Thursday, February 8, 2018

Bitcoin

Azia Riche

Bitcoin

With high hopes of a cryptocurrency trading floor, Bitcoin, its investors and traders forced shares up over 17,000% in the last three months of 2017; becoming more valuable than the New York Times, at over 11 billion. It was a boom in digital currency, making the world question if it was the future of currency. Ironically, in the first months of 2018 though, Bitcoin dropped lower than it had since November of 2017, valued at below $7,000. These drastic changes forced economists to question Bitcoin; is it really the future of currency?

First, as displayed in the two differing values between 2017 and 2018, Bitcoin has a high volatility. The value of Bitcoins is shown to be proportional to the square root of its daily users. Therefore, the value that each Bitcoin is directly dependent on the amount of people that use it, causing it to be at risk for prices increases and decreases. With a current vested interest in them, prices were on the rise. That was until, the decline in early 2018 thus far. This decline is largely attributed to the cryptocurrency exchange ban by the People’s Bank of China. With a such a large bank, like the People’s Bank of China banning the exchange of Bitcoin, the future prospect of Bitcoin being the future currency is slimming. For people who invested in such a fluctuating currency, where does that leave these owners who have invested so much money into the rising company?
Well, these Investors can sell their Bitcoin, and hopefully make a profit on what they purchased it for, or they can keep them, and hope that the volatile nature of the Bitcoin will bring their investment back to profitability. For some investors, the purchase of Bitcoin is not solely for investment and economic gain.
For example, in countries like Argentina, citizens use Bitcoin to prevent their money and savings from being taken by the government. While this does profit safety from their government and its taxes, the sum of their savings is not protected. With the high volatility of Bitcoin’s values, their savings are not safe from the fluctuating values of Bitcoin. Their money's value could increase or decrease at any time. Thus, the constant worry surrounding your money is always at the back of investors minds, for if Bitcoin faces a drop in value, your money that is reflected in Bitcoin would diminish by one setback. Meaning that Bitcoin may not be the future of currency due to its unreliable oscillations.
Additionally, most banks associate Bitcoin with suspicious and fraudulent activity, so most do not allow accounts to be opened with Bitcoin. Therefore, it is hard to get your money from your Bitcoin if you cannot place them in a bank account. There are ways around that though, because although numerous large retailers do not accept Bitcoin, buyers can use services like Shakepay to convert Bitcoin to US dollars for a fee. Also, with the addition of Bitcoin ATM’s, you can withdraw money from your Bitcoin, allowing Bitcoin to catch ground. Yet despite the existence of these ATM’s, it can be a hassle to purchase things with Bitcoin, and thus it is a burden for one to use Bitcoin, suggesting that it will not become a universal currency as you can not use it everywhere.
In conclusion, as of the current state of Bitcoin, it is not plausible to assume that Bitcoin is the future currency of the world. It does not have anything to sustain its value, and is very volatile. Also, Bitcoin does not house any incentives for its use, so most people would not be willing to risk their money in the chance that prices of Bitcoin could plummet.






Works Cited
“Bitcoin Dips Below $7k Amidst News of China's Full Ban of Cryptocurrency Exchanges.” Cointelegraph, Cointelegraph, 5 Feb. 2018, cointelegraph.com/news/bitcoin-dips-below-7k-amidst-news-of-chinas-full-ban-of-cryptocurrency-exchanges.
Blumberg, Jonathan. “Here's how you can-and can't-Spend bitcoin.” CNBC, CNBC, 7 Dec. 2017, www.cnbc.com/2017/12/07/heres-how-you-can-and-cant-spend-bitcoin.html.
Popper, Nathaniel. “As Bitcoin Bubble Loses Air, Frauds and Flaws Rise to Surface.” The New York Times, The New York Times, 5 Feb. 2018, www.nytimes.com/2018/02/05/technology/virtual-currency-regulation.html.






29 comments:

  1. I agree with you. While some people might see Bitcoin as the next new currency it is very unlikely with its high fluctuation of pricing day to day would make it an unreliable currency for everyone. Aswell its hard for the general public to learn and educate themselves on investing in Bitcoin which doesn't help its case. For a currency to work it has to be simple and pretty stable and right now Bitcoin looks nothing like that- Damon

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  2. I am surprised to see people calling bitcoin the currency of the future, when they value bitcoins at the US dollar. If this was a growing and what people are calling the next currency, we wouldn't still see 1 bitcoin as a dollar amount. And with the fluctuating prices, I just don't see why people would want to put money in, and almost have it in there like a gambling game. Investing your money in other stocks would be a much be move, then risk losing all of your money in a virtual currency.

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  3. With the data and information provided, it sounds like Bitcoin has very slim chances of being the future of currency, as it is very unlikely that with the fluctuating of the Bitcoin’s value, many individuals will be skeptical of investing there money into Bitcoin. And if values continue to drop, and individuals will likely sell their Bitcoin. So presumably, there would be a downward trend on the graph in the future. Making it clear that Bitcoin will fail, because why would individuals use Bitcoin if there is a chance they could actually lose money.

