'Very volatile': Could Bitcoin actually collapse?

Could cryptocurrencies actually collapse?

By Susan Edmunds of RNZ

Actor Ben McKenzie has released a documentary calling cryptocurrencies stupid, four years after telling the US Senate that they were the "largest Ponzi scheme in history".

While McKenzie is vocal about his wish to take down cryptocurrency, even local supporters say it's possible that at least some of them could see their value go to zero. But which, and why?

Cryptocurrencies are a decentralised form of digital currency that can be used for transactions between individuals, but are most commonly held as an investment asset. It is even possible to invest in cryptocurrency via KiwiSaver, such as through Koura's bitcoin fund.

Bitcoin is the best-known currency, but there are a large number in circulation, including Ethereum and Ripple.

Bitcoin's price has fallen from a peak of more than NZ$210,000 late last year to NZ$128,489.

Ethereum has dropped from about NZ$7500 this time last year to $4000.

The values can move a lot because they are not backed by any government, and the price is set by supply and demand factors rather than any specific use case.

Could Bitcoin value drop to zero?

Rupert Carlyon, founder of Koura, said there was a scenario where Bitcoin values could fall to zero.