A new digital coin is polarizing the cryptocurrency community after a massive price run-up stoked speculation that it could be a pump and dump. The coin, called Steem, surged 20 fold in value in the past week, from around 25 cents a coin on July 8 to around $5 on Wednesday. It quickly established itself as the world’s third-largest cryptocurrency, behind Bitcoin BTCUSD, -0.15% and Ethereum. In the span of less than a week, Steem has gone from the 10th largest cryptocurrency by market capitalization to crack the top three, surpassing Ripple and Litecoin, which have experienced their own boom-and-bust cycles. Cryptocurrencies are notoriously volatile. It’s not uncommon to see investors pile in to a new digital currency, hoping to ride a speculative wave to a quick profit. Often, the gains are unwound just as quickly, as buyers rush for the exits. Ethereum, the second-largest cryptocurrency, saw its value increase from about 50 cents a coin last summer to a peak north of $20 a coin in June, before tumbling back to $12 a coin. But Steem stands out because of the pace and magnitude of its rise, and for its unique business model.
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