The price of the electronic currency Bitcoin continues to soar. 
 
 Six weeks ago, Bitcoin was trading at $35. Since then, the price has continued to surge to new highs. Just this morning, Bitcoin blasted through $250. 
 
 As is always the case with such price moves, observers have been dismissing Bitcoin as a "bubble" since long before prices even hit $35. 
 
 And the observers may well be right. 
 
 Bitcoin may be a bubble. 
 
 Someday, Bitcoin prices may come crashing down, causing the suckers who own them then to lose their shirts. 
 
 But, in the meantime, those who are speculating in Bitcoin are just laughing at all the people who are dismissing Bitcoin as a bubble. These speculators have made 7X their money in six weeks, which is a return that more than justifies the risk they took of potentially losing everything. (As long as the chance of each outcome is roughly the same, downside of 100% and upside of 600% is a great bet.) 
 
 Like the assets at the center of most powerful asset bubbles, Bitcoin has sound theoretical underpinnings. The world can benefit from a convenient global electronic currency that is not subject to the whims and political incentives of governments trying to get themselves reelected. 
 
 Importantly, Bitcoin also has a small and (at least theoretically) finite supply. So the more demand for Bitcoins increases, the more the price of Bitcoins should rise. 
 
 Of course, as in any bubble, the more Bitcoin prices rise, the more demand there will be for Bitcoins. Bitcoin buyers may tell themselves stories about how they are buying a "store of value" in an inflationary world, how Bitcoin is a "good investment," and so forth, but these stories will seem much less compelling if Bitcoin prices suddenly drop, say, 75%. 
 
 If Bitcoin prices crash, all the folks who now think Bitcoin is a "good investment" will suddenly start crying bloody murder that they were tricked into buying something with no inherent value. And they will want to jettison their Bitcoins at any price someone will pay for them. 
 
 (This is just the way bubble psychology works. Sorry about that.) 
 
 In the meantime, though, Bitcoin prices could rise another 2X. Or 10X. Or 100X. 
 
 Why? 
 
 Because there's really just no way to figure out what a "fair price" for Bitcoin is. There's is theoretically a finite supply of it. And there is theoretically nearly unlimited demand for it. So there's no theoretical reason why Bitcoins can't eventually trade for $500, or $2,500, or $25,000. Or even $250,000. 
 
 And that means that brass-balled speculators will likely continue to plow into Bitcoin, as long as think it will continue to appeal to new speculators who haven't yet entered the game. 
 
 But! 
 
 Because Bitcoins have no inherent value (only the value that they can be exchanged for, which is determined in large part by speculators), Bitcoin prices could crash permanently at any time. 
 
 So it's worth thinking about what might cause Bitcoin prices to come crashing down. 
 
 Here are some things: 
 
 A sating of demand. At some point, everyone who could ever learn about or use Bitcoin will know about it, and many of them will own it. Given the lack of awareness about Bitcoin among the general population, as well as the complexity and "friction" involved in owning Bitcoin, we are a long way from this point. 
 
 At some point, everyone who could ever learn about or use Bitcoin will know about it, and many of them will own it. Given the lack of awareness about Bitcoin among the general population, as well as the complexity and "friction" involved in owning Bitcoin, we are a long way from this point. A drop in the price of Bitcoin (for whatever reason). Another thing that could cause demand for Bitcoin to drop is a Bitcoin price crash. If Bitcoin prices crash, many of those who already own them will not want to own them anymore--and they'll jettison them. This will cause a further price crash, which will further reduce demand. Etc. 
 
 Another thing that could cause demand for Bitcoin to drop is a Bitcoin price crash. If Bitcoin prices crash, many of those who already own them will not want to own them anymore--and they'll jettison them. This will cause a further price crash, which will further reduce demand. Etc. A Bitcoin counterfeiting or hacking or theft scare. Bitcoin aficionados will smugly tell you that Bitcoin "can't be counterfeited." Please. Anything can be counterfeited. To counterfeit something, you don't have to create the actual thing. You just have to create something that fools other people into thinking you have the actual thing. If there's a computer system out there that can't be hacked or fooled by a very clever hacker, I haven't seen it yet. Meanwhile, even if the Bitcoins themselves can't be faked, the systems that account for them can certainly be hacked. This has already happened. And if someone figures out a way to steal or delete or otherwise destroy all your Bitcoins, you will be much less likely to invest in them. 
 
