Why is one bitcoin, after all the disasters in the crypto industry, trading at about $27,000?

Your guess is as good as Mark Cuban’s.

“I wish I knew the real reason,” the tech entrepreneur and investor wrote in an email when asked about bitcoin’s resurgence, adding that the cryptocurrency’s supporters would say it is a safe haven at a time of global financial unrest. “I honestly don’t know.”

It’s a reasonable answer. Amid the smoldering crater that is the crypto market, bitcoin has somehow made maybe not a comeback, but at least a stand. For all the tokens, coins, forks, chains and NFTs, bitcoin remains the gold standard in cryptocurrency.

The crypto industry’s collapse is ongoing and has been playing out for almost exactly a year. The market’s losses are measured in the trillions of dollars. Most crypto headlines these days are either about a high-profile arrest, fresh charges or impending attempts at regulation. Crypto startup investing has plunged. The tech world’s attention, once enthralled by Web3 startups, has moved on to artificial intelligence. 

And, of course, bitcoin crashed, too, after reaching a peak of around $65,500 in late 2021. And yet it  is still trading far, far higher than just a few years ago. It remains volatile, dipping below $16,000 in November, but a recent rally coincided with concerns about the global banking system and expectations of an end to interest rate hikes. As of mid-March one bitcoin traded for about $27,000. 

To its proponents — and there are many — this is all more evidence that bitcoin is different. While the crypto industry expanded into finance, art, video games and slurp juice, bitcoin stayed bitcoin. Cuban has been something of a pragmatic supporter of bitcoin and crypto, saying in recent months that he plans to buy more but also that he sees problems in the industry at large.

“I would say it vindicates a thesis,” Alex Gladstein, chief strategy officer of the nonprofit Human Rights Foundation, said of bitcoin’s staying power. “Web3, blockchain, all these buzzwords over the years… and yet bitcoin just continues to grow and it continues to help people.”

Gladstein, who has written and spoken extensively in support of bitcoin as a way to support human rights, talks about the benefits of bitcoin in much the same way that the cypherpunk movement of the early 1990s did about cryptography — as a means to empower individuals and ensure their freedom and privacy. It’s out of the cypherpunk movement that early forms of digital cash, and eventually bitcoin, were first conceived.

That mix of technology and philosophy led to the emergence of bitcoin maximalists, sometimes called maxis, who defend bitcoin so vociferously that they are sometimes likened to a cult.

But it’s that following that helps set bitcoin apart. Molly White, a software engineer who has also emerged in recent years as one of the crypto world’s most potent skeptics, said in a phone interview that she still considers bitcoin a speculative asset but that it does exist in a somewhat rarified air thanks to its fervent fan base.

“There are some things about it that are, I think, objectively different,” she said. “It has this mystique around it being the original cryptocurrency.”

It bears repeating what bitcoin actually is. Bennet Tomlin, a data scientist who also hosts a podcast dedicated to critical discussions of crypto, put it succinctly: “The frame I generally put around it is: Bitcoin is an internet currency maintained by a network of computers, which is best suited for payments that the government or society would want to stop.”

Tomlin said he remains skeptical of bitcoin for many reasons, including whether miners (the people who run computers that make up bitcoin’s distributed computing system) will remain incentivized to pour energy into the system. Others remain entirely unconvinced. 

Nicholas Weaver, a security expert who lectures at Berkeley University’s Department of Electrical Engineering and Computer Sciences and has been a staunch skeptic of all things crypto, said he believes bitcoin’s use by criminals is the main reason it may stick around longer than other forms of digital currency.

“I see bitcoin as the one that hangs on the longest, but there’s no inherent value if you aren’t doing crime,” he said. “And if you want to gamble on whether a number goes up or not, go to Vegas — the restaurants are better.”

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There’s a boring answer to why something is worth the price it trades at — because that’s what the market says it’s worth. There’s enough buyers and sellers at that price to keep it there. It holds for bitcoin. 

But market psychology matters. What people think of bitcoin matters. And at this point, it feels hard to deny that there’s enough people who see value in bitcoin to keep it around for the foreseeable future. The cryptocurrency’s advocates continue to push for it to become an alternative banking system in other parts of the world, such as Block CEO Jack Dorsey’s recent efforts in Africa.

Fadi Elsalameen, an adjunct senior fellow at the nonprofit Bitcoin Policy Institute, said bitcoin’s growing use in the human rights world as a way for activists to facilitate the transfer of money outside the banking system has become invaluable.

“​​For us, having to use bitcoin has become not only a last resort. It’s become the only option because you don’t want to be at the mercy of a dictator,” Elsalameen said.

He said bitcoin’s adoption is continuing to grow among people in parts of the world where the banking system is either inconsistent or at the whims of an authoritarian. He noted that the price of bitcoin isn’t of particular importance in his line of work.

“Once we explain it in their language, they adopt it,” Elsalameen said of people in the Middle East who he’s introduced to bitcoin. “They’re saying this is exactly what they need.”

That need may not keep the price of bitcoin high, but it adds to the number of people who see bitcoin as distinct from the rest of the crypto world.