Virtual currencies, lead by Bitcoin, are the future, according to aficionados and a new class of currency trader who no longer trusts the flat currencies (paper money) of traditional markets like the US dollar, Aussie dollar, euro or yen.
But erratic trade and a world mired in intrigue and claims of drug dealing and criminal activity has seriously dented the perception of Bitcoin as a medium of exchange. Indeed, even though Bitcoin recovered more than 75% from the recent collapse, in the wake of the closure of the Silk Road website, can it really be taken seriously by more than insiders, criminals and geeks?
News over the weekend however that US authorities had seized 144,336 Bitcoins from computers belonging to the boss of Silk Road, Ross William Ulbricht, who went by the online Avatar of Dread Pirate Roberts, has seen prices drop from $233 last week to a low of $175 over the weekend before recovering to $193 yesterday.
An asset that genuinely aspires to be a medium of exchange shouldn’t lose 15% of its value in such a manner, especially on such a small volume of trade and such a small seizure of Bitcoins.
Having offended US regulators because, it seems, it is outside global finance, Bitcoin’s biggest challenge may not be volatility and wild price swings, but pressure from the establishment.
But like rock and roll in the 50s, maybe the “parents” of the global financial establishment just don’t get it, because the buyers keep coming back.
I’m starting to think I might just buy some next time Bitcoin has a crash. Maybe it is the future after all.