Bitcoin lost more than one-third of its stated value at one point on Wednesday and was down over half from its recent peak. The news is that BTC China in Shanghai, which is now said to be the world’s largest Bitcoin exchange, has stopped allowing customers to use the Chinese Yuan to buy Bitcoins.
What is interesting is that Bitcoin deposits, Bitcoin withdrawals, and Yuan withdrawals are said to not be effected. So what! If money cannot go in and most Chinese citizens do not have access to any foreign currency at all, then that is effectively trying to turn Bitcoin into a ghost currency rather than a shadow currency.
The Chinese central bank already told banks to stop allowing Bitcoin transactions. Now that appears to be spreading to payment companies.
As a reminder, Bitcoin’s challenges are massive. No one (or outside of a few) really knows anything about who created Bitcoin (is Satoshi Nakamoto even a real person?). A lost Bitcoin is like losing cash on the street, unlike your bank accounts. Bitcoin has no central bank to defend it. There is no national law protecting Bitcoin. There is no army that can go to war with a nation or a group to defend the integrity of Bitcoin. There is no “Full Faith and Credit” guarantee for Bitcoin. There is no national taxation authority to support Bitcoin. Alan Greenspan came out of the crypt to call Bitcoin a bubble.
Anyhow, those are just the problems I can see with it. Also omitted was personal concerns about the Bitcoin endgame may play out, with someone laughing all the way to the real bank. Please see the charts below, one is in Yuan (BTC China) and one is in US Dollars (MtGox). This is just not how a legitimate currency trades at all, short of nuclear war or at a severe inflection point in central bank actions which make quantitative easing look like a kid’s game.
Will Bitcoin die? That remains to be seen. What is obvious is that fortunes have been made, and some fortunes may be lost, around Bitcoin. What is becoming evident is that if Bitcoin was a person celebrating Christmas, it has a lot of coal in its stocking.
The truth is that the world needs something like Bitcoin, even if it ends up not being Bitcoin itself. It would answer so many unmet needs and it might just be the first form of micro-payments that actually works. What may come as a replacement if Bitcoin does not work would be some central bank(s)-backed and coordinated effort. The downside there is that the real conspiracy theorists (and gold bugs) would come out of the woodwork.
Top Gaining Stocks
Top Losing Stocks