The virtual currency Bitcoin has lost so much value that its coins could soon be more expensive to make than they’re worth.
What it means: Once upon a time, everyone was super excited about cryptocurrencies (online-only money that isn’t controlled by any government or central bank). Fans said cryptocurrencies like Bitcoin would make fraud impossible (because deets about each owner of the money is stored in the currency’s coding) and stop corrupt or nosy governments from being able to tell you what to do with your own money (including things like “don’t spend it on illegal drugs” or “use it to pay taxes” which lots of people would say is fair enough, really).
But Bitcoin never really took off as an actual currency because its value changed so much (see below). Most businesses wouldn’t accept Bitcoin, so people looking to use it as a currency needed to be able to exchange it - like when you go on holiday and exchange your national currency for the local one.
The difference is that with most currency exchanges, you’re always pretty confident that you’re going to get roughly the same amount of value from each form of money. But Bitcoin exchange rates changed massively and very quickly. It was the equivalent of being able to swap £100 for €100 one day and €10,000 the next. That’s not only annoying, it meant people ended up losing loads of money if they timed their ‘swaps’ badly.
At its most popular, a single Bitcoin was tipped to be on track to being worth $1 million. Its value has now fallen to $6,000. (Even at its lowest, a single Bitcoin was worth thousands of dollars, so lots of people would buy just part of a Bitcoin. Like how bits of pounds are pennies, we guess?)
Considering it costs $5,000 to make a Bitcoin, it soon won’t be worth anyone’s while to create the currency. (Although Bitcoins are virtual and therefore don’t require any special materials to make, you basically have to run a super-complicated, super energy-sucking computer code to create them, which is why creating them costs so much.) Some financial experts think that means Bitcoin is doomed to bite the dust completely.
Read our explainers on cryptocurrency and exchange rates.
