The following is an excerpt from Zeke Faux | November 12, 2015 | Bloomberg.com |
This was looking like the year that bitcoin would finally move beyond its sketchy reputation as an anonymous way to buy drugs and stolen credit cards. Banks had started to study how they could use the six-year-old digital currency to update the world’s outdated money transfer mechanisms; and its price swings were becoming less extreme, making it less risky for ordinary folks to use.
Then bitcoin’s price inexplicably spiked 98 percent in three weeks, touching $502 on Nov. 4, before dropping 20 percent the next day. That’s the kind of unruly fluctuation you might expect in a penny stock, not an invention that’s been hyped as a trustworthy replacement for unreliable government-issued money.
While it’s impossible to determine exactly why the currency went wild, the fluctuation came just as people around the world were discovering a new use for bitcoin: investing in MMM, an online pyramid scheme that’s promising returns as high as 100 percent a month. Data from Internet tracker Alexa show traffic to MMM’s websites taking off in October. More than 30,000 participants have posted testimonials on YouTube, mainly from China, the Philippines, and South Africa.
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