Bitcoin’s fluctuating fortunes

Written by on January 9, 2015 in News with 0 Comments

Poor old Bitcoin. You have to have some sympathy for the beleaguered virtual or cryptocurrency that has defied the pessimistic pundits and still exists. Barely a week goes by without a news story about it or predictions of its demise or attempts to regulate it.

At some stage it will either go away completely, disappearing due to lack of interest or will cross from the dark side of virtuality to reality when it becomes a currency in its own right – maybe even as legal tender. Even that may be a challenge because most currencies are regulated by countries and are, theoretically at least, backed by tangible assets like gold.

Of course, becoming real will no doubt affect its appeal to those that prefer to remain less real themselves when it comes to money matters. Becoming acceptable as a means of payment is less onerous and Bitcoin is successfully broaching that chasm and being accepted by many big name enterprises, including Microsoft. It is already being used to pay salaries in Ireland, Canada and the USA.

The Bitcoin system works without a central repository or single administrator, which has led the US Treasury to categorize it as a ‘decentralized’ virtual currency. California has become the first US state to legally approve the use of Bitcoin. Other countries have taken different approaches, some ignoring it altogether, others deemed it illegal.  The United Kingdom has chosen the currency routeAustralia has taken the view that Bitcoin is a commodity, whereas the Eurozone is still waiting for Brussels to pronounce itself on the matter.

Wikipedia defines Bitcoin as a payment system invented by Satoshi Nakamoto in 2008 and introduced as open-source software in 2009. The ledger uses its own unit of account, also called bitcoin. For many, bitcoins are simply a speculative investment, not unlike trading in normal currencies. Both have values that vary according to demand. Some feel more at ease with a decentralized digital currency like Bitcoin, other less so, yet there seems to be more attention placed on the fortunes of Bitcoin than almost any other currency, virtual, or otherwise.

Attempts to corner the Bitcoin market, most famously by the Facebook renowned Winkelvoss twins, have failed. Even when Tokyo-based bitcoin exchange Mt. Gox filed for bankruptcy, saying hackers had stolen the equivalent of $460 million from its online coffers, it failed to bring down the much-hyped digital currency. Last weekend came news that attackers had made off with approximately $5 million worth of bitcoins after hacking the Bitstamp exchange. In both cases the problems lay with the exchanges and not the currency itself.

Despite all the bad press and predictions by the Los Angeles Times last February that Bitcoin was ‘on the verge of  collapse,’ it is still around. The latest concerns are about its depreciating value. In a 72-hour period between Friday and Monday last, the value of a single bitcoin dropped almost 20 percent  A single bitcoin’s value was $311.5 on Friday, but plummeted to $257.61 on Sunday. Bitcoin has since rallied to hover near $270.

Mobile Payments Today reported that “Bitcoin’s value descent from near $1,300 in late 2013 to today’s price was the subject of many articles that dubbed the virtual currency the worst investment of 2014. It performed even worse than Russia’s battered ruble.”

Even with all that bad press Bitcoin will recover as more and more enterprises, merchants and countries accept it as a payment method. Currencies go up and down in value all the time. Bitcoin is acting similarly, but in a free market that is not controlled by federal reserves, regulators and the like. It will survive despite doomsayers efforts but whether its worth as payment option, virtual currency or investment is dominant remains to be seen.

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About the Author

About the Author: Tony is a freelance writer, regular speaker, MC and chairman for the telecoms and digital services industries worldwide. He has founded and managed software and services companies, acts a market strategist and is now Editor of DisruptiveViews. In June 2011, Tony was recognized as one of the 25 most influential people in telecom software worldwide. .

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