Bitcoin, the first and the most prevalent of 100s of crypto-currencies, has been in news lately for not necessarily for all the right reasons. Though this crypto-currency has survived for almost 5 years and has weathered multiple crashes in valuation over the years the future of Bitcoin is still questionable.
The concept in itself is promising especially in this age of globalization. A currency that crosses borders securely, without third party intervention, and no transaction fees can definitely boost international trades and prove to be a boon, more so for small businesses. As John Naughton of “The Guardian” said – Bitcoin serves the function of being a medium of exchange by making small online payments very cheap and easy. However as with every great thing in the making there are downsides to Bitcoin as well. The very same features that are its unique advantages can be and has been exploited, for instance Silk Road, an online market for illegal drugs, accepted only Bitcoins as the method of payment. Moreover the lack of government backing and regulations also leads to lack of consumer protection which makes it a risky currency to hold on to – as has been the case with Mt. Gox, once the world’s largest Bitcoin exchange, collapsed and suddenly disappeared with $350 million worth of Bitcoins. Thus it is no secret that Bitcoin has its share of disadvantages and limitations in its current state however what remains unanswered is if Bitcoin can be the currency of future and only time will answer that question. In the meanwhile what is worth noticing is that the fall of Mt. Gox is not synonymous to the fall of Bitcoin. It might rather prove to be beneficial to the future of Bitcoin. Though the value of the currency dropped to about $400 in response to the news it slowly crawled back up in the matter of a few days at over $600 per Bitcoin and in turn it has drawn attention of authorities. This along with installations of Bitcoin ATMs in multiple cities across the country only reflects the confidence that the proponents of Bitcoin have in the future of the currency. Additionally, the fall of Mt. Gox has also highlighted the need for regulating the currency and the response seems promising. Instead of an attempt to dump the currency, steps are being taken to further strengthen it. One of the major steps in the direction has been to form the Emerging Payments task force that comprise of nine state regulators to study the virtual currencies. It would be interesting to see how the advocates of Bitcoin reacts to the effort of regulating the crypto-currency as it violates the basic tenet of the currency – its decentralized nature. However for Bitcoin or for that matter for any crypto-currency to become a long-term stable currency of choice it needs to be backed and regulated which is in contrast to the basic premise of crypto-currencies. The key to its success would be to maintain the balance between regulations and innovation.
The future of Bitcoin though questionable, if recent turn of events is anything to go with is definitely far from dead yet. However at this point it would suffice to say that the currency has faced a number of tough questions and has only come out stronger and is stronger and more popular than ever before gaining a lot of traction from advocates of Bitcoin. Whether or not these efforts will fortify the future of Bitcoin is yet to be seen but at this time it would suffice to say that Bitcoin is gaining a lot of support and it might be too early to write it off.