It’s all gone a bit pear-shaped in Bitcoin world, if you believe the naysayers. With Bitcoin hovering around the £7,800 mark at the time of writing (a little over half the highs of mid-December), you could be forgiven for wondering if Bitcoin is a dead parrot and it’s time to consign it to history as the mere forerunner of digital payment systems, and to start to look to the future instead.
However, a year prior to those dizzy heights of six weeks or so ago, Bitcoin was worth a tenth of its current value. Viewed in that way, it’s still looking impressive in terms of investment. Those that have confidence in cryptocurrencies are still predicting great things to come, so are they right or wrong? Here are a few facts and figures to help you make up your own mind:
- Bitcoin isn’t the only digital currency to be fluctuating wildly at present – Ethereum and Ripple are at it too. This shows any ‘price settling’ as affecting cryptocurrency in general, and not Bitcoin in particular.
- The real tank in price can be directly linked to speculation that South Korea is on the point of banning cryptocurrency exchanges altogether.
- Everything needs to find its own level – if you’re a seasoned conventional investor, you’ll know that any sudden surge of interest (and purchase) leads to an increase in value (the classic ‘pump and dump’ scenario), which tends to lead to a crash before prices settle. If the stock is worthless, the price won’t recover, but Bitcoin is now holding relatively steady at a price we’d have seen as very exciting indeed this time last year.
Is it a Bubble?
Yes. And no. The feverish enthusiasm of late 2017 could be equated to the Dutch tulip craze of the 1630s, with bulbs going for 10 times the average annual income of a skilled worker. However, we still pay for tulips (although not perhaps at 10 times our annual salary), and we’re still paying for Bitcoin, even if we’ve calmed down a little. Even if the currency itself disappears, blockchain technology is very much here to stay, and even cryptocurrency naysayers can recognise the security protocols of that could transform internet transactions as we know them.
Will it settle?
We think so. Here’s why; Bitcoin is still less than a decade old, and is still very much finding its feet. It only ‘went legit’ in terms of capturing the public imagination during 2017, and it’s only during the last 15 months or so that cryptocurrencies have been seen as anything other than the currency of choice for purchases on the dark web. Additionally, ownership is changing, with a relatively small pool of owners releasing currency to the market to cash in and causing disruption in the overall value as a consequence.
As the pool of owners increases, single individuals will be less able to dictate the value – a real case of safety in numbers – and we’ll see an end to dramatic fluctuations. Bitcoin’s real rise has just begun.