Now it is time to talk about the big Bitcoin crash. Over the last few days the value of the virtual currency has fallen to $563 per Bitcoin (at the time of writing this article) from as high as $1200.
Bitcoins have come crashing down in the past few days but this should not come as a surprise as a similar trend was spotted back in December 2013. Then it was due to China’s Central Bank’s warning against treating Bitcoins as legal tender. The warning was issued in a notice jointly released by the People’s Bank of China (Central Bank) and four ministerial departments — Ministry of Industry and Information Technology, China Banking Regulatory Commission, China Securities Regulatory Commission and China Insurance Regulatory Commission. However the notice also said that Chinese people can make Bitcoin transactions at their own risk on the Internet. Hence they have not put a ban on the currency.
Apparently this statement was good enough to drop the value of the virtual currency to $584 back in December 2013.
The current fall of Bitcoins is due to the fact that a major Bitcoin exchange, Mt. Gox announced suspension of all Bitcoin withdrawals for “technical reasons”.
Apart from users not being able to withdraw Bitcoins from their Mt. Gox accounts, the technical issue faced by Mt. Gox may also be faced by other Bitcoin exchanges which could lead to further panic.
For everyone out there on the World Wide Web who had put their money into Bitcoins just a few days ago. Maybe as a source of investment, an alternative to using traditional currencies or to move money out of their home country without the interference of foreign exchanges or banks, are in for a shock! As they have already lost half of their stake and the worst nightmare is that the virtual currency continues to slide downwards.
Going by previous trends Bitcoins is likely to recover most of its lost ground once Mt. Gox resumes its services. But the fact that just by taking out one of its exchanges can cause such a drastic fall in the value of the currency remains a major concern.
This may raise calls from investors to establish a firm and trustworthy Bitcoin exchange, one that can be relied upon at all times.
It may also be argued that the presence of a regulatory authority could have prevented this drop, but that would go against the idea of having a virtual currency; the very principle that Bitcoin stands for. It must also be noticed that Bitcoins is a fairly new form of currency and unlike traditional form of currencies; it is yet to stand the test of time.
Every form of currency has its pros and cons and it’s up to each one of us to make the wise decision on the best suited currency for the environment we choose to do business.