Why Bitcoin’s greatest advantages are also it’s biggest failing
Having plunged 12% on Friday to under £5,700, the value of a Bitcoin plummeted yet further on Monday losing another £1000 in value to end up being worth just under £4,700 and Bitcoin’s greatest advantages could also be it’s biggest failings.
This has led to banks around the world starting to ban customers from buying Bitcoins with payments funded by credit cards. The rationale is that if you want to speculate you should use your debit card and the banks want to protect consumers from gambling by taking on additional finance.
In the UK the Lloyds group (which includes Lloyds Bank, Bank of Scotland, Halifax and MBNA) and Virgin money have both blocked Bitcoin purchases via their credit cards, as have JP Morgan Chase, Bank of America, and Citigroup in the US.
While once looking like a surefire bet, the meteoric rise in Bitcoin’s value from around $900 at the start of 2017 to over $20,000 in December followed by it’s latest plunge which hit a low of under $6,800 underlines that currently Bitcoin can only be a speculation, not a solid investment and certainly not a currency that ecommerce an rely on – there are few retailers who would happily lose 12% of their turnover by the end of a working day.
It’s likely that Bitcoin will fall yet further perhaps settling at around $5,000, making one speculative bet seem unlikely to be won. An investor (or perhaps group of investors) bet $1 million that the value of a Bitcoin would exceed $50,000 by the end of 2018. If their bet came off then they stood to walk away with $13.75 million but with Bitcoin on a downward spiral it currently looks like they are going to lose their $1 million stake and walk away with nothing!
There are only really three advantages of Bitcoin and other cryptocurrencies, one is the ability to mine money for free, the second is pure speculation hoping to profit as values soar and the third advantage is the lack of regulation and ease of paying anyone anywhere in the world with no currency transfer fees.
The failings of Bitcoin and other cryptocurrencies are bizarrely the same as Bitcoin’s greatest advantages – we’ve reached the stage where it’s likely to cost more in computing power than the value of any Bitcoins mined, Bitcoin’s value is too volatile for investment other than speculative bets and as governments look at illegal activities and lack of taxation regulation will increase.
Hmm, perhaps stick to topics that you fully understand. Not all cryptocurrencies can be mined, in fact, most can not.
You’ve not mentioned once here how Blockchain technology can assist the growth and progress of eCommerce. This is no better than the usual FUD media. All that this post states is “bitcoin went up, bitcoin went down, therefore it’s bad”.
Cryptocurrencies will be used in E-commerce but at the moment they are in their infancy. Bitcoin is now a store of value and shouldn’t really be considered for this task.
Something like Litcoins Litepay will be more suited or an emerging currency that can handle more transactions / has a high circulating supply to make it less volatile.
Amazon / eBay may in fact create their own payment method on the blockchain