It seems Bitcoin has been off to a rocky start this year. Earlier in the month, TechRaptor reported on a major Bitcoin Exchange getting hacked. Now panicked Bitcoin holders are selling, causing the price to plummet.
In a 24 hour period the price dropped from $244 to $173, a drop of nearly 30%. Taking a longer view of things, it's now worth about a fifth of what it was at its high point in December of 2013, when it was trading at just over $1000.
Bitcoin has been in steady decline for months now, and there are multiple contributing causes. The recent Bitstamp hack may have shaken the confidence of some in the currency, as well as accelerated the decline somewhat, but Bitcoin's problems have been around longer than that. A big issue is the fact that Bitcoin has still not caught on in the mainstream.
While techies who understand the inner workings of Bitcoin will feel confident in using it, the average person simply doesn't really understand how a digital currency works and doesn't have any trust in it.
Another issue preventing mainstream acceptance is the association of Bitcoin with illegal activity. This image of Bitcoin as a currency for criminals has been propagated by numerous news outlets, and has left a bad impression on many people.
The lack of widespread acceptance of Bitcoin has serious issues for the currency. Numerous Bitcoin hoarders have everyday needs that have to be satisfied, some of which can't be paid for in Bitcoins. Many of them are being forced to sell their Bitcoins in exchange for other currencies, like US Dollars, just so they can survive.
This influx of Bitcoins on the market causes the price to fall. As the price falls, even more Bitcoins have to be sold to meet the same needs. This causes a reinforcing cycle, which continues to devalue the currency.
At the time of writing, the price of Bitcoins was $206. Experts expect the price to continue to fall and stabilize at $140. This is higher than the $120 value that it had before its meteoric rise in late 2013.
Do you think Bitcoin will make a recovery, and regain some of its value in the coming months? How do you see the long term future for Bitcoin? Leave your comments below.
