Controversies and Future in Bitcoin
- Invention and Launch
- Buying and Selling
- How Bitcoin is Created
- How Bitcoin is Used
- Controversies and Future
The number of controversies involving Bitcoin is virtually unending. From Mt. Gox (perhaps the most notable Bitcoin exchange hack) to Silk Road, Bitcoin has always been at the center of controversy. The anonymous nature is one of the strongest components of Bitcoin, but it has also been its biggest drawback.
Mt. Gox is not likely to be a name that you heard before, especially if you are new to Bitcoin as a whole. Ask someone who has owned BTC from any time earlier than 2014, however, and you can bet that Mt. Gox will bring back some bad memories.
Whether or not you had money on the Mt. Gox Bitcoin exchange, you were likely impacted. In 2014, Mt. Gox was the largest BTC exchange in the world by a large margin, with over 70% of all transactions taking place under its umbrella. This made it the perfect target for thievesthiefs.
Though many of the details are somewhat blurry, it is presumed that 850,000 Bitcoins were stolen from Mt. Gox. Of these 850,000 coins, 750,000 belonged to customer accounts. While Mt. Gox attempted to continue operating, they eventually were forced into bankruptcy. Since the transactions could not be redacted, the stolen funds were as good as gone. Many lawsuits have been filed, but only a small fraction of the missing coins were ever recovered. As a result of Mt. Gox’s unpredictable collapse, the value of Bitcoin fell nearly 40% amid the saga.
Silk Road was the first and most notorious underground market to give the Bitcoin name a black eye. Launched in 2011, it operated largely with Bitcoin as its go to payment method until its shutdown by the FBI in October, 2013. Since the premise of Silk Road was almost entirely illegal activity, the anonymous nature of Bitcoin made it the perfect fit for payments.
Ultimately Silk Road’s first iteration would be shut down and its owner, Ross Ulbricht, would be arrested in San Francisco. While the entire Silk Road story is nothing short of fascinating, the fact that it was operated by a person in the United States made it even more brazen. The second version of Silk Road was launched shortly thereafter before its own closure in 2014. Surprisingly, the leader of this operation was also based in San Francisco.
Yet another version of Silk Road was online from 2015 until 2017 before it closed as well. For now, this appears to be the end of Silk Road.
The future of Bitcoin
The future of Bitcoin is as unpredictable as its past was foreseeableforseeable. Bitcoin is one of the most volatile vehicles in the entire world, whether you compare it to other investment options, currencies, or even property. Rarely is there a product whose value can fluctuate by 50% many times over, all the while sustaining a very large user baseuserbase. Bitcoin, however, is the rare combination of enduring and volatile.
Bitcoin will be impacted in many different ways by many different people and events over the coming years. Just like stocks or commodities, Bitcoin’s price and overall viability are heavily influenced by current events around the world. In the event of war, political turmoil, or economic collapse, you can bet that Bitcoin will see significant side effects.
It is unclear, and likely will be for many years, whether Bitcoin will end up being the prevailing digital currency of the world. It may be one of 50 currencies with daily use, much like modern foreign exchange markets. Conversely, it could end up becoming the only cryptocurrency with real, defined, and proven staying power.
It is most important to remember that, above all, Bitcoin is very, very fragile. One major hack could send the price into a downward spiral that could require months of recovery. Or, in this event, it may not recover at all. It would be extremely unlikely, outside of hyper inflation, for a government’s currency to completely implode overnight, but with Bitcoin, this will always remain a possibility.
When buying, trading, or using Bitcoin, you should always remember that your decisions should consider the risk involved. Bitcoin is a highly innovative, world changing idea that has captivated people around the world, but, it is still a product in its infancy.