Why Bitcoin Prices Need to Fall to Survive

David Jackson, MBA  |

As the price of Bitcoin hovers around the $8000 mark, the giddy days of Decembers $20,000 seem a long way away. Open up a few different bitcoin news sites and you’ll a good mix of differing opinions over what’s next for the Daddy of all cryptocurrencies. There are some that say bitcoin will hit $100,000 whilst there are others that say the price of the digital currency, already just above a half year low, could drop even further.

Whilst the holders will want prices to rise, for bitcoin and other cryptocurrencies to survive as cryptocurrencies and not as commodities, then there needs to be more retail take up. Your everyday person is not spending their crypto coins at the supermarket, in restaurants, or even in big purchases like cars or holidays. Whilst there are options available in some of the afore mentioned examples, they are few and not popular.

If blockchain has supposed to have revolutionized the way we buy and sell, why are we still using our credit cards at record levels? One theory is nobody wants to be the guy that pays for his pizza with 10,000 bitcoins (worth about $80,000,00 today) and be mocked for an eternity. There’s even a bitcoin pizza day, celebrated online, in honor of Laszlo Hanyecz’s infamous transaction in 2010.

The problem is that Bitcoin and other cryptocurrencies are seen as investments by its holders and as commodities by the regulators. The US, which accounts for 26% of Bitcoin volume, does not regard bitcoin as legal tender, neither does the UK, South Korea or China, the other big players in the crypto sphere. There’s one group that are out of that equation and that is the retail group.

What should be the lifeblood of any currency, the retailers, those that keep the flow going, have been squeezed out of the cryptocurrency world because of the high prices and extreme volatility. That combination is acting as deterrent for bitcoin holders to part with something they have read will quadruple by the end of the day/week/month or year (delete as appropriate). They are not going to chip away at their $8,000 coin knowing just four months ago it was worth $20,000 with no reason it can’t reach those dizzy heights again.

The only way that bitcoin and other cryptocurrencies can survive as currencies and be a viable alternative to fiat currencies, is more people to start opening their digital wallet and start spending. For that to happen, prices need to fall and stay low. People would pay for their affordable plumbing their pizzas and their holidays, with bitcoin, if the price was low and stable. Two things it currently is not.

And here lies the problem, by losing its currency status and be classed as a commodity like gold and silver then, then there will be further attempts to regulate and restrict bitcoin. They may bring stability to its price but is that really the future of the blockchain revolution? Probably not, but what is for certain is that 2018 and beyond will see a battle for bitcoins’ soul, which if it wants to be the currency of choice worldwide, it needs start being more accessible with a changed public mindset.

DISCLOSURE: The author owns Bitcoin

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