Well, we’ve been hearing a lot about these bitcoins lately and the potential for alternative, virtual currency. The benefits are countless, but it seems bitcoin may have just one downfall—the stability of its value. According to recent numbers, bitcoin’s value stood at an impressive $1200 per “coin” on Thursday but fell quite quickly, dropping half its value by the following day.
Bitcoin offers extremely useful benefits such as being able to transfer money from country to country without having to go through banks or dealing with foreign fees. However, if someone had invested in bitcoin on Thursday, chances are they were pretty upset when they looked at their account on Friday.
The coin dropped from a $1200 value to around a $600 value in just a matter of hours.
The current transfer time of bitcoin value is about 10 minutes which some are saying, “that’s about how long you should hold them to keep exchange rate risk low.”
The apparent loss in value resulted when China announced that they would not recognize bitcoin as a legal form of currency. They did not however rule out bitcoin entirely, but urged that Chinese citizens use the currency with extreme caution.
Apparently the value of bitcoin relies on the potential use of bitcoin in future transactions. Having China rule them out, hurt the number of times it will be used in future transactions which again in turn, hurt the value of bitcoin entirely.
I don’t know about you, but the stability of money seems pretty important. If a country making an announcement could cut the currency’s value in half, I’d hate to see what a real disaster would do to it.
People have been talking about the potential flaws in bitcoin, as it is an open source program. This means that it gives rights to anyone who wants to use it for personal use and may alter it in any way they want. This could potentially open the doors for good enough programmers to create a virtually, counterfeit bitcoin.
Either way it seems as if the heads of bitcoin have their hands full as I’m sure investors are less than ecstatic about the news. According to mtgox.com, the current value of each coin is around $900. It appears to be on a stable increase since Thursday night, but after seeing how fragile its stability seems to be, I’m sure this will hurt the persuasion of, “on-the-fence” investors.
Given all the media coverage on the intangible coin, do you think you are more or less likely to use bitcoin?