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  4. I feel that bitcoin will become an increasingly popular form of currency. With headlines of people making millions from investing, just the word "millions" might attract people. Although, like any stock, the more that bitcoin rises, the higher chance that it will take a big fall. One has actually just recently happened. They are working their way back up though.

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  5. In the current state of Bitcoin, I agree with your opinion on this topic. I feel Bitcoin has to many suspicions associated with it, causing people to not want to risk investing into it. There is the large problem of the fluctuating prices. Additionally, it is hard for people to trust this new online method of banking. I feel if Bitcoin manages to stabilize its value more, banks may start to accept Bitcoin, then this may make Bitcoin successful.

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  6. I find it interesting that in this new age of technology the use of bitcoins and their value has decreased. Yet, considering the risks that users face when using the cryptocurrency it does not surprise me that the use has decreased. It’s also interesting the balance that must be struck with using Bitcoins, in that their value decreases as less people use it. To relate it to class, there is a higher opportunity cost as banks might not allow you to open an account. -Lydia

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  7. It’s really interesting to see how currency has changed over time from just cash and checks to chip readers and now cryptocurrency. But I would have to disagree with your statement that it may not be the currency of the future.As time continues to move forward and technology becomes more prominent in our lives, this idea of online currency will become more favorable. Less and less Americans are leaving their homes to do their shopping due to retailers offering more deals online including free shipping. As we become a more digitized and futuristic world, the idea of bitcoin seems to provide all the right answers. Hence why more and more sites are trying to replicate this booming idea. I believe the problems you mentioned are going to be hurdles it has to overcome if it is going to go anywhere, but then again we also have to worry about hackers and such. It’s for sure going to need some work along with repercussions to the user, but due to only being in the early stages of developing this idea of cyber currency, we shouldn’t rule it out completely.

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  8. Very interesting how the rise and fall of probable future currencies can fluctuate so easily. In a time when anything and everything is becoming digital it is interesting to see something that the public seems to be hoping for spike and fall back down in such a short amount of time. This is an example of when smart banking comes into play, knowing when it is time to get out before the drop hits.

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  9. People are saying that Bitcoin will be the next big thing in money, it’s logical conclusion but I disagree It will most likely collapse by the end of 2020, you can already see it trending downwards, and it is already too expensive for most people to buy 1 bitcoin, and it is more unstable than the stock market so you are better off investing.

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  10. Bitcoin is a unreliable source of storing money, and seems strange to think that people would actually place their well earned money in something that could be lost in seconds. It surprised me that people place their money in Bitcoin in certain countries to keep the money away from the government, to relieve them from taxes. Also, that big banks like the one in China and banning the use of Bitcoin.

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  11. Cryptocurrency in general is a risky venture because it’s a unstable value, as stated in the blog-post. This leads to people overestimating the longevity of Bitcoin, only now when its in a upward increase investors are interested. However, the root-purpose of Bitcoin has came-out of focus instead it’s just a new trend that’ll eventually become irrelevant because of the massive inconsistency of it. This has hinder its growth for years because of the uncertainty in investing. Lastly, Bitcoin will die-out, and it’s value would drop to a unsustainable value because all the new investors will diminish the value of Bitcoin.

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  12. I agree that Bitcoin is an incredibly volatile form of currency. Although it has boomed in the recent years, it’s still a risk to invest in this cryptocurrency. I found it interesting that many banks, businesses, etc. don't even accept Bitcoin and find that it is often used for suspicious and fraudulent activity. I do not think that Bitcoin would make it as a reliable currency for everyone because of how it fluctuates and how unstable it is, as well as the little knowledge people have of it.

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  13. Bitcoin is an interesting topic along with all other types of Cryptocurrency. It is risky to invest in bitcoin to say the least but some people may seem the risk reward opportunity bitcoin leaves behind as a proper motive to take a chance. Opportunistic investors who invested early in bitcoin certainly have to like these recent trends. But personally I feel like the value of bitcoin will decrease because it is too unstable and leaves to many unanswered questions on if it is a reliable form of currency.

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  14. I agree with your point that it's risky to invest in Bitcoin, because it seems to be unstable and suspicious. When more people start to realize this, the investment in Bitcoin will decrease, making it and unreliable source of currency. The fact that most banks don't even accept Bitcoin because of how suspicious it is makes me not trust investing in Bitcoin. Overall good blog post and I agree with all of the arguments you presented.

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  15. Very interesting how the rise and fall of bitcoin can be drastically changed so easily. While some are saying they believe bitcoin can be the coin of the future I disagree. As you stated in your article there has been a significant decline in 2018 solely because china cut off use of the bitcoins. If the success and value of the bitcoin this heavily depends on the amount of users then I don't see it as our main source of currency in the future.

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    1. I agree with your point Brooke, I don't see Bitcoin becoming our main source of currency because of its rapid change in popularity. Especially if China, one of our biggest imports countries isn't allowing their country to use it, then we won't get as much out of the currency as we could. It also shouldn't be our main source of currency because banks don't even allow users to put Bitcoin in the bank. Overall, you made some really good points about Bitcoin and I will not invest.

