News / Economy

    Questions Surround Bitcoin Future

    Questions Surround Bitcoin Futurei
    X
    February 28, 2014 12:09 AM
    There are troubling questions about the future of the digital currency known as Bitcoin. The value of the virtual currency has fluctuated wildly in recent months - plummeting from an all-time high of $1,100 last December to just under $600 today. The latest worry comes after the sudden closure of one of the largest bitcoin exchanges this week. Mil Arcega has more.
    There are troubling questions about the future of the digital currency known as Bitcoin.  The value of the virtual currency has fluctuated wildly in recent months - plummeting from an all-time high of $1,100 last December to just under $600 today.  The latest worry comes after the sudden closure of one of the largest bitcoin exchanges this week.  

    Is Bitcoin dead?  That’s a question many investors are asking after the abrupt closure of Tokyo-based Mt. Gox, one of the largest bitcoin exchange sites.  

    Currency trader Kolin Burges flew in from London to get answers, when he found himself locked out of his own account.

    “I had 311 bitcoins in there, which at the time was worth around $300,000.  So it looks like that has disappeared," said Burges.

    No one really knows why the bitcoin broker shut down.  But economics professor Arun Sundararajan says signs point to a security flaw.  

    “It seems to have been a security breach more than anything else where a lot of the bitcoin was stolen by hackers.  And as a consequence, Mt. Gox had to stop trading.  And of course this has sort of lowered the value of the bitcoin traded at Mt. Gox considerably," said Sundararajan.

    Former Mt. Gox CEO Mark Karpeles declined to answer questions.  He resigned earlier this month.  But Karpeles has never shied from talking about the risks involved.

    Here’s what he told the Reuters news organization last year.

    “Bitcoin would quite qualify as a high risk investment.  If you buy bitcoins you should buy keeping in mind that the value could be zero the day after," said Karpeles.

    Although the recent cyber problems may have damaged public confidence, Bitcoin enthusiasts say that's because many still see virtual currency as a commodity.  Bitcoin miner Erick Watson spoke to VOA via Skype.

    “I would encourage people not to speculate on Bitcoin as a store of value.  I would encourage them to look for opportunities to employ Bitcoin as means of transacting," said Watson.

    Despite its slow adoption rate, Watson says Bitcoin is far from dead.  In fact, he sees a bright future ahead for Bitcoin and other virtual currencies as consumers discover practical advantages for private transactions.  

    “We’ll continue to creep along as businesses adapt Bitcoin rather slowly, and then we’ll hit some inflection point in the relatively near future, beyond which people will really begin to adopt it heavily," he said.

    That may happen sooner not later.  On February 28th - the first bitcoin counter opens in Hong Kong allowing people to buy the virtual currency without going online.

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