Bitcoin: is it viable or vulnerable?
Gold used to be the valued currency… the one you bought and hid away when you were worried about bank crashes or theft. To an extent, this is still true, however more people are investing in the online currency ‘bitcoin’ which has seen a dramatic increase in value over the last 12 months.
In 2009 when bitcoin was first released, you didn’t need to be rich to purchase it. With a sale value of just $0.39, anyone could buy in. Prices steadily rose and now in 2017, major fluctuations have seen the value of bitcoin rocket to over $16,000.
The currency was exciting. It didn’t require bank regulation and was easy to use for international transactions. However, without the need to associate your identity to your online wallet, of course it was vulnerable to theft and hacking. As the price began to rise, more people invested in bitcoin and whilst the public and some investors considered it gold dust, other’s weren’t so sure…
Warren Buffet, widely considered as one of the most successful investors in the world, said “the idea that [bitcoin] has some huge intrinsic value is just a joke in my view.” However, this was back in 2014. Has his opinion changed seeing such dramatic inflation?
The inflation figures we’re seeing easily explain why people are investing in bitcoin, however with such high values, bitcoin, like many other assets, certainly is vulnerable to theft. By ‘tumbling’ the currency, it’s possible for a thief to muddle transactions so far that their identity can’t be traced.
On the 6th December 2017, approximately $80m worth of bitcoin was stolen from leading mining service, NiceHash. The value of this currency is likely to change on a near constant basis, however the owners have little protection or assurance that their bitcoin will be returned.
Mr Kobal, NiceHash’s CE has tried to reassure their customers, explaining what happened and that authorities were involved to reclaim the currency. Whilst there is a monitoring system for bitcoin transactions, the owners are kept anonymous from the currency itself, making tracking less than straight forward.
Whilst bitcoin is predominantly used by individuals, there are some organizations who are now accepting bitcoin as currency. There are no bank fees, some fraud protection is offered and international payments are much speedier than conventional bank transfers…However, is it stable? Could we see large organizations losing millions of dollars with an unstable and fluctuating currency? Could this currency be the cause of another financial crash…?
For now, users must be vigilant as it seems that online security is still fragile and developing, meaning new currencies like bitcoin need careful management if they’re to be safer than keeping $100 in the biscuit tin…