Oliver Dobson lives in a town outside of Canada’s financial nerve centre, a nearly three-hour drive from Toronto. How he earns his living is worlds apart from the traditional business of Bay Street.
For the past few years, Dobson has been trading in cryptocurrencies, stockpiling a horde of digital coins that have suddenly skyrocketed in price. In the real world, he lives off of cash savings, but on the Internet, he works in myriad ways to harvest these tokens.
He considers it his full-time job.
“I’m very frugal with my money,” Dobson said. “I focus my time stocking up on these coins, so that when they explode [in price], I can take advantage of it.”
Prices for these cryptocurrencies, which have less familiar names like ether and nano, are exploding because they’re riding on the coattails of bitcoin, which has been on a feverish run. The going rate has catapulted from about $9,000 per bitcoin a year ago to a peak of roughly $58,000 in late February, according to CoinDesk.
The tidal wave has showered digital wealth on Dobson and other Canadians with a stake in the game, while attracting large players from Wall Street like never before.
Bitcoin’s flirtation with mainstream acceptance and the gravity-defying climb in the price — along with some white-knuckle dips — have made headlines around the world and even captured the attention of the doubters.
Underneath the mania is a potential sea change in the world of finance that observers say was made possible by a global pandemic. And what’s at stake is nothing less than a war for the future of money.
But there are plenty of skeptics. They warn bitcoin is a highly speculative investment play with no real value backing it up and that investors run the risk of crushing losses.
Create money out of thin air’
The rally has made Dobson’s seemingly bizarre occupation all the more lucrative. Among other methods, he said he uses bitcoin to buy other digital coins on crypto exchanges and sell them when they rise in price. He also keeps his eye out for so-called airdrops, where crypto startups release free tokens or coins as part of a marketing stunt.
“If you’re asking me, how do you make your money? I guess in a way, you just go try random stuff and they might just create money out of thin air and hand you some.”
The new wave of bitcoin and cryptocurrencies has its share of colourful characters. It also has some heavy hitters from legacy finance.
Wealthy investors and big institutions, such as PayPal Holdings Inc., Mastercard Inc., Visa Inc. and Tesla Inc., are embracing bitcoin in various ways, signalling broader approval of crypto for the first time.
The 2018 rout
To understand how this happened, and what it all means, it’s helpful to look back at the last bitcoin wave, which ended when investors watched vast sums of…