Bumpy roads and heavy winds of BitCoin
According to portal money.pl current value of 1 BTC is $622 with 8.2% drop. That is not surprising after recent Mt.Gox turmoil resulting in service being excluded from CoidDesk. Mt.Gox on the other hand recently announced that they discovered critical bug in BTC design, the “transaction malleability”, enabling deleting transaction information which might lead to resenting transaction. It was however not left without comment among community with claims that Mt.Gox explanation, to put it lightly, does not hold water. Today’s value is not unusually low, especially considering 50% fall when People’s Bank of China issued ban on merchants accepting Bitcoin and forbade banks and payment processors from converting Bitcoin into yuan.
Problem of volatility is constantly present since bitcoin gained significant value. What’s more important it is probably biggest thorn in paws of those who would like to see bts entering real retail and services payment. After all it is hardly comfortable to use currency which changes its value significantly on daily basis. Proponents suggests that it is just transition stage, with bts being still developed technological platform which will eventually mature into full blown currency. Opponents claim that it will be technological quirk with few option for utilizing currency, which stems from current problems, will ultimately lead to demise as the popularity will decline. The truth is that unfortunately bitcoin community does not contribute much to changing the volatile nature and lack of real uses for the currency. Let’s just take a look at reddit’s r/bitcoin – number of threads about real life applications and implementation is simply buried beneath discussions on gains from speculation. Such trend was especially visible after bts reached magical value of $1000, maybe even more visible was top link of the subreddit – phone number to suicide hotline – posted after price fall to $500. But perhaps even more disturbing is shortsightedness of supporters. Even commentators supporting bitcoin proliferation note that current state of the software is too clumsy, too unpolished to become real money instrument. Even if bts will reach such status it definitely won’t be in the current form.
On the other hand it is hard to miss growing acceptance of bts in the commercial world. For example New York based hedge fund NYSO HEDGE started accepting deposits, and even claimed that bitcoins are more secure than credit cards. Smaller examples include gas station, cigar industry and computer retailers. Perhaps the most interesting thing about this is that acceptance seems to be moving independently of bitcoins market situation. The most reasonable explanation is that these implementations are based mostly on popularity, when value and market swings are not important. In Poland most of the businesses that started accepting bitcoins does not take them directly as income, but signs contract with outside company which exchanges them at earlier set rates. Furthermore some claim that growing concerns and actions taken against the currency are in fact signs of its strength. After all if bts were irrelevant why Apple or Russia would take steps to ban them, or why would such news make headlines. Here however it is hard to miss some confirmation bias. Bad and good news about bitcoins does reach the headlines, but they are almost always headlines of portals dedicated to technology, not business. Of course they do get recognition of general news sources, but to say that they are now constantly present there is overstatement. Also let’s not forget that being in the headlines does not always mean being important, especially today when business models of even biggest news sources like CNN bends towards click magnets rather than actually world-influencing news.
But the ultimate test of BitCoins will probably lie not in New York hedge funds and App Store, but in everyday usage. Bts might be convenient for international transactions, bypassing sometimes complicated international invoice procedures, but will they be easy enough for everyone to use without learning about mining, cryptography, and mixing algorithms. Furthermore they will have to be easy accessible without need of registration in independent and unreliable (<cough> Mt Gox </cough>) trade markets. But if the exchange services would be controlled by central institutions – then we are coming back to what bitcoin tried to change in the very first place. The need for proper control and insurance constantly conflicts with free nature and intentional lack of supreme control. Because in this volatile situation the basic problem is that bts represent real money and real value, and because of that it is something not to take lightly. Well, unless you are just playing the market value for profit and fun.