Is Bitcoin virtual currency on verge of collapse? Well, if you believe the writer over at the LA Times, this is the case. However, as you know, when it comes to mainstream media, they often get the story wrong. In this case they got some things right, but when you step back and look at the big picture in the realm of Bitcoin, you can see that things are likely going to get better – quite a bit better in fact. We’re going to take a look at this article, so you can come to your own conclusion about whether or not Bitcoin’s value as currency is on the verge of collapse.
As you probably know by now, MtGox has shut down. This is the main piece of evidence that Chris O’Brien and Andrew Tangel use to make their argument. While this is big news indeed, the reality is that MtGox hasn’t been the major Bitcoin Exchange for quite some time. The loss of it may have some effect on Bitcoin, but other exchanges exist. And some of them are bigger (and better run) than MtGox was even in its heyday. When you look closely at the facts, you can see that there’s still a lot of uncertainty about what’s going to happen with Bitcoin.
Here’s a breakdown of their major evidence that Bitcoin is close to total collapse:
- MtGox – Again, while this is major news and will shake the confidence of some, most of the smart people left MtGox months and months ago. Quite a few people stuck around, of course, and there’s still no telling what’s going to happen with them, but many smart investors moved to Coinbase and other Bitcoin Exchanges online around the world.
- Confidence – Another point they bring up – which is true – is that consumers are going to lose a lot of confidence in Bitcoin after recent setbacks. From the hack earlier this month to the fact that MtGox has seemingly disappeared, all looks bleak for Bitcoin. Looking back just a few months, however, it’s clear that Bitcoin was gaining some momentum and maybe even a little mainstream acceptance.
- Theft – Some rumors state that MtGox has lost hundreds of thousands of bitcoins over the years to hackers and theft. This sounds bad, but you have to look at other forms of currency – they’re able to be stolen as well. What we have is one company – MtGox – that may or may not have had problems they could deal with. That is the bigger issue at hand.
Their main point is that MtGox having problems means problems for everyone who uses Bitcoin. Again, you have to remember that MtGox hasn’t been the biggest exchange in a while now. When you look at some of the other markets available, it’s easy to see that people still have confidence in the entirety of the Bitcoin network. The problem lies with some companies – like MtGox – that aren’t operating above board and transparently.
In the article, Chris O’Brien and Andrew Tangel wrote:
“This is extremely destructive,” said Mark Williams, a risk-management expert and former Federal Reserve Bank examiner. “What we’re seeing is a lot of the flaws. It’s not only fragile, it’s fragile as eggshells.”
While this man is likely in the know when it comes to financial matters, he’s a member of the current ruling elite. They’re the ones that do NOT want Bitcoin to succeed because if it did, their whole world would change. The idea of changing the world financial systems is scary to some, but to others, the early adopters, it’s hope for a bright new world without greedy bankers thieving money however they can. (Bank balance penalties? ATM use charges?)
They did have some hopeful news at the end of the article in LA Times. They quoted a press release, saying:
“It’s a shame that many people lost money, but when underperforming businesses are replaced by innovative ones, the economy grows stronger,” said Jordan Kelley, chief executive of Robocoin, which makes bitcoin ATMs, in a statement. “It’s a good day as Bitcoin continues to grow up — a few blemishes along the way are natural and healthy. We expect Bitcoin to grow even faster in the days ahead.”
Despite the headline signaling eminent doom for Bitcoin, there are many who still believe the virtual currency is viable. Because it’s still in its initial stages – its infancy – their are going to be growing pains in the weeks, months and maybe even years ahead. Having said that, Kelley and many other early adopters are in it for the long haul. And these are going to be the ones who make the most money in Bitcoin in the future.