Bitcoin’s rise from oblivion in 2013 was a major story not only among those in the financial business, but of consumers as well. However, 2014 has not been so welcoming to Bitcoin, as its value has plummeted. Many wonder if Bitcoin is finished, or if it will rise from the ashes once again.
Bitcoin was leading what many thought of as a digital currency revolution. Vendors could accept Bitcoin payments instead of credit card payments. The downside was the Bitcoin was not readily available – only so many shares were made to purchase – and it was not validated and protected by the FDIC. This worried many, and even though it seemed freeing not to have your funds tied to the government, it may have been part of Bitcoin’s downfall. However, for those who loved the idea, it seemed plausible. With Bitcoin anonymity was possible with purchases and international purchases could be made without having to calculate credit card international charge fees.
Bitcoin exchanges were popular for a while. However, in recent weeks the largest exchange avenue Vircurex announced that they were to cease exchanges with Bitcoin, and its like-minded virtual currency counterpart Litecoin. Vircurex was hacked twice in 2013, and has pledged to cover its user’s losses. Further, back in February, the largest known Bitcoin exchanged Mt. Gox called it quits for the time being. Unlike Vircurex, Mt. Gox has not offered to reimburse funds that have been lost or held up in its trading stoppage. It is currently unclear whether victims of Mt. Gox’s shutdown will see their assets returned to them. That said, many former Mt. Gox users have already taken to public forums such as Reddit to mourn their losses and defend the larger Bitcoin community. Other prominent exchanges have ended in sudden shutdowns, including Flexcoin on March 5, and Crypto-Trade on February 27.
While these shutdowns may not mean the end of Bitcoin, the simple fact that Bitcoin’s worth has dropped 55% may seal the deal. Investors are not likely to invest in a product whose worth is dropping – let alone plummeting. Bitcoin, even if it rebounds, is still highly flawed. One of the reasons of the total shutdown of Mt. Gox is because it is unregulated, and they have no one to answer in situations such as this. While Bitcoin may still be promising to some, it needs a major overhaul if it wants to come back as a successful virtual currency.