Bitcoin is a type of digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.
Just before Christmas, 2017, Bitcoin seemed unstoppable. Its value was rising exponentially as more and more investors piled in to the digital currency, hoping to profit from its sudden popularity. Other cryptocurrencies benefited too, as investors diversified their cryptocurrency holdings and arbitraged differences. Demand was so heavy that cryptocurrency exchanges crashed. Those who had held (or HODLed) cryptocurrencies for some time received the biggest Christmas present of their lives.
Professional investors and amateur traders alike predicted that Bitcoin’s price would increase even more in 2018. “Bitcoin will never crash,” said one Reddit user, “because then everyone would buy it when it’s much cheaper.” Like everyone buys the dips in a highly volatile high-yield market.
Others looked forward to universal adoption and a price tag in the millions. They might have trouble cashing in their windfall now, but that didn’t matter. Once everyone was using cryptocurrencies, fiat currency would be irrelevant and they would be the new super-rich. Some even started setting up a cryptocurrency Utopia in Puerto Rico, principally it seems to avoid the very large tax bills they would have to pay if they ever managed to convert their cryptocurrencies to dollars.