Monday 22 April 2013

Our hopes for the future of Bitcoin


As long-term Bitcoin community members we have viewed the last few weeks with a mixture of trepidation and excitement. Having sold our products and services for BTC over the past year we have found that although there is a substantial amount of Bitcoin out there, there is still not a vibrant market in exchanging them for goods and services. In our humble opinion, if there was more trade in BTC, there would be a greater stability within the market. However, we have watched as frustratingly the majority of Bitcoin activity has been funneled into speculation and playing the market. This alongside the hoarding/saving that a lot of miners have engaged in, has lead to very little being spent on actual commodities. Now, however we hope that people will start to see that the currency is much better suited to its original purpose. Perhaps another cryptocurrency will emerge, which is innately better suited to speculation, but in the meantime, we hope that people will start to use their Bitcoins for more and more transactions.

Bitcoin Logo
For all those out there who are still unaware of Bitcoin, it is a decentralized cryptocurrency, which runs on a peer-to-peer network. Essentially, Bitcoin is run by the people, for the people. Instead of notes, bankers cheques and a centralized banking authority, Bitcoin uses long strings of numbers which are processed and authenticated by the network of computers upon which the system is hosted. Not only does this make Bitcoins neigh impossible to forge, but it also means that you are in complete control of your money.

The influx of Bitcoin adopters has risen over the past few months. This has lead to a relative balance of positive and negative eventualities for Bitcoin. Firstly, the increase in public awareness has meant that cryptocurrencies have at last become mainstream topics. Secondly that the overall value of Bitcoin rose to previously only imagined heights and thirdly, that it lead to the massive devaluation on the 10th of April.

There are many valid reasons for why the market “crashed”, however a significant factor can be identified as the large contingent of new, wet-behind-the-ears (in a Bitcoin sense) individuals, who arrived on the scene when BTC began to become mainstream. These children of centralized banks, witnesses to the credit-crunch and a possible triple-dip recession formed a large percentage of individuals who were trading on MtGox (traditional currency to Bitcoin conversion website) around the time that the crash occurred. It is therefore highly unsurprising that they all became flock animals and headed for the exit when MtGox hit a few technical issues. If they had listened to any bona fide Bitcoiner they would have been assured that unlike an actual bank, MtGox is not the embodiment of the currency. The currency will persevere regardless of the existence of banks or currency exchanges. Indeed, the crash itself was nothing more than a return to the previous growth rate along which Bitcoin had been travelling until the sudden upturn in value.

Bitcoin Growth chart from Blockchain.info

Our hope is that Bitcoin owners learn from this and start to build BTC businesses and develop more ways of earning it than just mining or trading the currency. If we continue to grow and strengthen our community, there is no reason why Bitcoin can’t be the dominant cryptocurrency or any type of currency for that matter.

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