This Isn’t The End Of Bitcoin: The Why And The How

Examining the facts for tangible proof Bitcoin is coming back.

Now, seeing Bitcoin crash so spectacularly was probably one of the most legendary events in the history of the world as we know it. Remarkable, considering how recently cryptocurrency has been introduced to the contemporary reader. It has indeed changed the history: if an insightful trader were to buy a few dollars’ wrong of Bitcoin back in 2010, they would be worth millions now.

Such was the case with a very lucky man who bought a few Bitcoins ($27’s worth ) with nothing much on his mind. He then discovered he’s made a great deal of money (almost a $1 000 000) without even knowing about it and then spent one heck of an afternoon trying to remember his wallet password.

Kristofer Koch spent a fifth of his Bitcoins in 2013, when they cost just over $220 so he could buy a flat in one of the best parts of the capital of the country. However, if he held on to the money until just before Xmas 2017, he would have been a lot happier. And shortly after very dismayed. Bitcoins, which used to cost around $20 000 (for one Bitcoin, Kristofer!) on some exchanges in late December caused a lot of heartbreak when they fell to what is now about $8 250. There were a lot of people understandably upset.

Did This Happen Before?

What The Guardian will also tell you is that “in April 2013, the value of bitcoin peaked at $266 before crashing to a low of $50 soon after». With mass panic on the market and an army of articles asking: “Is this the end?”, it’s easy to not pick up on the more subtle queues. Bitcoin used to lose a lot more than 50% of its value like it did in December, and things like MTGox’s inability to handle large volumes of data 4 years ago, which led to troubles processing transactions,  the same kind which led to Cex.io, Bitfinex and such stuttering and thus causing a devaluation of cryptocurrency – all happened before.

Where and How?

In case you’re not familiar with Darknet, that is the legendary place where all the most secretive and secured deals take place. Darknet is the seedy underbelly of the regular Internet, which most of its users employ only to check their emails in Outlook. The purpose of the Darknet is maximum anonymity for its users so that none of them (ideally) can be traced. For a variety of reasons.

In December 2017 the transaction fees for Bitcoin users were remarkably high, and the cost of the transaction was more than the amount sent. This got a massive share of the users worried to the point of calling the situation unthinkable: it took so long to process transactions that users would be on hold for days.

The same mechanism for which MTGox calls Bitcoin “the victim of its own success”. Too much popularity, too many transactions, server overload, system crash. Then another peak, to staggering amounts we saw in the charts in the events leading up to December.

What Does This Mean For Cryptocurrency?

Concerns about the world being technologically ready for Bitcoins were long speculated upon, pretty much since it started becoming popular. Users now need a lot of high-end equipment and hundreds of terabytes of HD space for mining. What would happen, skeptics would often say, when Bitcoins spread and our systems simply became overloaded with data?

In Conclusion

The answer is simple yet elegant. The history repeats itself and moves in waves. After this dip, which is due to our systems reaching their peak capacity, there will be another high – maybe, as Saxo Bank famously predicted, all the way up to $60 000.

Although maybe not in the Darknet.

Which is good because no-one knows what they’re doing in there.