 Bitcoin aficionados will smugly tell you that Bitcoin "can't be counterfeited." Please. Anything can be counterfeited. To counterfeit something, you don't have to create the actual thing. You just have to create something that fools other people into thinking you have the actual thing. If there's a computer system out there that can't be hacked or fooled by a very clever hacker, I haven't seen it yet. Meanwhile, even if the Bitcoins themselves can't be faked, the systems that account for them can certainly be hacked. This has already happened. And if someone figures out a way to steal or delete or otherwise destroy all your Bitcoins, you will be much less likely to invest in them. A government crackdown on Bitcoins. If Bitcoin gains general acceptance, governments may begin to frown on it. After all, general acceptance of Bitcoin would usurp the governments' sole authority to create legal money. Governments don't like having their authority usurped. So they may begin to enact laws that prohibit the use of Bitcoin. 
 
 If Bitcoin gains general acceptance, governments may begin to frown on it. After all, general acceptance of Bitcoin would usurp the governments' sole authority to create legal money. Governments don't like having their authority usurped. So they may begin to enact laws that prohibit the use of Bitcoin. An increase in the supply of Bitcoins. Bitcoin aficionados will also proudly assert that only a certain number of Bitcoins will ever exist (21 million, if memory serves) and that no more can be created. Again, keep dreaming. The supply of Bitcoins as currently defined may, in fact, be limited. But there's nothing stopping the folks who created Bitcoin (or anyone else) from creating a new equivalent or better Bitcoin. Aside from the fact that Bitcoin appears to be well designed, there is nothing special about it. 
 
 Bitcoin aficionados will also proudly assert that only a certain number of Bitcoins will ever exist (21 million, if memory serves) and that no more can be created. Again, keep dreaming. The supply of Bitcoins as currently defined may, in fact, be limited. But there's nothing stopping the folks who created Bitcoin (or anyone else) from creating a new equivalent or better Bitcoin. Aside from the fact that Bitcoin appears to be well designed, there is nothing special about it. A better Bitcoin (or even just another Bitcoin). This is a very real risk, one that Bitcoin enthusiasts don't spend enough time worrying about. Again, there is nothing special about Bitcoin. Although awareness of it is growing, it's still complicated and hard to use. And monetary philosophers are already pointing out that the "finite supply" of Bitcoins may, in fact, be too small, limiting their usefulness. So if Bitcoin can gain traction, then so can any other electronic currency. And if another electronic currency begins to displace Bitcoin, the "finite supply" argument will go out the window. There might soon be a nearly unlimited amount of a better Bitcoin. 
 
 All of these factors--and many others--could cause Bitcoin prices to crash. 
 
 Bitcoin speculators would do well to remember that. 
 
 SEE ALSO: I'm Raising My Bitcoin Price Target To $400 
 
 Get the latest Bitcoin price here. ||||| Bitcoin’s value crossed the $15,000 threshold for the first time today, marking another milestone in its dizzying ascent. In recent months, the cryptocurrency has undergone a staggering increase in value; surging from roughly $3,500 in mid-September to its current price. And at the start of the year, a single Bitcoin was worth less than $800. 
 
 What happens next is anyone’s guess, and most analysts are united only in their uncertainty over the cryptocurrency’s future. Bitcoin long ago stopped being useful for actually buying things (partly because of its rocketing value and partly because of achingly-slow transaction times), so the questions facing speculators are: is this a bubble? And if so, when will it burst? 
 
 Some traders figure we’re getting close, and are preparing to short Bitcoin; that is, make bets that its value will decrease in the future. “[It’s] one of the greatest shorting opportunities ever,” cryptocurrency Lou Kerner told Bloomberg earlier this week. “You have a lot of zealotry, and a lot of people, including me, who think it’s the greatest thing to ever happen in the history of mankind. You have a lot of people who think it’s a bubble and a Ponzi scheme. It turns out both of them can’t be right.” 
 
 Although the general trend for Bitcoin’s valuation is only up, the cryptocurrency has been extremely volatile. On November 29th, for example, its value fell 20 percent in less than an hour and half; dropping from over $11,000 a tick above $9000. For true believers, such blips are only temporary, but skeptics caution that any plunge could end up being permanent. After crossing $15,000 earlier today it’s value quickly dipped down to around $14,800. 
 
