On Thursday morning, Fortune debuted online its January 1, 2018, cover story on Bitcoin’s recent market mania. Coauthored by my colleague Jen Wieczner and me, the piece dug into Bitcoin’s explosive rise and gauged the cryptocurrency’s longevity. After the feature published, I asked my Twitter followers when they expected the Bitcoin bubble to pop. “Tomorrow?” I submitted, half-joking.
Now I don’t believe in jinxes, but boy. In a span of 24 hours, the price of Bitcoin plunged 25%. Trading as high as $20,000 in recent weeks, the so-called digital gold suddenly nosedived below $12,000. Other cryptocurrencies were hit just as hard—wiping out more than $120 billion in total market value. It was an utter rout.
Fortune’s cover asked, “How High Will Bitcoin Go?” The question still holds. But you’ve got to take the long view. After all, many of Bitcoin’s most adamant backers appear to be in it for the long haul. As Chainalysis, a digital forensics firm, revealed to us during the course of our research, the overwhelming majority of people who have held Bitcoin for at least three years seem to be keeping their Bitcoin in reserve, rather than cashing out amid the frenzy. New entrants and flighty, day-trader types, on the other hand, do not seem to exhibit the same perseverance.
One of the most level-headed experts we spoke to for this feature was Brian Armstrong, CEO and cofounder of Coinbase, whose startup has benefitted tremendously from the cryptocurrency craze. “We probably are in a bubble,” Armstrong told us last week, noting that this would neither be the first nor the last. A prescient view, given the collapse that soon followed.
Already the cryptocurrency markets seem to be recovering. Bitcoin is trading back up above $15,000. Other digital assets are trending up across the board, too. All this goes to show just how blindingly brisk and bewildering are Bitcoin’s boom-and-bust cycles. Cryptocurrency investors must have an appetite for risk—indeed, a ravenous one—to remain in this game. The upside is potentially great, but the downsides are despair-inducing.
To put a twist on an old proverb: Faint heart ne’er won fair money. Enjoy the weekend—and happy holidays!
Robert Hackett
@rhhackett
robert.hackett@fortune.com
Welcome to the Cyber Saturday edition of Data Sheet, Fortune’s daily tech newsletter. Fortune reporter Robert Hackett here. You may reach Robert Hackett via Twitter, Cryptocat, Jabber (see OTR fingerprint on my about.me), PGP encrypted email (see public key on my Keybase.io), Wickr, Signal, or however you (securely) prefer. Feedback welcome.
THREATS
All that glitters is not digital gold. It was a big week for Bitcoin. Futures contracts began trading on the world's biggest derivatives exchange on Monday. Coinbase added support for Bitcoin Cash, a controversial "fork," or spinoff, of Bitcoin. An exchange operated by the New York Stock Exchange's parent company petitioned the SEC for approval of a Bitcoin ETF, also known as an exchange-traded fund. Goldman Sachs reportedly plans to introduce a cryptocurrency trading desk next year. Oh, and the market crashed. (It has already begun recovering.)
Ransom where? The U.S. has attributed this year's destructive WannaCry ransomware attacks to North Korea, per a Monday contribution to the Wall Street Journal by Tom Bossert, President Trump's Homeland Security Advisor. The Hermit Kingdom is also supposedly looting cryptocurrency exchanges and stocking up on Bitcoin, as my colleague and Cyber Saturday coauthor Jeff John Roberts noted in last week's essay. Fun fact: the recent WannaCry attribution arrived three years to the date after the Obama administration blamed Pyongyang for digitally broadsiding Sony Pictures Entertainment in 2014.
On a scale from "1" to Equifax... Marketing firm Alteryx left an unsecured database chock full of information on about 123 million American households out in the open online. The spreadsheet, available for any Amazon Web Services account holder to peruse, apparently contained data—including addresses, finances, and demographics—collected by Experian, one the big three credit bureaus in the U.S. along with TransUnion and Equifax, which has had its own, much severer problems this year. Security researchers have warned that the exposed data would be useful to spammers and identity thieves.
That's why they call it "Face"-book. The social network is starting to use facial recognition technology to alert people whenever it detects photo uploads featuring their faces, even in cases where users haven't been "tagged." The warning system is designed to help prevent abuse and impersonation on its site. You can opt out of the service and its face-tracking, if you prefer.
Bitcoin mining dominatrix? That's one way to make money, I guess. And this is, unfortunately, another.
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ACCESS GRANTED
"There's nothing else in the digital currency space like the cryptographic technique underlying #Zcash. It's a moonshot: risky, but certain to change everything if it succeeds."
—In a post on Twitter, NSA secret-leaker Edward Snowden lauded "zero knowledge proofs" and related "zk-SNARKs," advanced, privacy-enhancing mathematical techniques. I shined a light on this subject in my recent profile of "Zooko" Wilcox, whose his Zcash cryptocurrency employs them. Snowden endorsed the approach in a retweet of the story, writing: "Zero-knowledge proofs may be the future of private trade."
FORTUNE RECON
Desperate Bitcoin Investors Who Forget Their Passwords Are Resorting to Hypnotherapy, by Keshia Hannam
5 Burning Questions for Bitcoin Investors in 2018, by Matt Heimer
Amazon Acquires Security Camera and Video Doorbell Maker Blink, by Verne Kopytoff
How the U.S. Used Jazz as a Cold War Secret Weapon, by Billy Perrigo
Firefox Users Cry Foul Over 'Mr. Robot' Ad Installed as Research Program, by David Z. Morris
Google Purges Shady Overseas Sites In Latest Blow to Fake News, by Jeff John Roberts
Apple Admitted It Slows Down Old iPhones. Now It Faces a Lawsuit., by Lisa Marie Segarra
ONE MORE THING
Google is the Panopticon. In his novel Sylvie and Bruno, Lewis Carroll jokes about a nation that has built an entirely unusable, full-scale map of its land. Carroll never envisioned Google, whose digital mapping unit is closer than any other venture to rendering a near-exact reproduction of the world. If you have even a minor interest in cartography, it's worth perusing this insightful analysis of the evolution of Google Maps, where the pace of innovation—bolstered by new satellite and aerial imagery and combined with computer vision techniques—is leaps and bounds ahead of the competition, like Apple.
