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For a brief moment, Brian Cardarella was a Dogecoin millionaire.
The 41-year-old said he invested tens of thousands of dollars earlier this year in the cryptocurrency. As the digital token - created in 2013 based off a humorous online meme - surged, he watched the value of his investment cross $1 million.
Despite a recent reversal, it is still worth hundreds of thousands of dollars, according to a screenshot he provided of his trading account. "It is an emotional roller coaster," said Cardarella, who lives near Boston and founded a software consulting firm.
The rise of bitcoin - a type of cryptocurrency that exists on computers all over the Internet and does not rely on any government to oversee it - has often dismissed as a financial fad for techie speculators.
But this year has seen the number of cryptocurrency explode, minting hordes of newly successful investors drawn by the potential of huge profits, a culture soaked in humor and the encouragement of celebrity billionaires including Elon Musk. Dogecoin, named after the Shiba Inu "doge" meme, is up 10,000 percent this year, according to Coindesk, a media outlet that tracks cryptocurrency.
But the wild turns of the crypto market are colliding with intensifying concern from regulators about the risks taken on by ordinary investors and the potential for these largely anonymous digital payment systems to facilitate misconduct.
Last week, the U.S. Securities and Exchange Commission warned investors that bitcoin is a "highly speculative investment," pointing to "the lack of regulation and potential for fraud or manipulation."
The cryptocurrencies, which now number nearly 10,000, have been fueled by websites that allow investors to easily trade the investments, as well as stimulus checks that could easily be used to speculate as Americans were stuck at home during the coronavirus pandemic.
"Why is it that so many people are getting into it?" Cardarella said. "I would not be surprised if a lot of the people invested in crypto count that as their only investment."
Cryptocurrencies are essentially digital assets that allow people to exchange information or represent items of value on the Internet. In many cases, the digital currencies are run on a global network of computers that are not under the control of a central bank or company. They promote record-keeping, granting users the ability to instantly record their transactions on a public ledger without a middleman brokering the transaction.
The ransomware attack that brought down the Colonial Pipeline, sparking gas shortages in large swaths of the country last week, renewed attention on the use of cryptocurrencies to facilitate crime.
"There is a tension of privacy versus a government's right to know," said Kenneth Rogoff, an economics professor at Harvard University, who noted tax evasion and the financing of illicit activity among the challenges that cryptocurrencies pose to governments.
"This has been going on with cash forever, but cash is nothing compared to the potential for crypto," he said.
Many of the most popular tokens such as bitcoin have entire communities of developers and entrepreneurs building financial products and computer programs on top of the technology. Other currencies have no discernible utility other than to trade.
Recent days have underscored the extreme volatility of the market and the breathtaking sums trading hands.
Following his May 8 appearance on "Saturday Night Live," where Musk, who has called himself the "Dogefather," appeared to disparage the cryptocurrency, Dogecoin tumbled more than 30 percent. Musk followed that performance with another market-moving event, tweeting that his electric-vehicle company Tesla would no longer accept bitcoin as payment, citing its high-energy demands.
Bitcoin, the most valuable digital token, shed about 10 percent, taking many other names along with it. On Sunday, Musk suggested on Twitter that Tesla may have already sold or will sell its bitcoin holdings - sending prices diving.
The whims of a billionaire executive and his wrecking-ball tweets were only part of the story this month. A new cryptocurrency dubbed Internet Computer, which aims to foster open, decentralized versions of social media and enterprise software, debuted to the tune of $90 billion, with its market cap settling near $40 billion on Friday.
Over the past three months, the total value of all cryptocurrencies spiked 40 percent, to about $2 trillion.
Apps such as Robinhood and Coinbase offer a host of cryptocurrencies to invest in, which users can convert into cash. The ease of trading, experts say, was amplified by the economic and social conditions of the pandemic, which cut people off from live entertainment and casinos, while many Americans had thousands of dollars in stimulus checks to spend.
