This week on Planet Bitcoin - 18 September 2015

Friday 18 September 2015

This week has seen a gentle slide down from the $240 level, where we came to rest last week, to the $230 line and even a little below. In the bigger picture, the market is flattening out around the $230s; over the past month, we’ve had a brief crash down to $200 and a brief jump up to the high $240s, but otherwise we’ve tracked along on a more-or-less flat line.

It’s a fairly uninspiring picture - part of the general pattern of sideways we’ve seen for many months now, punctuated by the odd blip up or down - almost always within the confines of $220-$300 - before returning to the same sideways movement.

Weekly chart

In one sense, this isn’t a bad thing. Stability is good in terms of transacting in bitcoin. The wild swings we’ve seen in the past aren’t a great advert for cryptocurrency, at least not for anyone other than traders. And if bitcoin is going to gain any widespread use, it needs to be as a useful currency, rather than as a speculative toy.

But it’s also less than encouraging, in the sense that interest should be gearing up by now. There has been a huge amount of VC money pouring into bitcoin infrastructure - businesses and services - but the confidence that ought to bring to the currency itself is as yet missing. Price does not equal value, but a $3 billion market cap is nothing for the promise the technology holds out. At some point, all that investment money will presumably make a difference through increased use; that day has not yet come. Judged by price - a blunt but obvious metric - bitcoin remains in the doldrums.

Elsewhere around the bitverse

Bitpay is licking its wounds after losing an impressive $1.8 million in a phishing attack. Details recently emerged of the theft, which happened last December. A hacker gained access to the CFO’s email account, and managed to use it to convince the CEO to transfer 5,000 bitcoins to SecondMarket in three transactions. The hacker had apparently done their research; SecondMarket is the only one of Bitpay’s customers who are not required to send payment first. It transpired that the CFO had not made the instruction, and the address did not really belong to SecondMarket. The scam was only uncovered because the CEO cc’d their contact at SecondMarket in an email exchanged between him and the hacker - otherwise, the game presumably would have continued. Bitpay’s insurer declined to pay out, and Bitpay are now engaged in legal action against them.

Despite the low price, the bitcoin network’s hashrate is hitting new highs, thanks to low-powered and super-efficient new rigs from BitFury. The company believes its chips will bring the network up to Exahash territory (1,000 Petahash, or 1,000,000,000 GHash) by the end of the year, assuming prices remain stable. Higher prices mean this would be hit much sooner. Hashrate is likely to dip around July next year when block rewards halve, pushing many older and less efficient miners offline.

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