Why Bitcoin’s Crash Has Ensured its Future

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Ah, Bitcoin! During its early days, the only people who were interested in it were liberal, digitally-savvy tech geeks who were drawn to this cryptocurrency’s promise of decentralization and its virtually-focused design. As time went on and it grew more and more popular, the world’s mainstream media jumped on board announcing to everyone that a single Bitcoin was somehow worth more than gold.

Then came the commercial investors who were enticed by its skyrocketing value, pushing the price up higher and higher until, at its peak, this original crypto was valued at over $19,800 (in December 2017). But within just a few days of that all-time high, its trading value fell below $11,000, leading experienced traders and financial analysts to declare that Bitcoin’s days were over.

In the past three months alone, speculation has been rife about whether this crypto is just another financial flash in the pan or a worthwhile, long-term investment. Multiple theories have sprung up about why exactly its value fell so rapidly; some have declared the cause to be the $400 million sale of Bitcoin to pay back the creditors of the now-bankrupt former cryptocurrency exchange, Mt. Gox Exchange. There was even talk that the cryptocurrency’s plummet in value would negatively affect annual gaming events such as the World Series of Poker, since many pro players like Daniel Negreanu are avid Bitcoin investors. However, all of this discourse was completely missing the point, since Bitcoin was never meant to be an investment vehicle.

Bitcoin itself only came about as a byproduct of the creation of a pure and decentralized digital payment system by Satoshi Nakamoto in the late 2000s: the Blockchain. It was never intended to be a digital asset that would increase so dramatically in value. Instead, it was supposed to be a steady, predicable form of currency so that buyers and sellers alike could use it to set prices for trade and commerce.

Even during its huge crash, Bitcoin only dropped in value to the level it was in November — hardly something to worry about, unless you were part of the new wave of cryptocurrency investors. To commercial investors like these, who possessed little understanding of how the technology actually worked, so long as its price kept on rising, Bitcoin was a disappointment. However, as far as its longevity goes, this crash may well have served to secure its future.

Yes, Bitcoin trading volumes have been consistently volatile—but so, too, has its fiat price equivalent. One trend is clear, which is that Bitcoin has been steadily decreasing in value since December 2017, and as more investors are scared away, it’s likely that things will actually stabilize. Fewer investors equals lower volatility, but this will also bring about the return of Bitcoin’s original purpose as a form of currency. With a lower price, we can expect to see more people making use of Bitcoin to pay for goods and services; merchants will adapt their payment systems so that they can receive forms of digital currency, and the cryptocurrency industry will move into a much more stable and useful era.

Crucially, this evolution will also make it easier to pinpoint Bitcoin’s true flaws. Instead of asking if it’s worth spending money buying Bitcoin, we’ll be asking if there’s another digital alternative out there that can make financial transactions cheaper and easier. That will be the moment that will truly give us a better Bitcoin. When it’s faced with competition from the thousands of other alt-coins within the market, it will need to meet demand and exceed expectations. Bitcoin’s days as a trading commodity might be coming to a slow end, but its future as a viable and transformative method of currency are only just beginning to start.

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