The price of bitcoin and other cryptocurrencies has soared this year to record levels but for some, the bubble has already blown up in their face.
Investors joining the bitcoin craze in December will have seen the value of their investments drop dramatically. Bitcoin tumbled by 30 per cent on Friday to as low as $10,775.
As regulators debate how to handle cryptocurrencies, some people have already lost huge sums of money on bitcoin overnight.
Harvard educated Cameron and Tyler Winkelvoss, also known as the Winkelvoss twins, may feel the biggest hit from bitcoin volatility. On Friday afternoon, their bitcoin stock was worth around $1.53bn, a fall from £2.34bn from Sunday.
The bitcoin billionaires bought 1 per cent of all bitcoin tokens, or 120,000 coins, in 2012 when one coin cost below $10, as reported by the New York Times. Despite the volatility, the brothers have held their ground on bitcoin.
“We are very comfortable in very high-risk environments with absolutely no guarantee of success,” Tyler Winklevoss told the New York Times on 19 December. “I don’t mean existing in that environment for days, weeks or months. I mean year after year.”
It's not just bitcoin billionaires feeling the hit. Michael Foote, CEO of insurance comparison website Quote Goat, lost £500 in 24 hours on Thursday.
“Bitcoin has lost its meaning – it’s not the alternative currency it was originally meant to be”, Foote said.
The Londoner invested in bitcoin, litecoin and ethereum in September and sold the majority for a 300 per cent profit, but found the last remaining bitcoin transactions delayed and as such, devalued in the latest volatile drop on Thursday.
“For the average person like me, bitcoin is always a gamble”, he told The Independent. “But people are treating it like a punt”.
The entrepreneur says he’s staying away from bitcoin for now, and may look into alternative cryptocurrencies such as ripple – “something with more substance – but only a little more”, although he admits that “substance” isn’t the best word for cryptocurrencies at the moment.
“I’m very heavily against encouraging anyone to invest unless they are happy to lose it all”, he said.
“[It’s] definitely not a get rich quick scheme!”
A South African investor admitted on Twitter on Thursday to losing 6,000 Rand (£352). Lauren Cohen-Mendozza tweeted: “Husband has now lost 200k on Steinhoff. I’ve lost 6k on bitcoin”.
