Where did it all Go Wrong? The Bitcoin Journey

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Remember bitcoin?

That’s the digital currency that was thrust into the average person’s attention last December, for no other reason other than the strong value it wielded: a single bitcoin was worth a staggering $1,124.76! It could not be ignored. How could it?

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This was the next best thing to gold: the yellowish bullion, it that never losses the glitter, a commodity with so much potential it not only retains intrinsic value, but also gains value even as the world goes to hell. With bitcoin, here was another commodity, a currency at that, albeit a virtual one, that could not be manipulated by central banks and central governments. It was propelled the further by the announcement by the Winklevoss twins, who came to the public glare from their links with the founding of Facebook, that they would be setting up a bitcoin investment fund.

Never one to give a colder shoulder to anything of this prominence, media across the globe was awash with tales bitcoin: the greatest threat to the banking system since the invention of bankers. Bitcoin went viral; online investors ran amok. This was The One, The Next Best Thing. Only to gold…

Where did it all Go Wrong?The Bitcoin Journey

Fast-forward to Present Day

Between then and now, a host of businesses, numbering in the thousands, have announced and went ahead to accept bitcoin as legal tender. It is this kind of interest that should have helped stabilise the price of bitcoin, bearing in mind their value is tied to their acceptance, at least theoretically.

On the contrary though, its price has taken a nose dive, this past weekend especially. Late Monday this week, the coin was quoted at $333.88 – very much welcome news for investors given this was a rise from the nadir of about $290. To say the plummeting prices have caused rising concern among the bitcoin faithful would be an understatement. This has been more of fits of anguish, as has been aptly reflected by one investor on reddit’s bitcoin forum titled, ‘Desperate: How long to hold out / What would you do in my situation.’

LiveBitcoinNews.ComWhere did it all Go Wrong?The Bitcoin Journey

This investor revealed that he had lost over $100K this year already, that’s a hundred thousand yes, on an investment averaging $623 per coin. He went on to add: ‘So far i am down a lot.’ He most certainly is, bitcoin sure is.

LiveBitcoinNews.ComWhere did it all Go Wrong?The Bitcoin Journey

Dazed : What’s happening at the moment is that no one in the bitcoin community can quite place a finger on the price action. As is wont in such situations, every Albert, Tom and Bill is quite opinionated: speculation is rife.

There are those who think the move by New York State banking regulators to impose new regulations on ‘virtual currencies’ could be the reason bitcoin continues its downfall. There are others who are placing the blame on the IPO of Alibaba, thinking Chinese investors have pulled out to focus on the online behemoth. Still staying with the Chinese, there is another bunch that is theorising that Chinese computer programmers are stepping up bitcoin mining leading to a glut of the crypto-currency which can only be proliferated through solving that increasingly complex algorithm.

That’s not all. Word from other corners seems to suggest the success of bitcoin in the marketplace is its own Achilles’ heel, theorising that merchants accepting the digital currency quickly convert it to dollars, or some other hard currency, which is threatening to send the price to the gallows.

Then there is that other lot that is not letting the drop worry them sleepless, attributing it to the coin’s natural volatility.

LiveBitcoinNews.ComWhere did it all Go Wrong?The Bitcoin Journey

Investment Aficionado or Transactional User? : Investment enthusiasts have been worshipping bitcoin, placing all their faith in it (the Reddit investor?) and for them who bought into it and gathered coin as the price pointed to the $1,000-mark and its realms, taking the decline especially can be baffling, sickening even.

For investors who view bitcoin as a transactional tool – to transfer money in and out of currencies or spanning national borders without the interference of authorities – the price may not matter much. At least according to Susan Athey, a Stanford University economist and expert in crypto-currencies, who says that if you are selling products in bitcoin and exchanging the virtue currency for dollars, or trying to transfer your wealth from rupees in Mumbai to pounds in London, ‘in principle’, the exchange rate need only worry you for 10 minutes.

Last Word : This has not done enough to calm even users who have come up with one theory that seems to point the finger at manipulators. The bitcoin exchange merchant community – those companies that handle the transfer of rupees, lira, pounds and dollars to bitcoin and the other way around – has witnessed its fair share of theft, fraud, collapse and other calamity over the last two years or so. The notion does nothing much to bring solace as bitcoin continues to endure a sharp decline in value with no valid explanation everyone can concur with.

LiveBitcoinNews.ComWhere did it all Go Wrong?The Bitcoin Journey

Should this trend stretch on for long, leave alone intensify, even the faithful bitcoin users will begin to raise an eyebrow. The response will be to shift to a new means of exchange without the shortcoming of bitcoin: one that led to Francois Velde, U.S. Federal Reserve economist, to term the currency as one built on extremely complex code that’s only understood by a select few; one that lacks arbitration, one without accountability or recourse.

Personal opinion? Hold out, the storm will clear. It may not go back to the prices of yore, but it will go up.

Peter MwaiPeter is the Creator of great business content that comes home to roost on Live Bitcoin News. Ever the bitcoin enthusiast, he intends to shed light on the market dynamics that will help you make enlightened decisions. make sure to follow his insight. More Posts - Website

LiveBitcoinNews.ComWhere did it all Go Wrong?The Bitcoin Journey