Bitcoin prices momentarily plunged on Friday when false news of the People’s Bank of China banning all Bitcoin transactions from April 15 made the rounds of the internet and financial markets around the world. The digital currency has since revived, but not to its earlier above $600 mark. This incident has highlighted the fact that any information about the Bitcoin, whether true or false, can instantly up-end markets, thereby, putting to question the risk factor and future of the currency. However, experts say the recent price fluctuation does not question Bitcoin’s future.
While the risk factor is very much present — as is present with any stocks, bonds or currencies — Bitcoin is here to stay. Bitcoin miner and owner of Kervin Marketing, Jonathan Kervin, said that among other similar form of currencies, Bitcoin is a benchmark. This makes Bitcoin the most stable currency in the digital currencies world. Moreover, he said, Bitcoin cannot go out of business because as long as Bitcoin transactions are made, the currency will survive.
Developers of an online video game company, VsMe Gaming, and students of CaseWestern ReserveUniversity, Ari Lewis and Sagar Rambhia also believe Bitcoin is the future. VsMe Gaming eventually plans to let people play against each other for Bitcoin. The two students believe the government should get involved in Bitcoin and come up with regulations for the digital currency, as is the case with paper money. They said the reason they wanted the Bitcoin regulated is because it would mean “the US government thinks it is legitimate.” Lewis also said that “It [Bitcoin] is here to stay.”
Even though the digital currency is appealing only to a few niche groups, the possibilities for it to grow further are large. For example, the one good reason merchants have to accept Bitcoin is that it avoids them from paying fees associated with credit card transactions. The fact that Bitcoin cost less to accept as compared to a credit card means that merchants can offer more competitive prices to people who pay with Bitcoin.
Moreover, large amounts of money transfer is easier and faster with Bitcoin, with no need for any transfer fees or bank approvals. A sender also only needs an email address to transfer money via the internet, saving further time and costs. Bitcoin can also be paid to secure transactions for online gambling, a process still not accepted by PayPal, even in states where online gambling is legal. This can mean very lucrative options for gamblers.
However, even though the advantages of Bitcoin may prove the recent price fluctuation does not question the future of the digital currency, it may not yet be ready for mainstream adoption in the United States.
According to Nikhil Chand, owner of Bitcoin consultancy, CoinNEO, mainstream adoption may be in the distant future because bitcoins are not easy to use. Moreover, at present, the Bitcoin network can process only seven transactions per second. This cannot be of practical use if the technology was to really take off, he said.
Nevertheless, even though the recent price fluctuation of Bitcoin does not question its future, Chand is of the opinion that Bitcoin has more need for innovation and improvement, especially for the end-user experience, before it can be entered into mainstream use.
By Faryal Najeeb