Bitcoin Controversy

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Bitcoin and associated terminology have skyrocketed in both value (peaking around 17,000 USD as of December of 2017) and attention within the past few years, gaining traction as a new decentralized currency that didn't rely on third parties for secure transactions and spawned various offshoots. At first, it may seem attractive to invest in these ever-increasing coins, but they present various problems in an economic perspective at various levels. The volatility is based on the beliefs of the people who invest in the system that it won't fail, and various factors threaten the stability of bitcoin and others which could lead to a crashing or at least a continually unstable market. This leads to the question, of whether or not American investors …show more content…

The price of Bitcoin itself is volatile, influenced by external factors such as number of investors and its inherent properties. The ability to pay others directly without going through a centralized institution while still being a safe transit is one of Bitcoin's core qualities, but in that Bitcoin is backed by the actions and beliefs of its users rather than an institution. This also allows for a greater freedom in which Bitcoin can be utilized, which is sparking some controversy. In a paper by Ploteanu and Stratulat, (2015, pg. 4) they state banks have taken a stance against bitcoin, because of its decentralized nature as well as the risks by associating with the currency such as "money laundering, financing terrorism, and the levels of anonymity Bitcoin provides for its users." This makes Bitcoin increasingly riskier and difficult to utilize today in the modern world because central institutions such as banks will not accept them, forcing users to find workarounds such as converting their Bitcoin elsewhere. Swartz (2014) …show more content…

She looks at its percentage volatility of Bitcoin within 2013, 143%, compared to typical currency/stock value, 10 and 25% respectively. Swartz points out more flaws, "Unlike gold, a bitcoin's value is not tied to a resource and its value cannot be recovered." (2014, pg. 5) With this in mind, Bitcoin is proving to be unstable, seemingly riding on public frenzy and a few qualities that have little to no real use in the real world. Other external factors such as other cryptocurrencies containing more variations and improvements such as Ethereum, the perceived value by the public on Bitcoin, media coverage and others impact the constantly fluctuating value of Bitcoin

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