Knowledge in the cryptocurrency business’ present state would definitely establish one thing in your mind; cryptocurrencies are fragile than eggs. Today, they could look like the hope of the future, tomorrow it could be the doomsday everyone has always dreaded. Bitcoin has had her own fair share of this price swing. It has fallen from grace of $20,000 to as low as about $11,142 presently. This has persisted for quite a while and still seems to be dragging too long, with no signs of stopping any moment soon. But the question is why is this still happening and what does it mean for the future of cryptocurrencies.
Serious Competition From Rival Currencies
Since bitcoin stepped into the picture, other cryptos have also erupted in an effort to capitalise on the weaknesses of bitcoin and to perfect them so as to draw even more people. Some these altcoins have succeeded and others have failed. Those that succeeded seem to be draining the life force from bitcoin eventually. One analyst stated that
“A lot of the capital is flowing from bitcoin into alt-coins. Companies like Verge and Ripple, have seen cryptocurrency values go up over 400 per cent in the last week,”
Continuous Security Breaches
There have been several security breaches in the cryptocurrency area and this has got many investors very worried as to whether their investments will not be all washed away like footprints at the seashore. Cryptocurrencies as everyone knows, are not managed by a central body worldwide; they are circulated by various cryptocurrency exchange bodies. Thus, should any of these exchange bodies suffer a security breach all people with digital currency accounts with that exchange firm struggle with huge losses.
The recent Coincheck hack in Japan can’t go unnoticed. As well as the huge cyber-attack against a South Korean digital currency exchange last year. The firm lost roughly 17% of all its assets. These events have not only affected both firms, but have also caused a large number of people to sell their cryptocurrencies owned particularly in Asian markets. North Korea was being investigated for the crime, however, everything lost is gone and the people who lost their investments now have to bear the cost.
As at last year, bitcoin was making progress towards becoming a mainstream investment asset (because of the CBOE and CME bitcoin future announcements), but we currently are oblivious of how far these have gone. Yet, these security breaches are definitely a problem and hindrance to the growth of the cryptocurrency and attraction of more investors to it.
Most People Are Still In Panic
Most people could just be pulling away from cryptocurrencies due to how they are performing this year, judging by how poor start 2018 has had compared to the perfect run at the end of last year. Others too may just be selling off their coins in panic and fear of bitcoin’s value depreciating even more. This way, they get to play safe with their investments. One CEO stated that
“This increase in availability could have initially driven prices down, with other holders – especially those that bought at the top of the market – panicked into offloading as a result,”
Bitcoin Is Still Volatile And It Appears That No One Cares
Bitcoin isn’t regulated by any central bank, and its value is gained from just how much confidence people have in its market and value tomorrow. Unlike fiat currencies that have the backing of the central bank to make sure it is stable, bitcoin has no such bank or regulator behind it. Thus, more often than not, as the people’s confidence in it increases and they decide to invest in it, its price goes up and vice versa.
So far as everyone else is concerned bitcoin is still a gamble – and to some, a very big one. The good news is that bitcoin doesn’t look to be heading towards a total shutdown anyway. To say that bitcoin could crash anywhere in this year or even beyond is highly speculative. But that should not ward you off from investing in the crypto. However, you should know that investing in bitcoin is still a risk – a choice best left for you the investor to make. What most analysts advise even in such tumultuous times, is “do not invest in bitcoin on a short-term scale but rather look at the bigger picture of some years to come.”
Bitcoin is unstable, yes, and there is quite the distance to cover in resolving this, though it would really help if we knew Satoshi Nakomoto now. What sparked bitcoin’s quick growth last year was how majority of the general public begun to know more of the cryptocurrency world and blockchain technology. Moreover, people beginning to envision crptocurrencies as the currency of the future was a major factor, as well as those desperately wanting to get rich quick. Bitcoin’s future depends to some extent on the approval it will receive from various governments and their central banks – something it doesn’t have from any at all, at the moment. But as big names like Amazon and Apple begin to look for means to integrate bitcoin into their payment systems, there may still be that glimmer of hope anyway.
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Featured Images Via CoinStaker & Cointelegraph
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