2013 was a huge year for Bitcoin headlines. The cryptocurrency on everybody’s lips experienced unprecedented growth of over $1000 ($1238 on Mt.Gox) only to plummet to just over $500 when Chinese authorities took a stance. When BTC China, the country’s number one Bitcoin trading site, announced they could no longer accept Chinese Yuan deposits, it was a massive blow for the virtual currency.
But does this herald the end for Bitcoin? Is the currency resigned to a future of regulation, trading bans and bureaucratic red tape? Is the Bitcoin bubble bursting or is this just a slight wobble?
The answer to that question is not as clear cut as you might think. Bitcoin is still trading strongly. Some experts believe the end is nigh whilst others believe Bitcoin to be strong enough to survive it’s tumbles despite China’s best efforts. Here we examine two schools of thought on the future of this digital currency and how things might play out.
Bitcoin Was Doomed To Fail From The Very Start
According to many of the deliverable foreign exchange brokers I personally work with, the view is that Bitcoin is limited, risky and unregulated and it is only a matter of time before regulation and trading restrictions turn off the lights for this digital currency forever. The truth? They probably see it as a threat to their business model.
So my pals argue the point that a currency cannot exist if there is no demand. A problem that Bitcoin has experienced from the beginning is its volatility in price and its limited supply. This lead many to distrust Bitcoin as a viable medium of exchange – users wanted to have some assurance that their currency would hold its value for at least a short time.
According to Edward Hadas of the NY Times, ”The developers of bitcoin are trying to show that money can be successfully privatized. They will fail, because money that is not issued by governments is always doomed to failure. Money is inevitably a tool of the state.”
If we track back to November 2013, things were going swimmingly. Bitcoin almost quadrupled in value and everybody wanted a piece of the virtual pie. Many people made some sound investments and cashed in at the right time. It was a great run and one that made the world sit up and take notice. This was a digital currency that was doing well on the markets and that people were buying in their droves. And then the story turned sour.
Following China clamping down on Bitcoin, many buyers started to panic, trying to either capture their gains or cut their losses. And who can blame them when Bitcoin was down to just above $500 and in danger of falling further?
The Great Bitcoin Comeback
At the time of writing, Bitcoin is trading above $1000 again thanks to Zynga Inc. The supporters of Bitcoin no doubt thrilled, and my pals at the currency brokers less so. The Silicon Valley outfit announced they would start accepting the digital currency across their suite of online games. Zynga Inc is the company behind social gaming hits such as Farmville and Castleville so it is no surprise to see why trading rose so sharply.
And Zynga isn’t the only company to get in on the act. More and more companies are starting to adopt Bitcoin and only last month, Overstock.com, a major online retailer announced Bitcoin would be rolled out as a payment option. You can now even use Bitcoins to travel to space, courtesy of Richard Branson.
Whether you are on the fence about Bitcoin or you have firm views on what the future holds, no other digital currency has captured so many headlines in such a short space of time. Can large corporations, online stores and online gaming giants hold the future for Bitcoin or is it only a matter of time before mass regulation pushes it back out of play.
One things for sure, my friends at the deliverable foreign exchange brokerages certainly hope for the later.
Daniel Abrahams is the Co-Founder at MyCurrencyTransfer.com – the OPP award winning currency comparison website.
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