The price of bitcoin topped $500 last week, and some hailed the moment as a turning point for the seven-year-old digital currency. “We may well look back on this,” said one pundit, “as the time that changed everything for bitcoin.”
Then the price dropped again, and some said it had climbed so high only because of some bitcoin-powered Chinese pyramid scheme. Yesterday, the price stood at $311. That’s about $800 below its high point in late 2013, just before Mt. Gox, the world’s largest bitcoin exchange, completely imploded amid claims that hackers had broken into its systems and stolen more than $460 million in customer funds. “The question prompted by the recent movement in bitcoin is whether it marks a resurgence for the cryptocurrency,” wrote The FT, “or merely highlights its turn in the endless parade of get rich quick schemes.” Fair question.
But for Brian Armstrong—the CEO of Coinbase, today’s dominant bitcoin exchange and a company with the backing of some very big Silicon Valley players—the price of bitcoin (see graphic above) isn’t the best way of judging the health of the digital currency. “Sometimes, I feel like running a