At one time, Bitcoin was riding high as the hottest piece of coin in the entire digital economy. That time wasn’t long ago, actually, but unfortunately for the experimental currency, it looks as if it has already run its course. The once promising instant payment method is losing value and its decline appears to have no end in sight.
The Ups and Downs of Bitcoin
Right now you may be asking, “What the heck is Bitcoin?” It is a few things actually. First and foremost, it is a network that utilizes peer-to-peer technology to allow users to make, track and verify transactions. It is also the name of the software client that facilitates these transactions, in addition to the actual currency used for making transactions over the network. Officially launched in January of 2009, it has come a long way, as there are currently more than 7 million bitcoins in circulation.
Bitcoin started to garner attention early last spring, but it wasn’t until Dan Lyons of Forbes Magazine and Newsweek wrote an article in June that the intriguing new concept truly hit the mainstream limelight. It was this mainstream coverage that exposed Bitcoin to whole new audiences of people who never knew such a form of currency even existed. This exposure led to more interest, which resulted in a huge increase in value. Sadly for those involved, something happened along the way, something that according to critics, has Bitcoin on the brink of extinction.
The appeal behind Bitcoin and digital currency in general is the promise of an entirely new economy, one with the potential to change the way consumers shop online. Bitcoin in particular was viewed as a currency that would essentially make shopping online safer by allowing consumers to purchase virtually anything without ever having to give up their bank account details, credit card numbers or other financial details.
Despite all the potential, Bitcoin’s stock has taken a huge fall and continues to plummet at an alarming rate. Right now, the digital currency is valued at under $7 USD, a far cry from the $32 registered at the height of its popularity just a few short months ago.
The Future of Digital Currency
So why has the value of the once promising bitcoin taken such a hit? Well aside from the fact that it is still more of a novelty concept at this point, uncertainty appears to be the biggest factor. Although bitcoins are used in industries ranging from the retail sector to the non-profit vertical, which consists of a few organizations that accept donations given in the currency, overall adoption has been slow. Some experts have warned businesses that making a large investment in this new platform is something that should be avoided due to the high risk involved. The fact that Bitcoin has been associated with criminal activity doesn’t necessarily help the cause, either.
Back in June, several outlets were running stories detailing how consumers were purchasing illegal drugs from Silk Road, a web-based marketplace often referred to as the “Amazon of illegal drugs.” While Silk Road purchases cannot be made using a credit card or online payment service like PayPal, they can be made using bitcoins, which prompted two U.S. senators to request that the government investigate the currency to determine if it was being used for money laundering. Furthermore, LulzSec, a known hacking organization, openly admitted to using the currency to fund its illicit activities.
Considering all the trouble it has stirred up, the days of Bitcoin may indeed be numbered. However, this controversial currency just may have paved the way for the next big thing. This is not the first digital dollar to come along and certainly will not be the last.