"What the average Joe hears is how friends lost fortunes," said Alex Kruger, a former banker who has been trading in the cryptocurrency markets for some time. "Irrational exuberance leads to financial overhang and slows progress."
It is hard to know how many cryptocurrency investors are now in the red, with holdings worth less than the money they put in. Many who have lost money in recent months had gotten into the markets before the big run-up last year and their holdings are still worth more than their initial investments.
But by many metrics, more people put money into virtual currencies last fall and winter than in all of the preceding nine or so years. Coinbase, the largest cryptocurrency brokerage in the United States, doubled its number of customers between October and March. The startup Square began allowing the users of its mobile app, Square Cash, to buy bitcoin last November.
Almost all of the new customers on Coinbase and Square would be in the red if they bought cryptocurrencies at almost any point over the last nine months and held on to them.
The damage is likely to be particularly bad in places like South Korea and Japan, where there was minimal cryptocurrency activity before last year, and where ordinary investors with little expertise jumped in with abandon.
In South Korea, the biggest exchanges opened storefronts to make investment easier for people who did not feel comfortable doing it online. The offices of one big exchange, Coinone, had just one customer walk in during a two-hour period in the middle of the day last week. An employee, Yu Ji-Hoon, said, "The prices of the digital tokens have fallen so much that people seem to feel upset."
Kim Hyon-jeong, a 45-year-old teacher and mother of one who lives on the outskirts of Seoul, said she put about 100 million won, or $US90,000, into cryptocurrencies last fall. She drew on savings, an insurance policy and a $US25,000 loan. Her investments are now down about 90 per cent.
"I thought that cryptocurrencies would be the one and only breakthrough for ordinary hardworking people like us," she said. "I thought my family and I could escape hardship and live more comfortably but it turned out to be the other way around."
Bitcoin has dropped more than 50 per cent since the start of 2018.
In the United States, Charles Herman, a 29-year-old small business owner in Charleston, South Carolina, became obsessed with virtual currencies in September. He said he now felt that he had wasted 10 months of his life trying to play the markets.
While he is essentially back to the $US4000 he put in, he has soured on the revolutionary promises that virtual currency fanatics made for the technology last year and has resumed investing his money in real estate.
"I guess I thought we were 'sticking it to the man' when I got on board," Herman said. "But I think 'the man' had already caught on and had an exit strategy."
Much of the anger that investors feel is toward the smaller virtual currencies, or alt coins, that entrepreneurs sold in so-called initial coin offerings. These coins were supposed to serve as payment mechanisms for new software the entrepreneurs were building.
But almost none of these companies have delivered the software they promised, leaving the tokens useless, except as speculative assets. Several coins have been exposed as outright scams.
"I think I'd like to see most alts go to zero before I feel like the whole space isn't overpriced," Herman said.
Bitcoin has generally held on better with investors. It is down about 70 per cent from all-time highs, rather than the 90 per cent losses that lesser-known digital tokens have suffered. But it, too, has struggled to win much use beyond speculative investments.
"We also saw that bitcoin isn't ready for mass adoption and day-to-day use," Herman said.
Despite this pessimism, the social networks where cryptocurrency fanatics gather to trade information are full of people talking about their intention to hold on to their coins in the hope that they will recover once the technology has time to catch up with the hype.
Tony Yoo, 26, a financial analyst in Los Angeles, invested more than $US100,000 of his savings last fall. At their lowest point, his holdings dropped almost 70 per cent in value.
But Yoo is still a big believer in the idea that these tokens can provide a new way to transact online, without the big corporate middlemen we rely on today. Many of the groups that raised money last year are still working on the products they promised, with lots of serious engineers drawn to the projects.
"There's just so much more behind this new wave of technology and innovation that I'm sure will take over our society in due time," Yoo said.
With prices down so much, he said he was actually looking to put more money into the markets.
That thinking has been encouraged by the people who invested in bitcoin in 2013, when it first topped $US1,000. That bull market was followed by a crash in which the price of bitcoin dropped more than 80 per cent. But after a long fallow period, the price recovered. Even with recent losses, the value of one bitcoin is hovering around $US6500 up more than 500 per cent from the peak of 2013.
