As the week opens to the prices of cryptocurrencies taking up new lows with the nosedive wiping tens of billions off the market cap, analysts point out that one of the major parties responsible for this slump is the market’s top player, Bitcoin.
Remarkably, 2018 has been a rather dramatic year for cryptocurrencies with volatility taking up its position in the crypto market and cryptocurrencies bearing the brunt of it all. Bitcoin, despite being the market’s favourite, is not left out and has been noted to be on a free fall especially since its dip in February.
The Law of Demand and Supply
As explained by basic laws in economics, the crypto market is not exempted from the law of demand and supply. Bitcoin is equally not exempted from this law and in reality; one of the major reason for its free fall is the decline of its demand in certain circles.
It is no news that one of the major reasons for the integration of Bitcoin is its use as an alternative form of payment. And as the financial world moves closer to digitalisation, the employment of various means of achieving this goal has been noted to be gaining traction.
Bitcoin, despite its popularity, has been dropped by different platforms that might have aided its adoption into mainstream financial market due to the scalability issues associated with related transactions.
According to recent reports, about four different companies have dropped the digital asset with many more shunning the coin in favour of other altcoins. Stripe, had in April 2018, announced its intention to stop all Bitcoin-related transactions on its network and tech giant, Microsoft, had also stopped accepting the coin as a payment form.
Software developer, Steam, had also declined its usage as a means of transacting due to claims of high transaction costs. Scalability issues meant that there were lower transaction speed and as cited by Forbes, using traditional credit cards worked 10 times faster than with the Bitcoin blockchain.
This of course, relegated Bitcoin to the position of just being a digital gold which can be used as a form of investment instead of a day-to-day payment vehicle.
The role of Crypto Crackdowns
The decentralisation of Bitcoin has been a major topic on the forefront of crypto regulations. With many countries considering this as a threat to the global economy in the nearest future, the adoption of the cryptocurrency has been rebuffed in various countries globally.
The US has, in 2018 not been very favourable towards cryptocurrencies in general and Bitcoin as the top player in the crypto market has been knocked down a few pegs due to this. 2018 also saw crypto exchanges in China fighting regulatory wars with India joining in with tougher stance against Bitcoin and its supporters.
This at least meant that crypto investors with accounts in such countries were locked out of the Bitcoin market.
The Hacking Episodes
Though Bitcoin is decentralised, most crypto exchanges are unfortunately not. This means that their susceptibility to hacks and all forms of cyber threats is high. 2018 had seen various cryptocurrency exchanges with Bitcoins listed on them announcing that their exchanges had been hacked.
With the Bitcoin market very sensitive, this induced a chain of reactions in the market, causing a free fall in the prices of Bitcoin. While these factors prevail, the Bitcoin and cryptocurrency ecosystem as a whole is entering into a new era.
The narrative of blockchain elements playing the singular role of payment vehicles is being redefined. Users are beginning to explore the fundamental uses and application of blockchain technology. Hence, despite the dwindling fortunes in the price of cryptocurrencies, there is a new buzz around product development and actual encroachment of blockchain in the mainstream.
Ifeanyi Egede is an experienced and versatile blockchain technology and cryptocurrency content writer and researcher with tons of published works both online and in the print media. He has helped several startup companies grow their businesses in the blockchain and cryptocurrency space. Ifeanyi has close to a decade of writing experience, and when he is not writing, he spends time with his lovely wife, Tega and adorable daughter, Chimamanda.