By Tianyu Wu
Bitcoin, as the first-born kid in the world of cryptocurrency, is now facing an alarming stumble on its trend of rapid, but steady, growth. Its price rose from 0.09$ in 2014 to the mind numbing number of $19,000 on December 2017 at its peak. But then, in 2018, the price of bitcoin has kept dropping to the low of $5,800. Though some players came out as winners from Bitcoin’s dynamic price fluctuations, the dwindling speculation may signal a decrease in the public's trust in Cryptocurrency as a whole and the blockchain technology that supports this industry. When looking at the price chart of this crash, many cryptocurrency investors are longing for an explanation. How does such a thing happen, and what does this mean for the future of Bitcoin? What about other types of cryptocurrencies?
Financial media has pointed their finger at every crypto related event as the reason for this downturn. The public seem inclined to a more conspiracy-like explanation where large-scale price manipulation is the reason for cryptos price suppression. According to the proponents of this allegation, the lack of regulation in the Bitcoin market creates an opportunity for “bitcoin whales”, entities that hold a large amount of bitcoin, to direct the price of Bitcoin toward their benefit at the expense of smaller bitcoin holders. Though these allegations have no proof other than unusual trading patterns shown on Bitcoin’s dynamic pricing trend, they have created public discussion on the Internet. As a result, the American Justice Department started a case investigation in August of this year upon the possible price manipulation of Bitcoin. In this scenario, Satoshi Nakamoto’s original scheme for ridding financial transactions of the “tyranny” of government regulation may come to an end.
After a year of abrupt changes and shocks, maybe it is time to contemplate what is going wrong with Bitcoin. The designer of this progenitor cryptocurrency harbored the idea of cypherpunk, which is a mix of mild anarchism with techno-utopianism, and this idea helped Nakamoto bring out the mechanism of Blockchain. His (or her, or their) thoughts were released to a public forum in an essay that outlines the creation of a digital currency that would liberate society from the manipulation of huge corporations and the restrictions imposed by governments. However, it’s not difficult to see that the development of Bitcoin in the real world has deviated from its designer’s intent. It has not become an alternative for fiat-currency. In fact, among the top 500 retailers in the world, only 3 support bitcoin as a medium of exchange. Even despite the limited acceptance of cryptocurrency, the lack of regulations makes Bitcoin the opposite of a user-friendly currency. In the case of users accidentally rewriting their hard-drive, there is no way for the user to recover their lost coins. What’s more, instead of embracing a large user base and becoming an alternative for real money, the volatility in Bitcoin has attracted expert futures traders, but these traders only make the volatility more extreme.
Despite the negative feedbacks Bitcoin received this year, there is still hope. Just like the dot-com bubble didn’t crush the rise of various technological innovations based on the Internet, this drawback on the market price of bitcoin will hardly be the doom of cryptocurrency and blockchain technology. But in order to consummate its full potential, computer scientists and aspiring entrepreneurs need to make cryptocurrencies more accessible and user-friendly toward everyday users. In the next few years, whether a cryptocurrency can provide a comfortable experience for users may become one crucial principle for the development of the cryptocurrency industry.