"Five years ago, I was broke, unemployed, and ashamed to use my real name," Ryan Selkis, a popular virtual currency personality, wrote on Twitter last week.
"For the new fanatics, stick around for your own 14 month, 85% downdraft and you'll not regret it."
Twitter is also filled with complaints, like the one from a user named @Notsofrugaljoey, who wrote: "It's really hard to stomach losing all my hard earned money. Just broke down and cried."
On Reddit, a user in the United Arab Emirates posted a picture of the $US100,000 loan he had taken out in December to buy cryptocurrencies and that he will now be paying back out of his salary for the next three years.
Roberts, the British investor who has seen most of his $US23,000 vanish, is holding onto his coins in case they turn around. But for now he has stopped trading and is looking for another job.
"I'm living off the little savings I have left still in my bank account," Roberts said. "I've made a mistake and now I'm going to have to unfortunately pay the cost for the next few years."
The New York Times
- Cryptocurrencies | Category | Fox Business - November 1st, 2019
- Best cryptocurrency to Invest 2019 - The Complete Guide - November 1st, 2019
- Best Cryptocurrency to Invest 2019 Our Top 4 Picks - October 22nd, 2019
- Buy Cryptocurrency with Credit Card or Bank Transfer now ... - September 30th, 2019
- Best 10 Cryptocurrency Brokers - Updated for 2019 (Safe ... - September 30th, 2019
- Fidelity Said to Offer Cryptocurrency Trading Within a Few ... - May 10th, 2019
- Is This Cryptocurrency The Next Bitcoin? - forbes.com - April 28th, 2019
- Cryptocurrency Definition | Bankrate.com - April 26th, 2019
- Samsung is developing its own blockchain network, report claims - April 26th, 2019
- 2019s best cryptocurrency wallets | 70+ compared | finder.com - April 26th, 2019
- What is cryptocurrency? - Definition from WhatIs.com - April 25th, 2019
- A Beginner's Guide to Cryptocoin Mining: What You Need to ... - April 25th, 2019
- How Cryptocurrency Assets Are Becoming A New Battleground In ... - April 21st, 2019
- What is Cryptocurrency: Cryptocurrency Explained the Easy Way - April 13th, 2019
- How to trade cryptocurrency in the UK - finance.yahoo.com - April 8th, 2019
- Cryptocurrency Trading | TD Ameritrade - April 8th, 2019
- Cryptocurrency Prices, Charts, and Market Cap Data - UNHASHED - April 8th, 2019
- Blow To Bitcoin As World's Largest Cryptocurrency IPO Is Iced - April 2nd, 2019
- How and where do I report Cryptocurrency coin-to-coin ... - March 22nd, 2019
- Hundreds of Millions in Cryptocurrency Vanishes After ... - March 11th, 2019
- Fidelity's new cryptocurrency company is up and running ... - March 9th, 2019
- JPMorgan is creating its own cryptocurrency - CNN - March 6th, 2019
- Cryptocurrency Exchange Says It Can't Access $190 Million ... - February 5th, 2019
- What's the Best Cryptocurrency to Invest in Today? - January 9th, 2019
- Cryptocurrency Trading Easy tips to get started | AvaTrade - January 9th, 2019
- Thailand Issues 4 Cryptocurrency Licenses, Rejects 2 ... - January 9th, 2019
- NASDAQ, Fidelity Invest in New Cryptocurrency Exchange ... - January 9th, 2019
- Cryptocurrency News | Cryptocurrency News | Blockchain ... - January 9th, 2019
- Differences Between Cryptocurrency Coins and Tokens - January 9th, 2019
- Cryptocurrency Charts - January 8th, 2019
- What is cryptocurrency? - cointelegraph.com - January 4th, 2019
- Blockchain Will Survive A Cryptocurrency Apocalypse - January 1st, 2019
- Cryptocurrency - Simple English Wikipedia, the free encyclopedia - December 25th, 2018
