Bitcoins Usage Essay Example

Bitcoins usage relies upon the development and understanding of cryptocurrency concept in the population. Its use appears restricted to a fraction of the population being a relatively young concept to dislodge the centralized banking system. It leaves many investors wondering its future value and price. The volume appears low compared to increased demand explaining the skyrocketing prices realized in 2017 (Wadhwa, 2017). The development of more coins could ultimately change their valuation and usefulness. The trend reflects in increased speculation led by leading investors, casting more doubt to the public. The presence of quarters declaring Bitcoin as mirage and fraud may stimulate panic movement whose contagious effects would easily spread leaving the holders with zero value. Continued speculation by investors could spark panic selling leaving the Bitcoin bubble to burst (Kherchi, 2016). The presence of skeptical conclusion casting Bitcoin as a speculative bubble casts more doubt to persuade investment. Increased commentaries from respected economists within the financial sector contribute towards the rapid loss of Bitcoins value.

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The mass adoption of Bitcoins by a partially informed population is catastrophic for its future growth. The ugly scenes of a stock market crash may prompt such investors to sell rapidly on seeing the decline in the Bitcoins value. It remains reasonable to remain skeptical over the stability of the Bitcoins prices from the sudden rise in value (Torpey, 2017). However, like other cycles in commodity prices, the market may correct the Bitcoins value as more opportunities to spend emerge. The viability of Bitcoins remains tied to more people embracing it as alternative money to the centralized banking system. While the security of the blockchain appears a rock solid, its implementation and recent shaping by the market introduces volatility that casts doubts into its viability (Brandvold, Molnar, Vagstad, Christian, & Valstad, 2015).

A recent slump in Bitcoins value locks its viability in its future usage coinciding with mounting concerns over looming regulation under the centralized banking system. The cryptocurrency value lost its value by half weighed down by the expected introduction of governmental oversight globally (Brandvold, Molnar, Vagstad, Christian, & Valstad, 2015). Leaving the value determinable by demand and supply forces initiates price manipulation fears. As earlier stated its increased susceptibility to hacking during exchanges convinces a majority population to place it as a speculative asset bubble. The regulatory backlash announced by multiple governments blend with bans issued by Facebook on all forms of cryptocurrency advertisement places investors on the uncertainty edge. The continued tumbling of Bitcoin value by half from $19,511 witnessed in December 2017, invalidates its use as the alternative to conventional currency (Kherchi, 2016). The increased spate of negative headlines in India and Japan delays Bitcoins ability to become a viable medium of exchange.

The implementation of potential crackdown promised by India adds to an already worsening reception that may delay the bitcoin adoption. The presence of countries such as India promising to illegitimate crypto-assets while exploring blockchain technology in other aspects invalidates the viability of Bitcoins uses in the global payment system. The inability to penetrate high growth economies such as India amidst $500 million heists witnessed in Japan pushes back its adoption in the global scale (Meyer, 2018). Similar responses in developed markets may restrict Bitcoins usage regionally. That reverses the gains made in the United States exchanges by making Bitcoin future contracts while bans imposed by South Korean pushes it backward. Prohibiting anonymous in South Korea ignites a bank started by China (Wadhwa, 2017). Unless proven that regulatory framework will overcome the uncertainty in its valuation, bans by a section of developed countries push back the adoption Bitcoins.

The attachment of Bitcoin mining to blockchain technology weakens its economic viability in future. Besides analysts casting the cryptocurrency as a speculative asset bubble, mining cryptocurrencies feature heavy-duty crunching of numbers. It involves huge acquisition cost of computers and heaving electricity consumption. The circumstance makes mining expensive. The cost exposure in mining hardly was an issue when Bitcoin value priced above $10,000. However, its crash towards the conclusion of 20017 shows little recovery. Analysts place break-even point in mining activities at $8,600 (Meyer, 2018). Estimating an average electricity costs unit at six cents or a low of three cents would still be expensive for Bitcoins mining to remain economically viable. The trend with TSMC to lower its projection in mining-rig processors. With such an entity generating ten percent of its revenue from mining, it shows more power intensive and expensive acquisitions makes Bitcoin mining unviable (Elizabeth, 2017). According to Morgan Stanley's analysts, the mathematical problems miners solve in the assembly of Bitcoin blockchain leaving the cryptocurrency ability to earn reward difficult. Even where Bitcoin would retain its current value, it would lose economic viability in the rapid decline in mining profits.

Bitcoin performance resembles the Tulip investors by Dutch in the seventeenth century and dot-com boom in the late'90s. Dutch speculators drove the tulip bulbs prices to unimaginable levels prompting ordinary population to rush into purchases. With a majority of them using their homes as collateral hoping to accumulate wealth, they lost their investment as prices crashed (Wadhwa, 2018). A similar trend appeared when low-level investors lost their life saving following the dot-com bubble burst. Investment in the dot-com companies saw many venture capitalist regard it as the foundation of newer economy aligned to long-term investment outlook. However, the rush only benefitted the already rich who cashed on huge bonuses along the way. Bitcoin pattern shows a similar bubble building that may take longer to burst. The ability to rise to astronomical proportions indicates Bitcoin use as a digital currency (Wadhwa, 2018). A viable currency should show stability to protect the users from suffering remorse when holding or spending Bitcoin. Today, users are prone to fear of losing value.

Like tulip and dot-com investment, Bitcoin valuation rose rapidly affirming satisfaction of greed and speculation. The Bitcoin valuation gained by five million factors from $25 in 2010 to $19,000 by 2017 (Russo & Lam, 2018). Positive prediction in the price to rise in the long-term draws unsuspecting investors similar to the tulip bubble and dot-com boom burst. Individuals hyping the Bitcoins would likely cash out their investment, leaving the entrants to lose their savings. The decentralism leaves such victims with no source of financial relief (Kherchi, 2016). This awareness invalidates the viability of bitcoin made difficult by the system's design. The design is difficult to regulate and oversee red flags as a reason for increased money l...