Bitcoin has been in the news for months. After a significant increase in value, the price is back to square one, the main trading place – Mt. Gox – collapsed, the mysterious creator surfaced and disappeared again. How are the digital currencies doing now?
According to De Nederlandse Bank (DNB), it seems unlikely that digital currencies such as bitcoin will play a role as a means of payment in the short term. They write in a statement released last week that the currencies are unable to perform the main functions of money: medium of exchange, hoard and unit of account.
You can pay with bitcoins in different places. In Rotterdam there is even a house for sale that can be settled with bitcoins.
For example, if we were to quote prices in bitcoins instead of euros, the value could vary widely from day to day, according to the central bank. The price development of the currency at the end of 2013 is pointed out. In November, the value of the currency was less than 200 euros, at the beginning of December it was more than 800 euros. A few days later, the price halved after critical statements by the Chinese central bank about the digital currency.
In addition, DNB points to security concerns with parties that manage and trade bitcoins and the lack of a deposit guarantee scheme that exists for other currencies such as the euro. In addition, the ease of use of bitcoins and related currencies would not be optimal.
The collapse of Mt. Gox
With the security problems, DNB probably refers to the destruction of the largest trading center for bitcoin: Mt. Gox. The exchange, founded in 2010, accounted for around 70 percent of all Bitcoin transactions at its peak.
However, things went wrong in February of this year. When it came to light that about 850,000 bitcoins (more than five percent of the total number of bitcoins in circulation!) Had disappeared, the website went black. It is still unclear how Mt. Gox could lose that much money, but theft or fraud is likely.
Future of Bitcoin
The mysterious bitcoin creator, Satoshi Nakamoto, has also had a lot to do in recent months. After publishing an article on an internet forum in 2008 describing the principle of the digital currency, it never became clear who it was. Until American magazine Newsweek revealed in March that Satoshi Nakamoto may be a pseudonym for Dorian Nakamoto. Already met by paparazzi, this 64-year-old former California programmer firmly denied being the creator of bitcoin. That was confirmed not much later by the real Nakamoto. The account from which the original bitcoin article originated reported: “I am not Dorian Nakamoto”
The turmoil surrounding bitcoin had repercussions on the value. He peaked in December 2013 at more than 800 euros, now the price is slightly above 300 euros. Still, a long-term investor can still rub his hands. Anyone who invested in bitcoin a year ago has seen that value flip over three times in the past year.
The price of bitcoin had a stormy course especially in the past year. The currency peaked in the spring of 2013, as well as towards the end of that year. Meanwhile, some air has escaped from this last “bubble” again.
It’s a gamble, investing in bitcoin, given the strong value fluctuations the currency has shown. And that is precisely the reason for the negative advice from the DNB. But bitcoin is not out of the world yet. The security protocol on which the coin is based and which ensures that every bitcoin is only issued once is still in place.
In fact, the digital currency phenomenon seems to be on the rise. In addition to bitcoin, there are now an estimated 200 alternative currencies in circulation. Most of them, incidentally, represent a small part of the value that all bitcoins have together (at the time of writing, all bitcoins together are worth more than four billion euros).
In addition, new parties are emerging who want to capitalize on the popularity of digital money. For example, by looking for ways to safely store a debacle like Mt. Prevent gox. One of the companies is the Dutch Coinqy. “At Mt. Gox went wrong because it lacked a secure technical and organizational infrastructure. Bitcoins have “disappeared” there for a long time. Due to a lack of control, it was discovered too late, ”said Andrew Wolters, one of the company’s founders.