The recent skyrocket in Bitcoin’s market value has caused a great deal of speculation regarding the possibility of lasting success and whether or not it is just a matter of time before it sees a significant crash – as we’ve seen on a few occasions.
As Bitcoin is decentralized by nature, there is a definite possibility that it will perform differently than tradition currencies controlled by a company or third party. Bitcoin has its price dictated by a range of factors and these are not always the same as those we see with fiat currencies and are typically shown as the exchange of the cryptocurrency in relation to other currencies.
So how long until the Bitcoin bubble burst and what situation or scenario will be responsible for its price drop?
Some people suggest media may lead to the demise of Bitcoin just as easily as it now hypes it up. Mention of hacking could lead to a significant value drop as it stimulates panic within the Bitcoin community and beyond.
While the digital currency remains stable for the time being, there are plenty of past examples demonstrating immense volatility. And although the government cannot directly impact the way Bitcoin is traded, official statements from government officials regarding cryptocurrency regulation do cause a stir within the public.
The anonymity that is synonymous with Bitcoin and which has allowed it to become such a key player in the online gambling community, is of a particular interest when it comes to why governments are considering introducing new rules to eradicate the fact that Bitcoin allows total anonymity. Proposals to introduce third party supervision which would detract from the appeal of Bitcoin in its present state could cause Bitcoins value to suffer as well.
The future of Bitcoin could rest on the measures that governments decide to take in the future and how harshly it becomes policed. Our current and more conventional currencies are easy to value, whereas Bitcoins are seen as being part of their own economic group and have their value determined when exchanged with fiat currencies. A change in the way of determining the value of Bitcoin could lead to a significant change in its market price as it would completely transform its perception.
Furthermore, the influence of the media and the fact that the general public are vastly unfamiliar with the Bitcoin affects the price of Bitcoin as people are still reluctant to use Bitcoins to make purchases as the currency has not yet gone mainstream. For now, Bitcoin is predominantly used as a form of currency used in online prediction markets, however an increase in the number of people who accept the currency would significantly impact its value.
Similarly, additional technological advancement would be able to impact Bitcoin price as it would raise awareness and simulate more interest from the masses. Something like market manipulation can easily dictate the price of Bitcoin as traders can, for example, purchase large amounts of Bitcoins and this boosts the market and makes the price appear to rise before dropping it once more.
This not only highlights how the value of anything is unpredictable but also emphasizes how there is very little predictability in the matter of the share value of something.