A few years back, Bitcoin was tapped as the “future of currency” in the world. The digital “cryptocurrency” has seen better days, though. Plummeting prices have caused Bitcoin value to drop precipitously – about 15 percent – in recent days. This kind of volatility is nothing new, really, for Bitcoin. The currency alternative that was supposed to bring some sense of stability to international trade, especially online, has been anything but stable in its short market life.
These recent setbacks, though, could be seriously bad news. China is rumored to be considering shutting down Bitcoin exchanges, and there’s noise that the head of at least one major US-based bank believes the digital currency to be “fraud.”
Where Does Bitcoin Stand?
So, is Bitcoin the next evolution in human currency, or is it a “fraud” … or something in between?
On paper, Bitcoin is a representative currency developed to allow exchange without the involvement – some say interference – of banks or governments. Users are allowed to swap Bitcoins anonymously, teasing an extra level of privacy on financial transactions.
The currency exchange and value is determined by “miners” who use computers to solve the math needed to arrive at some semblance of an accurate valuation. Users may then turn Bitcoins into cash through prices set in online trading.
The biggest knock on Bitcoins has been both its natural volatility and its uncertain valuation. The former is constantly referenced by critics, and the latter is continuously called into question by those, like that US banking executive, who feel the whole system is just a scam.
Bitcoin – The Ups and Downs
This year alone, the value of Bitcoin has seen massive peaks and valleys. In June, it was $2,500. By mid-July, it was down to $1,900, then back up to $2,800 by the end of July. And it certainly has not held there. The value jumped around in August as well, from $2,710 way up to $4,700 … before beginning another downward slide, to about $3,300 as of this writing.
So, what, exactly, is Bitcoin’s real value? That, it seems, is the big question even major supporters have yet to answer, though it can easily be traded, legally, for accepted cash.
That’s not to say the US government is altogether okay with Bitcoin. The currency has been linked to international “bad guys” that, thanks to the anonymity allowed by bitcoin, can move money virtually undetected by national and international intelligence and security agencies.
Like just about everything else related to Bitcoin, people are split on what this means. Some see the frustration of intelligence agencies as a net win. For others, it’s an inherent danger. Which perspective wins out on the world stage? No way to answer that question yet. But, first, Bitcoin needs to find a way to dial down the valuation issue. Once people know they can start making money, that, more than anything will help with the negative public image.