Don’t Own Any Bitcoin? Be Happy

Photo (cc) by zcopley

It’s been mostly a downhill roller coaster ride for Bitcoin (and its investors) this year.

The price of Bitcoin recently nosedived by 20 percent last weekend, bottoming out at $286, The New York Times said. (As I write this, it’s back to $330.)

Unfortunately, the erratic price shifts are not unusual. Bitcoin peaked at $1,150 nearly a year ago before starting to slump.

It’s not known what caused the recent decline, though there is speculation, the Times said.

One reason for the drop could be uncertainty over potential regulations. In July, New York became the first state to propose regulations for Bitcoin companies. The comment period for the regulations, which were introduced by the Department of Financial Services, is set to end on Oct. 21.

More merchants are accepting Bitcoin, then using third-party payment processors to immediately convert it to dollars. That increase in the number of Bitcoins in circulation could also push its price down, the Times said.

Regardless of the reasons for the tumbling Bitcoin prices, it “underscores the dangers of Bitcoins as an investment,” the Los Angeles Times said. If people aren’t using it and its value continues to decrease, Bitcoin will likely sink.

Federal Reserve economist Francois Velde described the crypto currency as one “based on an extremely complex code understood by only a few…without accountability, arbitration or recourse,” according to the LAT.

The Times said supporters of the digital currency maintain that until Bitcoin finds a general use that will push it into the mainstream, its price will likely continue to fluctuate.

“Right now, Bitcoin is in this transition stage where it’s a commodity trying to become a currency,” said Rafael Corrales, a partner at the venture capital firm Charles River Ventures who has followed Bitcoin. “When Bitcoin becomes a currency, it realizes its potential.”

In other Bitcoin news, Blockchain, a Bitcoin wallet and data analytics provider, recently raised $30 million from venture capital investors, The Wall Street Journal said. The funds will be used in part to fund Bitcoin marketing efforts.

“We have captured a lot of the low-hanging fruit in terms of users and it is time to start going after people who are going to use Bitcoin not because it’s interesting to them but because it’s useful,” Peter Smith, Blockchain presidents, told the WSJ.

What do you think of Bitcoin? Have you used the digital currency? Share your comments below or on our Facebook page. And if you don’t have a clue what Bitcoin is or what it’s about, be sure and read Bitcoin for Dummies

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