Is Bitcoin the new wave that will take the world by a storm or merely a bubble waiting to burst?
a cruptocurrency that can be used as a substitute for cash for online payments. In fact, the only thing you need is an online Bitcoin account or Bitcoin wallet
in order to make an online purchase. Despite having quickly gained interest in the past few years, many people are now starting to show concern as to whether Bitcoin is simply a bubble. In other words, something that expands extremely rapidly can also end in an instant. If that bubble bursts, many problems will certainly follow, especially indebtedness.
BI Intelligence, a leading researcher of Business Insider, notes that the Bitcoin price skyrocketed, setting a new record at the rate of 1 coin to USD 1,820 (the existing highest price on record was 1 coin to USD 1,461). This price continues to climb due to the support from Japan and the increased volume of purchases via BitFlyer, the largest currency exchange service provider, as a result of investments made by large financial institutions. Japan announced its approval of the recognition of Bitcoin as a currency as at 1 April 2017. So far, it seems as though Bitcoin is enjoying great success, showing a high potential for growth and future development. Furthermore, the continuously increasing price has attracted many potential buyers.
But how sustainable is that success, when concerns of the “Bitcoin bubble” are becoming more serious? According to the board of Bundesbank
, the Central Bank of Germany issued a warning to dissuade people from buying Bitcoin because it does not recognize this currency. This could be the case where investors are rushing to jump on the Bitcoin bandwagon in order to generate profits without considering all of the risks associated with such currency, e.g. the possibility of newly-prescribed rules that conflict with the use of this cryptocurrency. These factors represent a threat for investors and have an adverse impact on the value of Bitcoin.
The concept of Bitcoin being a bubble is echoed by Mark Cuban, billionaire, entrepreneur, and owner of the Dallas Mavericks (NBA), who continuously posts tweets on his concerns: “I think it’s in a bubble. I just don’t know when or how much it corrects. When everyone is bragging about how easy they are making $=bubble.”
MARK CUBAN: Bitcoin is a 'bubble'
Cuban’s tweetstorm comes on the heels of bitcoin’s record of nearly USD 2,900 per coin. The cryptocurrency gained in 33 of the past sessions, with an increase of 144% during that time, and is up 200% so far in 2017.
However, given that Bitcoin is not entirely subject to any specific institution or law, all transactions would be considered public, and all information and changes would be kept in the Blockchain system
. As a result, many world-class banks or persons related to the completion of transactions using bitcoins, are now considering Blockchain as a potential solution for reducing costs and enhancing the efficiency of the operations system in accordance with the commitments. Banks also conduct surveys on new technologies and methods, such as collaborations with Fintechs, participating in memberships at the international level, or even trying to come up with solutions within their own teams.
Sarah Kocianski, senior research analyst for BI Intelligence, compiled the information, reasons, and methods for exploring Blockchains in order to prevent the creation of a bubble as follows:
- Most banks are exploring the use of blockchain technology in order to streamline processes and cut costs. However, they are also looking to leverage additional advantages, including increased competitiveness with fintechs, and the ability to use the technology to create new business models;
- Banks are starting to narrow their focus, and are increasingly honing in on tangible use cases for Blockchain technology that solve real problems faced by their businesses.
- Regulators are taking an increased interest in blockchain technology, and they're working alongside major banks to develop regulatory frameworks.
- Blockchain-based solutions will start to emerge in different areas of financial services. The most successful solutions will solve specific problems for banks and attract a large enough network to create widespread benefits.
It is evident that even though there are concerns about the possibility of a bubble, many parties are continuously working to improve, modify and find solutions especially in the case of banks in Japan. For more information, see Japanese banks using Ripple's Blockchain, the Google-backed system, to make payments
. Stay tuned, for the future of Bitcoin in the world of Blockchain has only begun.
Source: Business Insider