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(Disclosure: the author holds investments in bitcoins.)
It was an exciting moment for cryptocurrency followers. After some months of relative stability during which bitcoins were traded in a rather narrow range, the price of the currency suffered a sudden downturn. From a maximum of around $ 6,500 at the end of the first week of November, the bitcoin dropped to around $ 3,500 in just two weeks. Just when we thought of entering a new era for bitcoin in particular and cryptocurrency as a whole, we returned to the old days of the Russian crypto mountains. In a 24-hour period, the price of the bitcoin managed to vary from $ 3,448 to $ 4,101.
This is not the first time that bitcoin has given investors a sudden bumpy ride. The loss of almost 50% of the value of the currency fell slightly compared to the fall of 87% from $ 1,141 to $ 152 between the end of November 2013 and mid-August 2015. Or the 83% it collapses from $ 259 to $ 45 in two days in April 2013. The 94% collapses from $ 31 to $ 2 in five months in 2011. Bitcoin has recovered from each of these falls and there is every reason to believe that a more mature bitcoin will recover from this.
But what happens then? What will be the most necessary bitcoin when it comes out of this collapse and will enter a new era? What support should we give to bitcoins to allow it and other cryptocurrencies to develop their potential?
The first thing bitcoin needs is stability – and bitcoin needs that stability more than any other digital currency. Where bitcoin leads, other coins follow. Once the first cryptocurrency begins to trade permanently within a narrow band, we will soon begin to see the other major currencies that follow the example. Speculators will be able to bet on new ICO-generated coins in the same way that stock traders buy penny stocks, but the rest of us can settle for the availability of a digital currency that we bought years ago at a discount.
What will bring that long-term stability could only be the current temporary instability. Where there is panic, there is always an opportunity. But much of the recent fall was driven by speculators who dumped their money at a loss. Those who buy them will now remain. Sellers who try to limit their losses will not come back.
It's a good thing. At this time, the economy in general and digital businesses, in particular, need an international electronic money free from the control of national banks. They need people who are willing to resist diving instead of zooming in as they try to beat the markets.
This means that digital companies hoping to take bitcoins do not really need the arrival of institutional investors in the cryptocurrency space. Hedge funds and banks are welcome, of course. They will add liquidity and their presence gives cryptocurrency a vote of confidence. They show other investors that bitcoin is a safer bet than one might think. But those institutional investors are already here. Relationships indicate that institutional investors have already replaced individuals with high equity as the largest buyers in transactions worth more than $ 100,000. They did not bring stability. They came because of stability.
Companies need stability because what they really need is a return to the days when other merchants were willing to accept bitcoins and customers were willing to spend them.
Those days practically ended last December when Vapor has announced that it will no longer accept bitcoins. Price volatility and high transaction costs pushed a service provider that should have been the ideal customer for an international digital currency.
But bitcoin has never been thought to be an advantage. It was not intended to make millionaires from a handful of visionaries – and impose losses on everyone else who bought and sold at the wrong time. It was designed to facilitate international transactions. It was intended to provide a way of buying and selling that could not be manipulated. It was meant to give the Internet the financial service that has always been lacking.
The need for this service still remains. Buyers and sellers still need a way to make transactions without paying the huge commissions required by online payment services. Entrepreneurs who have built online businesses still need their own currency and control of their financial future. They need customers to have an easy way to buy bitcoins, keep it safe and spend it when they buy online wherever they choose to buy online.
The price of the bitcoin itself does not matter. Bitcoin does not have to trade back to $ 20,000. It does not need to hit six figures or turn the first arrivals into millionaires, no matter how good it may be. Bitcoin just has to do what it should always do: facilitate financial transactions in a digital business environment.
For companies, the exciting moments of Crypto must end.
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(Disclosure: the author holds investments in bitcoins.)
It was an exciting moment for cryptocurrency followers. After some months of relative stability during which bitcoins were traded in a rather narrow range, the price of the currency suffered a sudden downturn. From a maximum of around $ 6,500 at the end of the first week of November, the bitcoin dropped to around $ 3,500 in just two weeks. Just when we thought of entering a new era for bitcoin in particular and cryptocurrency as a whole, we returned to the old days of the Russian crypto mountains. In a 24-hour period, the price of the bitcoin managed to vary from $ 3,448 to $ 4,101.
This is not the first time that bitcoin has given investors a sudden bumpy ride. The loss of almost 50% of the value of the currency fell slightly compared to the fall of 87% from $ 1,141 to $ 152 between the end of November 2013 and mid-August 2015. Or the 83% it collapses from $ 259 to $ 45 in two days in April 2013. The 94% collapses from $ 31 to $ 2 in five months in 2011. Bitcoin has recovered from each of these falls and there is every reason to believe that a more mature bitcoin will recover from this.
But what happens then? What will be the most necessary bitcoin when it comes out of this collapse and will enter a new era? What support should we give to bitcoins to allow it and other cryptocurrencies to develop their potential?
The first thing bitcoin needs is stability – and bitcoin needs that stability more than any other digital currency. Where bitcoin leads, other coins follow. Once the first cryptocurrency begins to trade permanently within a narrow band, we will soon begin to see the other major currencies that follow the example. Speculators will be able to bet on new ICO-generated coins in the same way that stock traders buy penny stocks, but the rest of us can settle for the availability of a digital currency that we bought years ago at a discount.
What will bring that long-term stability could only be the current temporary instability. Where there is panic, there is always an opportunity. But much of the recent fall was driven by speculators who dumped their money at a loss. Those who buy them will now remain. Sellers who try to limit their losses will not come back.
It's a good thing. At this time, the economy in general and digital businesses, in particular, need an international electronic money free from the control of national banks. They need people who are willing to resist diving instead of zooming in as they try to beat the markets.
This means that digital companies hoping to take bitcoins do not really need the arrival of institutional investors in the cryptocurrency space. Hedge funds and banks are welcome, of course. They will add liquidity and their presence gives cryptocurrency a vote of confidence. They show other investors that bitcoin is a safer bet than one might think. But those institutional investors are already here. Reports indicate that institutional investors have already replaced high net worth individuals as the largest buyers in transactions worth more than $ 100,000. They did not bring stability. They came because of stability.
Companies need stability because what they really need is a return to the days when other merchants were willing to accept bitcoins and customers were willing to spend them.
Those days practically ended last December, when Steam announced that it would no longer accept bitcoins. Price volatility and high transaction costs pushed a service provider that should have been the ideal customer for an international digital currency.
But bitcoin has never been thought to be an advantage. It was not intended to make millionaires from a handful of visionaries – and impose losses on everyone else who bought and sold at the wrong time. It was designed to facilitate international transactions. It was intended to provide a way of buying and selling that could not be manipulated. It was meant to give the Internet the financial service that has always been lacking.
The need for this service still remains. Buyers and sellers still need a way to make transactions without paying the huge commissions required by online payment services. Entrepreneurs who have built online businesses still need their own currency and control of their financial future. They need customers to have an easy way to buy bitcoins, keep it safe and spend it when they buy online wherever they choose to buy online.
The price of the bitcoin itself does not matter. Bitcoin does not have to trade back to $ 20,000. It does not need to hit six figures or turn the first arrivals into millionaires, no matter how good it may be. Bitcoin just has to do what it should always do: facilitate financial transactions in a digital business environment.
For companies, the exciting moments of Crypto must end.
