The Reasons for the Recurrent Price Instability of Bitcoin

Bitcoin was introduced as the world’s very first decentralized currency in 2009. The currency which was equivalent to a mere $0.008 skyrocketed to extremely high rates after almost an entire decade. Bitcoin was valued close to $20,000 towards the end of 2017. This entire time the increase in the value of Bitcoin hasn’t exactly been linear with respect to time. There have been numerous times where the currency’s rate took a big dip. If the charts are observed, it can be seen that the price keeps oscillating and is never consistent over long periods of time. The rate growth is not constant either, due to the nature of the factors that impact the value of Bitcoin.

Since the inception of Bitcoin, where some consider Bitcoin to be a great innovation in the world of financial transactions, some consider it to rather be a gimmick. The popularity of Bitcoin is just as volatile as its value.  Due to this reason, the mass adoption of cryptocurrencies has not been possible. This lack of adoption directly impacts the price of Bitcoin, making it volatile.

The reputation of bitcoin has also suffered because of the scandalous schemes surrounding it. These have been particularly detrimental to the standing of Bitcoin, with masses being led into believing that all activities related to Bitcoin are nefarious schemes devised in order to rob people of some serious coin. This, in a way, cannot be helped because Bitcoin was a new technology, unlike any other, and the underlying technology, blockchain was in its infancy. There are a number of loopholes and backdoors that could be intercepted by anyone at a given time, and then the validity of the entire network could be compromised. Every time some bad news hits, the value is bound to go down.

Bitcoin has been dubbed as the digital gold because of it not having an actual use case of its own except being used for financial transactions. This makes the future of Bitcoin highly unpredictable. A small disturbance in the crypto world or a scam can topple its value. It may be a very robust system for carrying out International transactions all over the world, but as its value fluctuates a lot. It cannot exactly prove to be a good investment tool or for people who are looking to make a quick buck. In addition, there are a number of Bitcoin holders who hold a major portion of the entire coins in circulation. If these individuals try to sell off their coins, huge ripples would be created and the price will be acutely affected. Liquidation of their crypto assets would lead to a great wave of change in it rate as it has been observed.

All in all, Bitcoin is still a technology that is considered in its early stages, and lack of knowledge about it in masses makes them easy targets to be defrauded which in turn creates disinterest and consequently its value drops. This oscillation of Bitcoin will not cease unless efforts are made to minimize the aforementioned factors.

Hassaan Malik

Co-founder of BlockPublisher, Hassaan is a technologist at heart with a keen interest in blockchain, cryptos and traditional financial markets. Email: hassaan@blockpublisher.com, hassaanmalek@gmail.com

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