Infographic: A closer look at bitcoin trading

Bitcoin has had an eventful month in September, with prices leaping to a record high of $4,921 on Sept. 1 before plunging to a low of $2,975 last week on news that Chinese regulators plan to crack down on cryptocurrencies.

Prices were also hit after JPMorgan chairman, president, and CEO Jamie Dimon called the currency a “fraud,” saying he would fire anyone at the investment bank found to be trading in it.

Since then, however, Bitcoin has shrugged off the shock, breaching the $4,000 level this week.

While the digital currency was invented in 2009, it has dominated headlines in recent months, capturing the attention of investors, regulators, and speculators worldwide. Some companies are now starting to tap into the trend, offering customers the option to pay in bitcoins.

Earlier this month, UK-based entrepreneurs Michelle Mone and Doug Barrowman launched a $325 million luxury development in Dubai that would give investors the option to pay in bitcoin.

In the GCC, investors are showing interest in the currency but may not fully understand the associated risks, said Devesh Mamtani, head of investments & advisory at Century Financial Brokers.

“We have seen trends like this in the past as well where everybody just needs to invest without understanding the risks of the trade. The technology is definitely of interest, but the trend of these cryptos is probably going to be a short lived phenomenon,” he told Argaam.

Nevertheless, the risk-reward ratios of digital currencies remain high, he noted. “Even though these investments are risky and unregulated, the returns they offer are unparalleled to any other.”

In the following infographic, Argaam takes a closer look into the story behind Bitcoin and how it works. 

Write to Jerusha Sequeira at jerusha.s@argaamnews.com