It’s been yet another turbulent fortnight for Bitcoin, the crypto-currency that’s either the best or worst thing in the world right now, depending on your news source.
A headline from Stanford University reads ‘Stanford scholars say Bitcoin offers promise, peril’. That about sums it up at the moment. News has been breaking thick and fast on Bitcoin, and most of it has been negative of late. First there was the February 7 announcement that Apple had cut leading purse app, U.K.-based Blockchain, from the iOS App Store. Blockchain complained that Apple’s “bean counters (sic) are now firmly in charge” of the company. The app had over 120,000 downloads, which represents a small but significant fraction of bitcoin’s 2.5 million users.
This was followed by the slow implosion of Japan’s Mt Gox, which just a few days later had to halt all currency withdrawals amid an ‘increase in withdrawal traffic’. Now the firm is in turmoil after a glitch allowed thieves to steal users’ Bitcoins. Mt Gox users have taken to firesales for the rights to their frozen bitcoins ($118: around $450 less than the rate on unaffected exchange sites), banking that Mt Gox will fix the problem.
This merry-go-round has already been likened to the subprime lending that led to the global financial crisis. “The market is telling you there’s a huge risk that Mt Gox is completely insolvent,” Leigh Drogen, CEO of Estimize, told CNN. Mt Gox is the largest bitcoin exchange around, by some margin. It’s little surprise, therefore, that at the time of writing a bitcoin’s value was around $567, down from an all-time high of $1,242 in December.
But there was good news too. Bitcoin ATMs are springing up all over the world, particularly in America, and Mt Gox’ sticky situation doesn’t appear to have translated to lower prices on other exchange programs (however, the current markets are redder than a political map of southern Texas – prices are falling.) And despite the gloomy news, it seems that people are still highly enthused by the currency, which Bitcoin Foundation CSO Andreas M. Antonopoulos views as its biggest challenge. “Bitcoin is so much more than the price,” he says. “At this point, the most important metric is user adoption and on that metric Bitcoin is growing exponentially. Adoption is all that matters right now. Bitcoin works as a means of exchange regardless of price.
“Volatility continues to decrease over time and more and more people are joining this global phenomenon,” adds Antonopoulos. He also rubbished claims that Russia’s prosecutor-general has banned bitcoin there, saying the Russia decision has been “misrepresented” in the media. “It would not be the first time a narrow ruling has been mistranslated as a blanket ban, that’s what happened with China,” Antonopoulos says.
In a surprising turn, and in response to Mt Gox’s implosion, Tyler and Cameron Winklevoss, of almost-Facebook fame, and owners of around $25m in bitcoins, have launched their own price-tracker for the currency called ‘Winkdex’. Aside from the fact it sounds like a questionable dating service, Winkdex aims to reflect “the true value of a bitcoin…an index that better reflects accurate pricing is the next step in wider acceptance of bitcoin as an asset class,” said the twins. Judging by the last two weeks of news, that might prove harder than they thought.