A viral tweet posted by Nick Maggiulli, chief operating officer at Ritholtz Wealth Management, captured the astronomical growth for those willing to take the risk: If a person who received three government stimulus checks invested the full amounts in Dogecoin - buying in April and December last year and again in March - that portfolio would now hold approximately $500,000 worth of the token.
"Because you get this big price movement, you start to see your friends making money, people have this general fear of missing out and they want to be part of the excitement," said James Putra, vice president of product strategy at TradeStation Crypto, a trading platform. "When you put an entire nation at home, they find interesting ways" to spend their time, he said. "People that never even contemplated trading are now talking to me about moving averages and chart patterns."
But the phenomenon is global, and many investors see the merits of new technology and the chance for life-changing winnings.
"I am entering a new tax bracket that I would never touch based on my income from working," said Christopher Hansson, a 29-year old law student in southern Sweden who used to work in retail and shared a screenshot of his cryptocurrency account. "A lot of people made life-changing amounts of money during the early stages of the Internet, and I would say cryptocurrency is the Internet 2.0."
Since 2017, Hansson said he has invested about $15,000 in several tokens and has seen his crypto portfolio grow significantly. "Financial independence - of course it's a long shot, but it's a shot," he said. "I live in my apartment with my dog. A garden and all that would be nice."
Angela Walch, a professor at St. Mary's University School of Law and a research associate at the UCL Center for Blockchain Technologies, said a confluence of factors is behind the flood of amateur investors diving into the market for novel assets.
"Why is this happening now; culturally where are we? We've had major world-shaking events, this massive global pandemic, stimulus packages and lots of government spending in the U.S. and elsewhere," she said. "This is your safe haven, the world is falling apart. Think of it as buying a lottery ticket; spend whatever you would be comfortable spending in Vegas. You may win big. But you also treat it as entertainment value - the chance to win big."
In the wake of the GameStop frenzy earlier this year, when stocks became memes, hype replaced fundamentals and celebrity endorsements turned attention into financial authority, regulators are taking notice.
Statements from finance officials highlight growing government concern, especially as figures such as Musk have shown their outsize influence over markets and, experts say, as prices swing wildly when influencers proclaim their excitement or scorn.
The SEC's recent warnings of the dangers of bitcoin follow calls for more muscular government action, establishing a federal watchdog with a clear mandate to oversee cryptocurrency's regulatory gray area.
"Right now the exchanges trading in these crypto assets do not have a regulatory framework, either at the SEC or our sister agency, the Commodity Futures Trading Commission," SEC Chair Gary Gensler told Congress earlier this month in one of his first remarks on cryptocurrency regulation. "Right now there's not a market regulator around these crypto exchanges. And thus there's really not protection against fraud or manipulation."
Officials abroad have taken a less diplomatic approach.
"I'm going to say this very bluntly again," said Andrew Bailey, governor of the Bank of England. "Buy them only if you're prepared to lose all your money."
Regulators face increasing pressure to set new policy on cryptocurrency not just because of the risks to retail investors, but the broader crypto boom bolstered by premier financial institutions such as JPMorgan Chase and Goldman Sachs advancing plans to offer crypto-based financial products to their clients.
"The more that these tendrils from crypto are weaving their way into the mainstream financial system, the more they can pose a systemic risk," said Walch of St. Mary's University. "They cease being their own alternative-world projects - it's not just those dedicated people anymore."
And as the Colonial Pipeline ransomware crisis made clear, government officials have yet to resolve a fundamental tension at the heart of bitcoin and other cryptocurrencies.
"There are two very different concepts: creating anonymity in the blockchain and simultaneously having a traceable and regulated currency - in my mind, they are very antithetical concepts," said Alex Reffett, co-founder of the East Paces Group, a wealth management firm.
"The government can destroy cryptocurrencies if they want to," he said. "But the ideas that make cryptocurrencies unique and valuable to at least some degree relies on the unregulated areas."