For many who avoid know, the dot possuindo bubble was a period between 1997-2001 where many internet companies were created and given outrageously upbeat valuations based purely on speculation that later dropped 80-90% as the real estate started out to collapse in the early 2000s. Some companies such as eBay and Amazon, recovered and after this sit down far above those value but for others it was the end of the line.
Bitcoin was actually created in order to take power away from our financial systems and put people in control of their a single cent, cutting out the middle man and permitting peer to peer dealings. However, it is now one of the slowest cryptocurrencies on the market, its transaction speed is four times slower than the fifth biggest cryptocurrency and its nearest rival for payment solutions Litecoin. Untraceable privacy coin Monero makes transactions even faster, boasting an average block moments of just two minutes, a fifth of the time Bitcoin will go through successfully in, and that’s without anonymity. The world’s second biggest cryptocurrency, Ethereum, already has a higher transaction volume level than Bitcoin despite being valued at only $676 dollars per Ether compared to Bitcoin’s $16, 726 per Bitcoin.
So why is Bitcoin’s value so high? I asked Duke Randal the same question. “It all extends back to the same source and demand economics, relatively there is not very much Bitcoin available and its recent surge in cost has attracted a whole lot of media attention, this combined with the release of Bitcoin futures which many see as the first sign Bitcoin is being accepted by the mass market, has triggered a lot of men and women jumping on the bandwagon for financial gain. Just like any asset, when there is a higher demand to buy than to sell, the purchase price goes up. This is bad because these new investors are getting into the market without understanding blockchain and the underlying principles of these currencies meaning they are likely to get burnt” BitcoInvest.cc.
Another reason is that Bitcoin is extremely volatile, it is known to golf swing up or down countless numbers of dollars in less than one minute which if you are not used to nor expecting it, causes less experienced traders to panic sell, ensuing in a loss. This specific is yet another reason Bitcoin will struggle to be adopted as a form of payment. The particular Bitcoin price can move substantially between the time vendors accept Bitcoin from customers and sell it on to exchanges for their local currency. This particular erratic movement can wipe out their entire profitability. Will this instability go away any time soon? Not likely: Bitcoin is a comparatively new resource class and although awareness is increasing, only a very small percentage of the world’s population maintain Bitcoin. Until it becomes extensively distributed and its liquidity enhances significantly, the volatility will continue.
Therefore if Bitcoin is incredibly worthless as an actual money, exactly what are its applications? Several believe Bitcoin has moved on from becoming a viable form of payment to becoming a store of value. Bitcoin is like “digital gold” and will simply be used as a benchmark for other cryptocurrencies and blockchain projects to be measured against and traded for. Recently there have been stories of men and women in high inflation countries such as Zimbabwe buying Bitcoin in order to hold on to what wealth they have rather than see its value decline under the recklessness of its central financial system.