While fans claim that Bitcoin is revolutionary, possessing the ability to change how currencies operate and payments are made, it is really the underlying blockchain technology that provides it with that ability.
This is where the first hurdle arises for Bitcoin. It is not as scarce or finite in volume as pundits would have investors believe. Anyone with the requisite skills and ability can use blockchain to create a new cryptocurrency, and it is this which has been occurring, as the cryptocurrency bubble has ballooned… As more cryptocurrencies are launched the degree of interest in Bitcoin will wane as they attract greater attention.
Then there is the push by many governments to regulate Bitcoin and other cryptocurrencies.
Given Bitcoin’s checkered past and its use by criminals to conduct illicit transactions, it is only a matter of time before financial regulators globally move to clamp down on cryptocurrencies. Once Bitcoin is strangled by regulation, its appeal will wane substantially.
Hacking remains an ever-present risk, and all it would take is another incident of the scale of the 2011 hack of the Mt. Gox exchange, which ultimately saw the exchange collapse and sparked a massive sell-off of Bitcoin, to turn into a rout that spreads into other cryptocurrencies and trigger a colossal crash.
It is important to remember that Bitcoin is virtually impossible to value; it possesses no utility and has yet to be widely accepted as a currency, even by major e-commerce providers. This means sentiment is driving the price of Bitcoin, and any negative events that impact the confidence of investors could spark a full-blown flight, causing their values to collapse.
Eulogy made by Matt Smith
