encourages people to remain skeptical.
“Fifteen years from now, the blockchain, too, might be an integral infrastructure for the digital world. In this hypothetical world of 2033, bitcoin at $16,000 might be an absolute steal,” Thompson wrote. “But we don’t live in 'hypothetical-world 2033.' This is still real-world 2017. And bitcoin’s last few weeks are the real-world definition of a speculative bubble.”
Bitcoin also presents an environmental concern, according to CNNMoney.
Experts said that the processing of cryptocurrency — which is when computers complete complex algorithms to create the digital currency in a process called "mining" — requires a lot of energy.
In fact, it requires 32 terawatts of energy to mine Bitcoin, which is close to the same amount of power for 3 million U.S. households.6 comments on this story
Digiconomist toured a Bitcoin mining center, which was full of computers and systems to complete the algorithm, in Inner Mongolia (most Bitcoins are mined in China, according to CNN). The Digiconomist report said that the energy to "mine" one bitcoin requires the same amount of fuel as a Boeing 747/
Those numbers will only climb as Bitcoin becomes more popular.
"As bitcoin grows, the math problems computers must solve to make more bitcoin get more and more difficult," wrote Eric Holthaus, a meteorologist, for Grist this week.