In 2014, the American Grammy Award-winning hip hop artist, businessman and actor 50 Cent (born Curtis Jackson III) allowed fans to use cryptocurrency to buy his album Animal Ambition, as a way for him to “stay with the times.” The sales stunt raked in 700 bitcoins, valued at about $662 each. This past January, CNBC Make It reported that those 700 bitcoins were worth an estimated $7.8 million. Upon discovering the windfall (a singular bitcoin had risen in value to $11,200), 50 Cent took to Twitter this past January for a bit of braggadocio: “A little bitcoin anyone? LOL…”
Others weren’t laughing. And that included Bank of Canada governor Stephen Poloz, who told CNBC that bitcoin should not be considered a currency. Comparing bitcoin trading to gambling, Poloz empha- sized the need for global regulations.
The wildly fluctuating value of bitcoin would seemingly appeal best to those in possession of a gambler’s steely nerves. First created in 2009, bitcoin was worth virtually nothing. This past December, values soared to $20,000 per bitcoin then sunk to $11,000 in early 2018, when the global stash was estimated to total $190 billion. By early February, bitcoin fell below $8,000, due partly to investors getting cagey about proposed regulatory crackdowns.
Bitcoin is limited as a medium of exchange, as there can only be 21 million in circulation, with about 16 million being created to date. According to Investopedia, the founders of bitcoin stipulated that, similar to gold, it must have a finite supply, making it an efficient store of value. However, its use is limited, as it can be used as a payment system for some online transactions but very few real-world ones. This is due in part to bitcoin’s whiff of opprobrium. Without a central authority to run its database (such as conventional financial institutions), it can be used to anonymously transfer funds, thus aiding criminals — hence the call for regulations by financial authorities. ◊