- Is Cryptocurrency Dead for Good? | Investopedia - December 6th, 2018
- Cryptocurrency scammers dupe Singaporeans out of $78,000 in ... - December 6th, 2018
- Invest in Cryptocurrency With Spare Change - Black Enterprise - November 28th, 2018
- What is Mining Cryptocurrency? What you need to know... - November 26th, 2018
- Saudi Arabia Will Launch Its Own Cryptocurrency in 2019 ... - November 23rd, 2018
- Bitcoin and Other Cryptocurrency Prices Are Crashing Again ... - November 17th, 2018
- Homepage - Cryptocurrency Army - November 14th, 2018
- Cryptocurrency - Simple English Wikipedia, the free ... - November 14th, 2018
- How To Create Your Own Cryptocurrency - fastcompany.com - November 14th, 2018
- Cryptocurrency price plunge worse than bursting of dotcom ... - September 18th, 2018
- Iran, North Korea and Venezuela turning to cryptocurrency ... - September 12th, 2018
- SEC halts trading in two cryptocurrency products, citing ... - September 12th, 2018
- Cryptocurrency News, ICO Reviews & Blockchain Updates ... - September 9th, 2018
- Cryptocurrency "miners," utilities look for ways to get along ... - August 29th, 2018
- Cryptocurrency: Virtual money, real power, and the fight ... - August 28th, 2018
- Pornhub Now Accepts PumaPay Cryptocurrency - August 27th, 2018
- NK hackers target Mac users with trojan cryptocurrency app ... - August 27th, 2018
- cryptocurrency coins Archives - The Industry Spread - August 26th, 2018
- cryptocurrency Archives - Page 6 of 6 - The Industry Spread - August 26th, 2018
- Cryptocurrency investment in SMSF - hallandwilcox.com.au - August 26th, 2018
- How To Choose The Best Cryptocurrency Wallet - Crypto News AU - August 26th, 2018
- Courses | Cryptocurrency Australia - August 26th, 2018
- What Every Investor Should Know Before Buying Cryptocurrency ... - August 26th, 2018
- The biggest cryptocurrency hack in the history of blockchain - August 26th, 2018
- After the Bitcoin Boom: Hard Lessons for Cryptocurrency ... - August 21st, 2018
- Cryptocurrency Rankings | CryptoSlate - August 14th, 2018
- Bitcoin price falls after SEC postpones key ETF decision - August 12th, 2018
- Brokers Cryptocurrency Deals Are Focus of SEC Review ... - August 7th, 2018
- 7 Cryptocurrency Predictions for the Rest of 2018 - August 7th, 2018
- Have a Cryptocurrency Company? Bermuda, Malta or Gibraltar ... - July 31st, 2018
- Bitcoin price live: Latest updates as cryptocurrency ... - July 22nd, 2018
- 2018 Bahamas Blockchain & Cryptocurrency Conference - July 16th, 2018
- Best Cryptocurrency Trading Platform 2018 | Top Crypto ... - July 13th, 2018
- Cryptocurrency: Advantages And Disadvantages Explained - July 12th, 2018
- ATB Coin - The fastest and most secure payment system - June 19th, 2018
- An Illustrated Glossary of Cryptocurrency Slang (Infographic) - June 19th, 2018
- Apollo All-in-One Cryptocurrency - June 3rd, 2018
- Cryptocurrency News, ICO Database, Coin Rankings and ... - May 25th, 2018
- CoinLib - Cryptocurrency prices now - May 21st, 2018
- Cryptocurrency Market Capitalizations | CoinMarketCap - May 4th, 2018
- CryptoCurrency Market , Coin Prices & Charts, Crypto ... - April 28th, 2018
- Nasdaq open to cryptocurrency exchange in future, says CEO - April 27th, 2018
- The 4 Top Cryptocurrency Mining Stocks -- The Motley Fool - April 27th, 2018
- One in five financial institutions consider cryptocurrency ... - April 27th, 2018
- New hacks siphon private cryptocurrency keys from ... - April 27th, 2018
- What Is Cryptocurrency? - dummies - April 21st, 2018
- Cryptocurrency Market Surges to $365 Billion, Start of a ... - April 21st, 2018