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  16. Throughout the years I had heard of Bitcoin here and there, honestly though I always thought it was kind of just some stupid little online thing that had no real worth. That is until the recent months when it sky rocketed and gained world wide attention as tons of people began to invest and it blew up price wise. While it now ha come back down and tons of people have lost money on it, the idea of the whole world using cryptocurrnecy is an interesting one. To have the whole world trading using one currency would make trade of all kinds easier and bring the whole world closer in terms of being able to buy from and trade with anyone from anywhere, anytime. So while now is not the time and bitcoin may not be the answer, expect more things like this to arise in the future.

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    1. I can relate to what Mike said here in that I also heard of Bitcoin here and there but never truly understood the substational meaning behind it and how it works. It has been crazy to see how Bitcoin has grown over the years and how it used to be nothing at all and now all of the sudden a single Bitcoin is worth more than 10 grand. I also read a story recently about a rapper named 50 Cent who recieved several Bitcoins for an album her created and throughout the years he forgot about the Bitcoins and now this past week he found them when going through his fininces and realized that all his Bitcoins taally up to over a few million dollars.

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  17. I think that Bitcoin is way to risky for someone to use with the rapid spikes in what your money is worth. I do find it very interesting that some people use it as a way to protect their money from the government but keeping their money in can also have the same affect if not worse to their moneys value. If they are trying to keep their money safe I would try and ind a different loop in the system because Bitcoin does not seem to be reliable or worth the risk.

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  18. I remember hearing Mr. Heesch discuss Bitcoin and Cryptocurrency with my group members on our way to one of our business meetings last semester. It was something was really hard for me to understand. It seems as though investing in Bitcoin is very unpromising and that it could potentially harm those who choose to invest. I think that with the data presented, anyone who can see that investing with Bitcoin is not a good idea.

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  19. Bitcoin has been a recent trending topic due to its dramatic increase in value over the past couple of months. But I agree with your argument that it is risky to invest in Bitcoin because the market and value for them is constantly fluctuating and usually in a negative slope. Also there is no point in investing when banks don't accept bitcoin or you have to pay fees to get your money invested in Bitcoin back. I just think that's silly. Overall good and interesting topic. Nice Blog.

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    1. Dear Thomas,

      I definitely agree with your blog comment. Considering Bitcoin is so volatile, I'm surprised that its value has taken off in such a dramatic way. According to the blog, Bitcoin's value increases proportionally to however many people show interest in it, so the only way for Bitcoin to do poor is for people to be discouraged by its volatility and not show interest in it. On the other hand, this means that Bitcoin is fueled by it's popularity, and it turns into a feedback loop where people make Bitcoin more valuable by showing interest in it, and as it becomes more valuable people gain more interest in it. Interesting stuff.

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  20. It's interesting how quickly and successfully Bitcoin started out and eventually is starting to decrease in demand. Once consumers began to see the negative aspects of Bitcoin, I too would choose not to use it. Also, once the banks in China began to ban it, this makes Bitcoin questionable to the rest of the world due to China being one of the leading countries in the global economy.

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  21. I've heard of Bitcoin a lot in the past couple months. When people first started to talk about it, I had no idea what it was and what it was worth. It amazes me how much people have invested in this currency and I was quite surprised how much the value has been increasing. I wouldn't really use it because there are many things that don't use this currency or allow people to use when giving payments. I don't plan on using Bitcoin simply because it could just drop at anytime and not be worth as much as I would be paying for. I agree with Thomas on how there isn't a point of investing since banks don't allow people to use this currency or you have to pay fees to get your money invested in Bitcoin. I find it just ridiculous. I thought this was a creative topic and well written post.

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  22. Bitcoin most likely won't be the currency of the future. The currency is already starting to fall in popularity, and the idea would be too hard to implement as a main currency. Seeing how random the surge in price is, the value is too volatile for it to be very reliable. Also, bitcoin would have to be drastically changed, since the way to get them is to mine using a computer program, meaning anyone can have as much as they want. There also would be no actual money whatsoever. The bitcoin is just something on a computer that has been given a dollar value. The concept as a future currency is just an idea, that if brought to life would cause more problems.

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  23. The different ways that Bitcoin gets used is quite interesting to me. While there are those using it for economic gain and investing, I had no idea that people in countries with an intrusive government used it as a way to keep all of their savings. I wonder if these citizens are still choosing to use Bitcoin, even with the steady decline of its value, and whether that marginal cost does still outweigh the benefit.

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  24. I believe that bitcoin might play a role in the future but at the same time I don't believe that it will have that big of an impact with fluctuating in value so much from day to day that it is hard to get a basic price point for bitcoin and with some banks not accepting it as a stable currency there is no way to keep it safe. Also what if accounts where people keep bitcoins got hacked and then people steal bitcoins what then?

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  25. While I agree that Bitcoin is very volatile and fluctuates frequently I strongly believe that over time it could balance itself out and become a steady form of currency. If Bitcoin were to balance itself out it would be a better alternative to a bank because with Bitcoin its very difficult to hack someones account info and steal their Bitcoin, while banks all over have had to deal with black hat hackers stealing millions from accounts.

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  26. cryptocurrency prices, market cap rankings, charts and more

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