Monday, 10 February, Bitcoin prices plummeted to values unforeseen, hitting its low below $690 from a Friday close of $703.57, according to a CoinDesk index. The culprit? Many claim halts to withdrawals announced by Mt. Gox, the virtual currency’s largest exchange, sparked the drop.
Officials at Mt. Gox claim the halts were in reaction to a technical issue that was long in the making. Surges in activity put strains on the system, unable to handle large volumes of movement and requests, causing issues and delays. Mt. Gox’s announcement explained that in order to fully understand the nature of the issue, all withdrawals had to be paused to allow for a clear technical view of the issue at hand.
A timeframe has not been provided on when the issue will be resolved and withdrawals will be allowed, so consumers will have to wait. The trading platform, however, continues to function as usual for all customers, allowing for purchases and exchanges.
In light of the drop, activity still buzzes around Bitcoin purchasing and trading, with numbers peaking at up to 50,000 in early February. The January peak pales in comparison, sitting at just 11,000.
With the sharp drop in pricing, may first-time buyers of Bitcoin see a superb opportunity to break into the market, while others continue to make trades, seeing this glitch as a small roadbump. Critics of Mt. Gox’s move state technical issues are simply a diversion to what really ails Bitcoin.
CNN Money reports on what critics have long been stating about Bitcoin: it’s hard to trace, governments are having difficulty governing this currency, and because this currency belongs to no country, it’s hard to assign accountability for it.
Worldwide scrutiny of Bitcoin’s legalities, reliability and usability casts shadows on its growth, as it rides the peaks and valleys of a currency forging its way into our world.
Bitcoin has frequently seen market hype through media attraction, extremely high levels of activity, price drops and stabilization several times since its inception in 2009, as outlined in an economic report given by the Washington Post. Despite all this, the take-up of the virtual currency has just grown and grown and today, you can find many Bitcoin poker sites allowing it to be used for gambling.
Many foresee that this virtual currency will slowly stabilize in the future, as it rides out is own unique path of growth. Former Federal Reserve Chairman, Ben Bernanke, states that Bitcoin “may hold long-term promise, particularly if the innovations promote a faster, more secure, and more efficient payment system.”
Most periods of volatility have been caused from extreme periods of rapid growth, something not usually seen in currencies we normally use on a day to day basis. So, to expect normal behavior from Bitcoin, as in actual currencies, may be asking for too much. In addition to this, Bitcoin is pretty young for a currency.
Today’s world is different, depending on multitudes of transactions completed in a virtual space. It’s important to remember that Bitcoin is shaped by this same technology, which inherently makes it different from coins we see and touch.
Looking at how well it has been accepted thus far, it’s pretty safe to say this currency is going to mature its own way, going through its own growing pains, and finally becoming something less volatile and possible more accepted as time unfolds.