November 11, 2013

Current Bitcoin Boom a Good or Bad Sign?

You've probably heard about the rising price of Bitcoin and wondered "What's going on?" The simple answer is that there's been a spike in interest, specifically from Chinese investors. China now accounts for about a third of daily Bitcoin transactions and hosts the biggest Bitcoin exchange in the world.

So is it a bubble? There's no way to know, but if the intent of the big new investors is to speculate, i.e., make money off short-term fluctuations, which certainly could be the case, then it's possible we'll see Bitcoin come crashing back down again at any sign of a price falter be it a day or a year from now. The only way we'll see Bitcoin stabilize long term is if a larger proportion of investors hold it not with intent to speculate, but rather with intent to use it as a functional currency.

There have been some good signs of late on this front, from the Bitcoin ATM in Vancouver to China's search engine giant Baidu accepting Bitcoin for its firewall service. The importance of this cannot be understated: China has a massive internet market, and if we see other major Chinese internet companies mimic Baidu's move to accept Bitcoin, it may spur just the kind of heavy adoption Bitcoin advocates have been hoping for since its inception, which could in turn result in greater adoption around the world. Whether this will happen remains to be seen, but as of right now, we at BitcoinGet are feeling cautiously optimistic about the current price rise. There are more fluctuations on the horizon, but if adopters can manage to weather the speculation storm, the future is bright.