While many people are still trying to understand the basics behind the virtual currency, also known as cryptocurrency – the rise and fall in the prices of these valuables have sent investors in a panic.
It was January 2009, when the first cryptocurrency “Bitcoin” came out in public. The idea behind the creation was to replace the “fiat” currency or the local currency that we use. Assuming that technology is taking over our lives rapidly, the creators of cryptocurrency wanted to make the use of virtual currency a common practice. However, by the year 2016, the general idea shifted from substitution of legal money to an investment asset. This led more than 96 countries to accept bitcoin as a form of currency and allowed transactions between investors through online wallets.
However, at that time, the digital currency was worth only $27. But with each passing year, more versions of cryptocurrencies emerged while the price of the first digital currency – Bitcoin reached the all-time high of $17,900 on December 15, 2017. Unfortunately, the limelight didn’t last for long, and the virtual currency saw a sharp decline within 24 hours reaching $13,800 by December 22, 2017.
The prices dropped further falling below $7,000 in February 2018 leading to a state of anxiety amongst traders and investors. The sudden rise and decline have also made us wonder if the digital currency is really worth the hype it has managed to create for itself? And what possibly can be the reason for this sharp downfall in just a 2-month tenure?
After thorough research, we have outlined some predictions that can be the reason behind the sharp crash of cryptocurrency.
What is Behind the Downfall?
According to experts of the industry, the decline is a result of the change in policy by South Korea. Market analysts have claimed the small Asian nation as the world’s third-largest market for cryptocurrency falling behind USA and Japan. This is mainly because the country offers an exceptional IT structure along with high-speed internet – the main ingredients for a fast and easy crypto trading. South Korea alone has over a dozen cryptocurrency exchanges with a high demand for trading. Moreover, the country sees a 30% premium in trade when compared with other countries.
Above all, the citizens of South Korea are more tech-savvy and more open to crypto gambling. Unfortunately, the government of South Korea speculated over the high demand for virtual currency and is now considering a ban on such form of money. Apart from facilitating crime, the Korean government is wary of the virtual currency as it might increase money laundering. Following the announcement made by the officials, several cryptocurrency exchanges have been raided in South Korea along with a downfall in price worldwide.
The enthusiasts of cryptocurrency have even signed a petition on the official website of South Korea to call against the proposed clampdown. The answer to the 200k petitions is yet to be received from the South Korean president while investors have their fingers crossed in anticipation.
Lack of Technological Advancement
The blockchain technology that regulates cryptocurrency is relatively new even after so many years. Advancements in technology are yet to be seen which is not very favorable for the crypto infrastructure. Additionally, there has been no news of banks accepting the mode of cash as a mainstream leading many investors to question the future of cryptocurrency.
Media News and Speculations
The positive and negative reviews regarding cryptocurrencies also affect the fluctuating prices. The different prices become more apparent if influential individuals make the claims about the future of e-money. For instance, the billionaire investor Warren Buffet recently said to a news channel that the cryptocurrency would come to a sad end. Although he is unsure when and how it will happen – his forecasts claim that eventually, the fad of digital currency will end.
Goldman Sachs also anticipates that most cryptocurrencies will not survive in the long run. He believes that the cryptocurrency mania is similar to the dot-com fad of the 90s where the stocks of websites have fallen making way for titans such as Amazon and Google.
Such remarks by influential figures have a negative impact on the prices of cryptocurrencies and make aspiring investors hesitant about their investments.
Risk of Security Breaches
We are all aware of the vulnerabilities involved with online transactions. Since cryptocurrency is similar to e-money, it also possesses a lot of risks such as phishing, malware, and hacking. To avoid mischievous acts, it is essential that cryptocurrency investors ensure proper security measures by using updated versions of anti-virus on their computers. Moreover, they should double check the data of each transaction and make use of AirG spam less software where required.
What is the Future of Cryptocurrency?
To sum it up, the investment and trading of cryptocurrency are not for the faint-hearted. Just like any market, the digital currency is currently going sharply downhill. However, as the saying goes, “up like a rocket, down like a stick” – we can all expect the prices to oscillate accordingly to the market. And until the digital currency is legalized and accepted as standard money – we can safely say that the future of cryptocurrency still looks uncertain. Let us wait and watch where all the investment from digital currency ends.