Bitcoin at the Present
So just how widely accepted is bitcoin currently then? Its acceptance is growing
almost exponentially. At first it was predominately used amongst individuals and small
business owners that operated their own small scale websites that sold goods like Tshirts, books or other small goods. However bitcoins acceptance has not only spread
further than ever, but to big name companies such as Dell computers, Virgin Airlines,
Overstock.com, Expedia, Pay Pal, and Google just name a handful of the hundreds of
companies. Non-Profits also have been accepting bitcoin as donations. Organizations like
Khan Academy, Students For Liberty, and Foundation for Economic Education which
was the first non-profit to be given a million-dollar donation in bitcoin (Oberg, C. 2013).
A big reason many people have criticisms of bitcoin and other cryptocurrencies
are because of how volatile prices are currently. A large reason for this is because
cryptocurrencies are still a relatively new phenomena that's going through its initial
growing pains but will stabilize as time goes on (Lee, T. B. 2014).
Bitcoin has gained its
massive value at a nearly incomprehensibly speed from a historical perspective.
CoinDesk.com tracks the history of bitcoins value and from their data we can see that bitcoin was started in January 2009 and for months was valued at $0.00. Then people
started to see its potential and first wave innovators began to experiment with bitcoins.
Bitcoin achieved real value in July of 2010 valued at $0.05. It then only took until
February of 2011 that bitcoin was equal to and then surpassed the US dollar in value. By
August of 2012 bitcoin had increased in value by 1000% up to $10 per bitcoin. Then
quickly by March of 2013 bitcoin increased in value by another 1000% up to $100 per
bitcoin. Finally by November 2013 bitcoin again increased 1000% in value up to $1,000
per bitcoin. Bitcoin hit an all-time high of $1,145.46 on November 29th 2013. As of
writing this paper July 2016 bitcoin has been maintaining value between $600-$700 over
the past few months and is showing more and more gradual price changes in overtime.
So what are a few reasons for bitcoins price fluctuations and do these price
differences actually matter?
Some reason is speculation based since bitcoin is so young.
When Mt.Gox, one of the world largest bitcoin exchanges went bankrupt, bitcoin lost a
lot of value because it scared people. However when the U.S. government shut down in
2013 bitcoin hit its massive peak because people were worried about the U.S dollar and
losing trust in the U.S government so they turned to alternatives. When the Russian Ruble
was collapsing in 2014 that also correlated with a spike in bitcoin value. Bitcoin also
spiked after the "Brexit" in 2016. There appears to be an inverse correlation between trust
and faith in governments and their currencies and the value of cryptocurrencies like
bitcoin. However, the price of bitcoin doesn't actually matter all that much. Bitcoins real
value isn't just in its function as a currency; it's in the fact that it can bring property rights THE EFFECTS OF CRYPTOCURRENCIES ON THE BANKING INDUSTRY AND MONETARY POLICY
into the digital age with the use of the blockchain and its function as a payment
system/meta currency (Heggestuen, 2014).
Future of the Blockchain
41
The use of the blockchain, while it's connected with bitcoin, is not limited to just
bitcoin transactions. On August 5th 2014 a couple made history by having the world's
first bitcojn wedding. It was registered not with any government or organization but
submitted to the blockchain (Marty, B. 2014). The couple displayed a QR code of a 0.1
bitcoin transaction as the permanence of their vows that will exist forever.
It's important to remember that the blockchain is the weight behind bitcoins
value. The blockchain is the solution for the threat of double count in the digital age. It's
the way for two complete strangers to be able to exchange in commerce over the internet
as if they were doing so with cash. No need for a third party vendor, no massive fees, just
free trade. One example of the blockchain being used is with a website called
Proofof'Existence.com. The site allows individuals to upload files to certify custody of the
file at a given time without exposing any personal information or the contents of the file
itself. This could be massive in the world of intellectual property rights. The future
possibilities are massive, from stock exchanges, music distribution, and to even voting.
