Will Bitcoin thrive or dive in 2018? Bitcoin is a digital asset that aims to act as decentralized cryptocurrency. It was created in 2009 by a pseudonymous founder as the first of its type, and has increased in value by about 2500% throughout 2017. The Bitcoin’s price rise expresses the increasing approval of this system. However, it might be the result of a speculative bubble. In the anticipation of the Bitcoin becoming a dominating currency, some will buy it in the hope to sell it for profit later. Bitcoin had shown to fluctuate in boom and bust cycles that ruined substantial value.
However, this encrypted tool holds some advantages which cannot be easily dismissed. While in the current banking system, you have to trust a long chain of bank clerks and payment processors to handle your money, with Bitcoin, there is no need to do so. Bitcoin transactions are fast, cheap and private, and no central authority has control over your transactions. No taxes, transaction fees or tracking apply with Bitcoin. The transactions are verified with blockchain protecting your personal information, and therefore prevent any potential identity theft.
The international community has expressed mixed opinions regarding bitcoin. India’s finance minister has stated that the digital currency will not be recognized as a legal tender. Turkey, some early responses claimed that “buying and selling virtual currencies is incompatible with Islam since the government can not control it.” A nationalist Dutch newspaper urged Netherlands’ citizens to sell their Bitcoins as a nationalist act. The newspaper claimed that Bitcoin transactions undermine the government, and destabilize the economy by permitting money laundering and tax avoidance. The newspaper’s main claim is that the Central Bank is losing its ability to maintain a stable economy through controlled regulation by opening its doors to decentralized cryptocurrency. The citizens are exposed to the speculative nature of the Bitcoin and to the risk of converting their assets into air. In agreement with this statement, Robert Ophele, chairman of France’s market regulator, has declared that cryptocurrency is a means for cybercrime, and represents no agreeable component of a real economy. Similar concerns were raised by the British Telegraph newspaper, which, immediately after the big drop in the value of the Bitcoin in January 15, 2018, stated that the digital currency is used for illegal purposes. Governor Haruhiko Kuroda of Japan said that Bitcoin should be regarded as a currency, but only traded for investment or for speculation.
In response to the vast approaches to the virtual currency, the BIS, the Bank for International Settlements which acts as the central bank for central banks, has acknowledged the necessity to address a virtual currency while employing a careful approach.
Facing 2018, will bitcoin, the representative of virtual currency, boom or bust? In light of its extremely volatile nature throughout 2017, some say that Bitcoin, the first blockchain-based cryptocurrency, possesses flaws that its competitors will aim to overcome. Another factor that may impact the fate of Bitcoin is the “mining” process used to create it. The mining process requires excessively high energy, raising environmental concerns. Will Bitcoin dive or thrive in the upcoming year? If it manages to overcome its current problems, adopting a virtual currency regulation system and gaining consensus in the main global banking institutes, Bitcoin could turn into the most common means of business transactions.