The most popular cryptographic currency is over 10 years old. During this time, the rate of Bitcoin has fallen sharply and then soared to record values. The financial world is still arguing about its prospects.
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A physical bitcoin coin
“Stay away from him. It’s essentially a mirage,” warned the legendary American investor and billionaire Warren Buffett in 2014, speaking of Bitcoin.
During this time, Bitcoin has experienced dizzying ups and downs, making some investors millionaires literally overnight and ruining others – who lost large sums as a result of a sharp collapse in the rate.
Bitcoin was first talked about after an anonymous developer (or group of developers) named Satoshi Nakamoto published an article on October 31, 2008, explaining how the cryptographic currency worked.
The publication states that the developed “e-money version” will make it possible to make online payments directly from one person to another, bypassing financial institutions.
In practice, it meant creating a payment system with easy access for everyone and not subject to control by central banks. However, the prospects of implementing this idea in practice are still rather vague.
The BTC currency remained an unusual means of payment.
One of the first advantages of virtual money began to be used by criminals who bought drugs and weapons for bitcoins on illegal sites and laundered money with the help of crypt currency.
However, after the bitcoin rate first hit the mark of a thousand dollars in 2013, the public interest in the crypt-currency woke up. Now paying for goods and services with Bitcoins has become quite commonplace in some countries.
Crypt currency is often used to pay for purchases at online stores or to book a hotel. In some countries, you can use bitcoins to pay at cafes and restaurants and in others, you may sell BTC to PayPal.
The bankruptcy of Mt. Gox and record rate of bitcoin
It is true that the leading central banks have divergent views on virtual money. The European Central Bank, for example, compared crypt currency to snow coma, while the then head of the U.S. Federal Reserve Ben Bernanke, on the contrary, pointed to its great potential.
The first and so far the biggest crisis associated with the most popular crypt currency occurred in early 2014, when hackers broke into the online trading platform Mt. Gox, which was trading about 80 percent of all bitcoins. At the time, the crypt currency worth $477 million was stolen, and the crypt currency exchange itself had to declare itself bankrupt, which collapsed the cost of the bitcoin.
The turning point for it came only in 2017 when the rate took off almost 20 times. In December 2017, it reached a record of $19500.
The other side of the crypt currency
Few still use bitcoins in their payments, but everyone has to pay for their creation. After all, huge amounts of electricity are used to produce digital money.
One of the reasons for the bitcoin bite growth was the interest from the public, analysts and traders noted with crypt currencies. According to Dave Chapman, the managing director of Octagon Strategy, a Hong Kong trading company, many people were afraid of losing profit.
As a result, people were buying BTC at the peak of its value in the hope that it would continue to grow. They were disappointed when a couple of weeks after reaching its peak, the bitcoin rate began to decline.
Bitcoin is short of buyers
Experts have always warned that BTC is characterized by high volatility. Bitcoin has lost over 50 percent of its price since the beginning of this year. This drop in price is obviously caused by a decline in investor interest in Bitcoin as an investment instrument.
This is partly due to unjustified hopes for the emergence of exchange-traded investment funds, ETFs, whose value should be calculated on the basis of the bitcoin price.
The creation of such funds requires SEC approval, which would instantly enhance the reputation of a bitcoin in the eyes of large investors. However, the SEC is not in a hurry to give the green light to a new stock instrument for fear of fraud risks. Some large financial institutions are also skeptical about Bitcoin.
However, many analysts predict that in the future Bitcoin is likely to be seen as an investment rather than a means of payment. In the meantime, it obviously lacks buyers, which means that the bitcoin rate is not insured against further collapses.