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 20 per cent to as low as $12,560 on Friday morning.
As regulators debate how to handle cryptocurrencies, this is the story of just some of those who have already lost huge sums of money on bitcoin.
Londoner loses £500 overnight
“Bitcoin has lost its meaning – it’s not the alternative currency it was originally meant to be”.
That’s the view of Michael Foote, CEO of insurance comparison website Quote Goat, after losing up to £500 in 24 hours on Thursday.
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”.
Millions thrown away in a landfill site
James Howells, an IT worker from Newport, unintentionally dumped 7,500 bitcoin in 2013.
He is now planning to find them, but isn’t sure how, as he believes the hard drive he saved them to is currently buried in a landfill site.
That means the bitcoin stored on the hard drive would have been worth around $975,000 at the time the device is said to have been ditched. Today they would be worth $103m (£78m). “After I had stopped mining, the laptop I had used was broken into parts and sold on eBay. However, I kept the hard drive in a drawer at home knowing it contained my bitcoin private keys, so that if bitcoin did become valuable one day I would still have the coins I had mined,” he told the Telegraph.
“In mid-2013 during a clear-out, the hard drive – then worth a few hundred thousand pounds – was mistakenly thrown out and put into a general waste bin at my local landfill site, after which it was buried on site.”
Alex and the case of the faulty USB stick
Self-confessed bitcoin geek Alex only goes by his first name publicly. Speaking to Australia’s News.com.au, he says he got into bitcoin in its early days in 2009 “just for the fun”.
“In the tech community we didn’t think bitcoin would be that big,” said the Melbourne game developer. He doesn’t go by his real name because “if my wife knows I’m dead”.
As bitcoin grew, he deleted the hardware needed for bitcoin and backed it up on his “wallet” on a USB stick. The wallet contained unique crypto-keys, used to identify bitcoins Alex had mined on his PC.
“The thinking was that it’s offline, not on my PC, so in case something bad happened to the PC – [if] it blew up, or [was] hacked – I still had a backup,” he said.
When bitcoin peaked at around $980 at the end of 2013, Alex says he remembered his wallet and plugged in the USB stick to access files. Except, the USB stopped working.
“It was one of those cheap made-in-China ones,” he said.
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