Bitcoin is coming down to Earth — at least for now.
The so-called digital currency recently traded at $31,594.03, down 9.6% on the day and down 25% from its record $41,947, set Jan. 7.
Beside gravity, a factor in bitcoin’s drop Thursday may be a trade blog suggesting the existence of a double-spend. That refers to the same bitcoin token being used by the same person in two different transactions.
To be sure, some industry pros say the double-spend talk is much ado about nothing.
“In this case, it doesn’t look like a merchant was defrauded,” Nic Carter, co-founder of Coin Metrics, a data firm, told Bloomberg. “This doesn’t look sinister to me. My best guess is this is experimentation or a software bug.”
In any case, bitcoin seems to be riding a jet stream of hot air. Advocates say it represents a store of value, but it’s a store of value only because people believe it’s one.
Bitcoin proponents argue that that the dollar represents a store of value only because people view it that way. But the dollar has the full faith and backing of the U.S. government, while bitcoin has no underlying asset at all.
Bitcoin itself doesn’t meet the basic definition of a currency: an asset that’s used as a medium of exchange in legitimate commerce.
In November, digital-payment processors went through just $269.7 million of global merchant sales worldwide in bitcoin, according to research that Chainalysis compiled for The Wall Street Journal.
U.S. retail sales for that month were more than 2,000 times that figure: $546.5 billion.
Bitcoin has been sharply volatile since it was introduced in 2009. Nauseating lows have followed dizzying highs. Skeptics say: Caveat emptor.