 Read more: 2017 is the year cryptocurrency joined the financial system 
 
 Bitcoin’s skyrocketing valuation has also brought with it a new problem: energy costs. It takes enormous amounts of power to sustain the Bitcoin network, and, according to a report from Ars Technica, it’s estimated that the cryptocurrency currently consumes as much electricity annually as the whole of Denmark. Predicting exactly how this consumption will rise or fall in the future is difficult (it depends on things like the rate at which new bitcoins are mined and the number of transactions), but given that Bitcoin only currently has use as a speculative asset class, it seems unsustainable. 
 
 Meanwhile, financial experts are struggling to make sense of the phenomenon as a whole. One analyst quoted by the Financial Times, Walter Zimmerman, suggests that the best way to look at Bitcoin is as an absurd video game with no boundaries. “Users of other currencies find utility in a stable value. But not here in Bitcoin world,” writes Zimmerman. “The reality of Bitcoin is that users are also players. And the objective of this game is the highest possible score.” But how much higher can it go? ||||| Markets Insider 
 
 Bitcoin rises above $16,000 for the first time on Thursday. 
 
 The digital currency has risen $4,000 in the past 48 hours. 
 
 LONDON — Bitcoin passed $16,000 per coin for the first time on Thursday, just 24 hours after clearing $14,000 for the first time ever. 
 
 Bitcoin hit $16,000 at around 4.05 p.m. GMT (11.05 a.m. ET) on Thursday. It had passed $15,000 for the first time at about 10.50 a.m. GMT (5.50 a.m. ET) on Thursday and passed $14,000 for the first time late on Wednesday. 
 
 Bitcoin continues to break its own record highs against the dollar and has now risen by over $4,000 over the past 48 hours. It has gained well over 1,000% across 2017. 
 
 Neil Wilson, a senior analyst at ETX Capital, said in an email: "We're running out of new things to say about this - the price action is exceptional and something that is without any parallels. It's a bubble for sure in its dynamic, we just don't know when or how it will collapse." 
 
 The incredible rise means the total value of the cryptocurrency market has now passed $400 billion, according to CoinMarketCap.com. The market surpassed $300 billion just 10 days ago. Bitcoin represents 63% of the value of the entire market, according to CoinMarketCap.com. 
 
 The latest bull run began in earnest at the end of October when CME Group, the world's biggest exchange operator, announced plans to launch bitcoin futures contracts that would give institutional investors exposure to the new asset class. The rival Cboe is beating CME Group to the punch, launching its future contracts on Monday. 
 
 The Royal Bank of Scotland's chairman, Sir Howard Davies, said on Bloomberg TV on Thursday that he was concerned bitcoin was "a frothy investment bubble." 
 
 "All the authorities can do is put up the sign from Dante's Inferno — 'Abandon hope all ye who enter here'," Davies said, according to The Guardian, which reported the comments. "That's what's needed, and it need to come from the Federal Reserve, the European Central Bank, and the Bank of England at the same time." ||||| Hang around in the tech industry long enough and you or someone you know will be heard saying, “that’s so crazy it just might work.” Two years ago, if you’d have told me that an open-source, P2P currency would soon be a thriving, billion-dollar market, I would’ve told you that you were on a lonely bus headed to CrazyTown, U.S.A. But today, Bitcoin officially became a crazy idea that’s actually working. 
 
 Today, all the Bitcoin in circulation — some 10.9 million of them — have collectively crossed the billion-dollar mark. As it is wont to do, the value of Bitcoin (and its exchange rate) has fluctuated wildly today. At one point, it hit a dollar value around $78, then pushed into the mid-nineties. As of this minute, it’s hovering around $90. 
 
 Okay, it’s still a tiny fraction of Google’s market cap, but this is something — especially for a largely unregulated, decentralized virtual currency. (Say that three times fast.) The world’s most popular controversial crypto-currency, mind you. 
 
 Bitcoin supporters will scoff and tell you that this is no news, and that Bitcoin has been alive and thriving for years. In fact, it first appeared back in 2009, and has been slowly gaining steam since. But Bitcoin has largely remained outside the realm of mainstream media attention, because no one has been quite sure what to make of it. Is it a passing fad, a hilarious geek-driven phenomenon, or the real deal? 
 
 In fact, it has really been relegated to the realm of the uber geeky, or seen as the currency of anarchists or crazy digital libertarians. The black market marketplace known as Silk Road, which allows pretty much anyone to anonymously sell “alternative products” (i.e. large quantities of one’s drug of choice), uses Bitcoin for its currency. Something which hasn’t exactly helped Bitcoin’s “cross over” appeal. 
 
