My brother-in-law cornered me by the cheese plate on Christmas Day and asked, very seriously, whether he should "put a little money into that Bitcoin thing." I had to break it to him that the little money would've been worth about twice as much two and a half weeks ago.
Quick recap for anyone who spent December decorating instead of reading tech blogs: Bitcoin spent most of November climbing toward the neighborhood of $1,200, which is when it started showing up on the evening news and at family dinners in the first place. Then China's central bank came out on December 5th and told financial institutions and payment companies they weren't allowed to touch it. That alone knocked the wind out of it. The bigger gut punch came around December 18th, when BTC China, which had been one of the biggest exchanges anywhere, said it would stop accepting new yuan deposits because of the pressure from Beijing. Price fell off a cliff after that. We're talking a drop from four digits to something starting with a 5 or 6, depending on which exchange and which hour you're looking at, in the span of about two weeks.
So there I am trying to explain "regulatory risk" and "exchange liquidity" between bites of my mother-in-law's terrible fruitcake, to a guy who just wanted a yes or no answer. I gave him neither. What I actually said was that I think the underlying idea is genuinely interesting, a currency nobody controls, transactions nobody can reverse, math instead of a central bank, but that none of that makes it a good idea to dump your Christmas bonus into something that can lose half its value because a government agency issued a memo. Those are two different conversations and 2013 has done a great job of smashing them together into one.
I've had a tiny amount of bitcoin sitting around since 2011, back when it was worth pocket change and I mined a bit on my laptop mostly out of curiosity, more or less as an experiment than an investment. Watching it go from a curiosity to a Christmas dinner topic to a cautionary tale, all in about thirteen months, has been genuinely strange to watch from the sidelines. I'm not selling. I'm also not buying more this week, and I told him not to either, at least not with money he'd miss.
Separate but related note on trusting institutions with your money right now: I did basically all of my in-person Christmas shopping this year with cash, partly out of habit and partly because of what's been unfolding with Target's card systems since their breach got confirmed a week or so back. I'm not going to pretend I fully understand the mechanics of how that many card numbers got skimmed at checkout registers, but I know enough to have avoided swiping anything there in December, and I know at least three people in my own contacts list who got a fraud alert text from their bank this month. Funny year to be nervous about both plastic and digital money at the same time.
Anyway. If you got asked a version of the bitcoin question at your own family gathering this week, you're not alone, and you have my permission to give the same non-answer I did. The tech is worth paying attention to. The price chart from the last month is not something you should be making financial decisions based on, in either direction. My brother-in-law seemed a little disappointed I didn't just tell him to go buy some. He'll get over it. He still owes me for helping him set up his new router last spring, so I figure we're roughly even on unsolicited advice.
Hope everyone's holiday was better than my fruitcake situation. Back to normal posting soon, once I've eaten enough leftovers to function like a person again.