The dizzying heights of bitcoin’s mid-December valuation in 2017 at $17,900 per coin has proven impossible to maintain, slipping down to a figure below $14,000 within the space of a week. Just this month, the most prominent of cryptocurrencies dropped to almost half of its peak value, slumping to a mere $10,000. Its volatility has invited wide-reaching scepticism from many critics, now set to debunk the reportage which has afforded the cryptocurrency a kind of mythical status.
Most recently, Nobel prize-winning economist Robert Shiller spoke out in Davos at the World Economic Forum, heralding bitcoin as a “really clever idea”, but focused on exposing the negative side of its journey in “going viral”. He postulated that people should be cautious as not to start “over-emphasising” bitcoin, calling instead for a greater focus within financial services on integrating public digital ledger blockchain to keep tracks on the progress of online cryptocurrencies.
Shiller was not the only one with opinions to share on the matter, and a clear trend seems to be emerging in comments of a similar nature; in Davos, world leaders such as Theresa May have expressed concern over cybersecurity in relation to cryptocurrencies, telling representatives from Bloomberg that her team will begin to take issues appearing in this area “very seriously”. This follows recent calls from South Korean government officials to work on implementing a lockdown on domestic virtual currency exchanges in fear of the rise they give to criminal activity. What’s more, Cecilia Skingsley from one of Sweden’s central banks Riksbank divulged a similar circumspect attitude to digital currencies, observing that “it’s not a very efficient medium of exchange because you don’t buy your groceries with bitcoin”. Such statements are rather vacuous, however, suggesting that politicians and financial authorities are struggling to find clear answers for tacking cybersecurity issues and regulating the decentralised currency.
Whether or not bitcoin can be integrated into regulated financial services, its progression over the nine years since its creation is remarkable. Undoubtedly, it should be lauded as a crucial example of the kind of disruptive innovation which is changing the way many people utilise technology in their daily lives. The growing value of this currency and its counterparts, originally associated with the dark web and criminals, indicates a further turn away from the opinions of ‘experts’, which Michael Gove raised as a bone of contention during the EU referendum. With other major cryptocurrencies such as Ethereum and Ripple maintaining and stably increasing their value this month, it is certain that cryptocurrencies are here to stay. Despite its fall from grace, a market value of $10,000 should offer enough support for bitcoin to find a more stable middle ground and grow at a steadier pace.
Image: [Investucate TT]