 And geeks have had a point: Eventually, with the increasing popularity of P2P networks, virtual currency and digital marketplaces, it was only a matter of time before these entities would collide and a virtual currency of record would emerge. No government control?! Even better! 
 
 Bitcoin crossing the $1 billion threshold may not seem like much, but if anything, it seems to be a sign to anyone listening that the crypto-currency is ready to be taken seriously. Of course, there are still a lot of concerns, as John Biggs laid out in 2011. 
 
 But why has Bitcoin become a billion-dollar market? 
 
 First off, startups are beginning to carry the torch. As Alex wrote yesterday, Expensify announced that it is now supporting Bitcoin “to give international contractors an alternative to PayPal and the high fees associated with the service.” Reddit has jumped on the bandwagon, too, along with WordPress and Namecheap, among others. 
 
 Adam Draper, the founder of Menlo Park-based accelerator, Boost VC, recently announced that the team would be focusing on Bitcoin-focused startups for its summer class. As he laid out in a post today, one of the other big reasons Bitcoin is beginning to take off — besides, of course, that it allows secure digital transactions without transmitting personal information — is that investor confidence is growing. Bitcoin startups are beginning to raise, and Draper claims that their fund is far from being the only one that’s interested. 
 
 What’s more, the government has finally realized that it needs to start taking virtual currency seriously and develop a strategy for dealing with these types of currencies. FinCEN recently put out a series of “Guidelines,” which will inform future regulation, but also works to establish trust and credibility for virtual currency, particularly Bitcoin. 
 
 There’s also the climate of the global financial markets, particularly the panic in Cyprus, after the government froze its citizens’ bank accounts following its bailout. Many believe that the tenuous financial markets in Europe and beyond create an atmosphere that’s ripe for a digital panacea like Bitcoin. 
 
 Of course, the other side of the Bitcoin argument is that the confluence of unsteady financial markets, and skyrocketing growth of virtual currency (plus hype), is creating a perfect storm that equates to Bitcoin just being one giant bubble waiting to pop. 
 
 What’s more, as my colleague Greg Kumparak pointed out today, Bitcoin itself is still in a tenuous place, policy-wise. There’s a good chance that a decentralized, unregulated market is going to scare the pants off the government once it’s fully cognizant that Bitcoin is a billion-dollar market — and growing. “It’s the easiest ‘this funds terrorism’ scare argument the government will ever try to make, so a big battle within the next year or two is pretty much guaranteed,” he said. 
 
 Whether one sees it as a phenomenon or a legitimate institution, Bitcoin is working on all cylinders to become the latter — and now has a real case for our undivided attention. Either way, feel free to marvel at how a virtual currency that appeared practically out of the ether (created by some phantom mathematician/economist) just pulled a billion-dollar market out of its hat. 
 
 See you on Silk Road?
– The price of Bitcoins is skyrocketing at a head-turning rate—they're currently worth more than $200 each, up from $90 when we wrote this piece on the phenomenon two weeks ago—which has everyone wondering: Is this a bubble? And should you buy anyway in the likely event that it is? Here's what people are saying: Farhad Manjoo at Slate gives a first-hand account of the confusing and frankly downright shady process for buying the coins. "You've got to take several leaps of faith, trusting sites that look like they were put together by teenagers," he writes. But that's why he thinks this bubble still has legs. Bubbles, he theorizes, take off when mainstream buyers get involved. Once better Bitcoin sites appear, the masses will arrive, and "prices will begin to get really crazy." Speculators "are just laughing at all the people who are dismissing Bitcoin as a bubble," writes Henry Blodget at Business Insider. Because the most you can lose on Bitcoins is 100% of your money—and you stand to make much more than 100% back. Like, say, 600% (which investors have made in the last six weeks). That said, lots of things could obliterate the market, like hacking, or a government crackdown. Timothy Lee at Forbes thinks Bitcoins are a bonafide disruptive technology. "The Bitcoin economy today looks a lot like the PC market circa 1978," he observes. "Most people today look at Bitcoin and see an impractical curiosity." But Bitcoin isn't a product, it's a platform, and one with lots of room to grow. But Kurt Eichenwald at Vanity Fair is far, far less convinced, calling the system "very cool. But also very foolish." Bitcoins aren't a currency anymore—currencies are based on "a rational expectation of relatively stable valuation," and Bitcoin prices are anything but stable or rational. "In essence, the market is a fantasy," based on speculators and investors. And when they stop buying, who will replace them? "My bet? No one." It's worth noting that the price took a really nasty hit today, falling 24% from its intra-day high of $266.