Bitcoin has seen a massive decline in 2018 and it looks like it may get worse before it gets better. It is leaving investors grasping for reasons why the world’s top cryptocurrency is falling so hard, with some wondering – could this be it for Bitcoin?
Has Bitcoin Lost Its Way?
Interest in Bitcoin – and cryptocurrencies in general – reached a frenzied pitch back in December of last year as mainstream media sources scrambled to cover the digital currency’s meteoric rise to an all-time high of near $20,000. Since then, however, that surge has lost much of its momentum as prices continue to decline.
Although Bitcoin continues to appear in the mainstream media spotlight on a near-daily basis, the focus has shifted to the price decline as well as speculation on just how low the cryptocurrency could go. It has caused many commentators, experts, and investors to wonder: Has Bitcoin has finally fallen off the map or will we look back at the first half of 2018 as just another one of its many dips on the way to the moon?
If a recent article in Forbes is any indication, we may as well pack it in right now. Written by Peter Tchir, the piece attempts to point out the various reasons the author feels the cryptocurrency appears to be imploding. Unfortunately, and with all due respect, most of the arguments made lack substance and – in some cases – understanding of the subject matter.
Inefficient Means of Exchange
This is probably the only argument the author makes that has any truth to it. As much as I love Bitcoin, I am also a realist. At the height of Bitcoin-mania, it was taking hours – even days – for transactions to be confirmed.
Adding to the misery of long transaction times were high transaction fees. During this time, people were paying $20, $30, even $50 or more to send Bitcoin transactions. At an average size of 250 bytes per transaction, that works out to as much as $0.20 per byte. Because of this, Bitcoin was ill-suited for smaller day-to-day transactions, like the oft-cited buying a cup of coffee.
The current Bitcoin landscape is much different now, something the author at Forbes fails to take into account. With SegWit posting close to 38% adoption in recent weeks and the Lightning Network growing to more than 2600 nodes and more than 5300 channels, Bitcoin transaction times and fees have been reduced exponentially. In fact, just the other day, a single bitcoin transaction worth more than $300 million was confirmed with a transaction fee of just $0.04.
So while this argument may have been true at one time, as solutions like SegWit and Lightning Network see increased adoption, Bitcoin adoption is likely to increase as well.
Regulation Making it Harder to Hide Wealth from the Government
Whenever a so-called ‘expert’, official, or other talking head starts pontificating on the evils of Bitcoin, one argument that never fails to get trotted out is how people are using Bitcoin to hide their money from the government. That argument, of course, usually segues in with the “Bitcoin is cryptocurrency of preference for criminals and Very Bad People” argument.
Bitcoin wasn’t designed to hide wealth from the government. It was designed to allow people to control their own wealth. There is a difference. And frankly, if anonymity is a user’s primary concern, there are far more privacy-centric cryptocurrencies out there. Bitcoin is hardly anonymous – in fact, there is an entire growing industry dedicated to tracking transactions.
Of course, even with all of these developments, Bitcoin is still viewed by many as the currency of criminals. Salacious reports of crimes committed involving Bitcoin are being plastered across the Internet, but the truth is that the vast, vast majority of bitcoin transactions are non-criminal in nature…