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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 its is 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 causes contributing to it. 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 this 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.

Max Michael

Senior Writer

I’m a technology reporter located near the Innovation District of Kitchener-Waterloo, Ontario.

  • Bearpants112

    I wonder if we will get any apologies from the bitcoiners who advised people to buy in at $1,000/coin. Probably not, since they’re busy catching the knife.

    The biggest flaw in Bitcoin in my view is that it cannot be a stable alternative currency AND a way to get rich. Unfortunately it was advertised as both by the true believers and now a lot of people have been burned.

  • Damian Salcedo

    The flaws are not in the theory, but in the execution. Despite that I think cryptocurrency is here to stay.

  • So virtual money eh, is that like imagining you have stacks of euro bills in your mattress or something :). What do you use it for anyway? I never seen anyone pay with virtual money in a store :).

  • which is part of the problem apparently. but atm you probably wont see anyone paying with bitcoin, simply because in order to pay with bitcoin you have to log into an account online.
    the virtual moneys worth is decided by supply and demand as dictated by the buyers of bitcoin, rather then a well hidden supply of gold and the state of the country of the currency. the plus side is that you can not track what is being bought or sold for bitcoins. as far as “the government” knows you might have an account, but that is it. could contain millions, or only 12 cents.
    the biggest problem is cashing in. you can not add millions to your bank account without getting flagged, and since you can not use bitcoins in grocery stores you will have to sell them, put the money on your bank account and then use it to buy food.

    due to the nature of the currency it is being painted as a currency for criminals, rather then given a solid shake to see which is actually better.
    to change takes more then to remain, therefor we lay back in the comfort of our chains

  • BeholdMyPower

    I’d love to see an article explaining the finer points of Bitcoin, I always have trouble trying to wrap my head around the idea.