To say bitcoin has been on a wild ride would be a gross understatement. The digital currency has been on the defensive from central banks that want to see it gone. Exchanges have bankrupted, hackers, suicides and Newsweek chasing after an old guy that may or may not be the creator of the currency. All of this and the price has remained in the $600 range. Not bad considering any one of those items could have cratered the currency, and still might.
The big issue surrounding bitcoin now is the lack of a stable exchange. Mt. Gox, the de facto public face of bitcoin imploded under the weight of hacks and possible thefts. BitInstant is being accused of money laundering to the black market site – the Silk Road. Not exactly confidence builders for a currency in its infancy.
SecondMarket is trying to stem the tide of bad news coming from exchanges by opening a U.S. based exchange. It will force regulators hands, which may not be a good thing in the wake of the bad publicity of late. It probably doesn’t help when the secondary face of bitcoin are the Winklevoss twins. They bought a ticket on Virgin Galactic using the digital currency. With their own ventures in bitcoin, one wonders if the currency can be taken seriously.
Regulators are already having issues with the currency. Fed Chairwoman said the Federal Reserve couldn’t regulate bitcoin even if it wanted to. In the wake of Mt. Gox bankruptcy, Japanese authorities have searched for a regulator to help deal with the fallout.
The suicide of an American executive in Singapore put a darker light on the fledgling currency. Autumn Radtke jumped to her death after wrestling with business and personal issues. She had started the exchange First Meta, but it had failed to gain traction in virtual currency space.
The Creator Unmasked?
Newsweek made a big splash with a cover claiming that they had found the mysterious Dorian Nakamoto in California. A 64-year-old physicist behind the newest investment fad? The pushback against the story was immediate. Experts weighed in and said it wasn’t him, and the guy at the center of the article denied he was the creator.
The criticism came fast and furious for Newsweek. Michael Wolff, from the Guardian, slammed Newsweek in a post: “Newsweek is a lot like Bitcoin. Bitcoin pretends to be a currency, but it lacks the most important aspect of a currency: stability. Newsweek, now owned by a dubious outfit called IBT, pretends to be Newsweek, a venerable and stable journalistic brand, once owned by the Washington Post.”
Where does this leave bitcoin? For now the currency has shown it can take multiple punches. Still sitting in the $600 range shows that investors are willing to give it a chance. Even if it has been a wild ride. The currency went from nothing to $1200 then flashed crashed multiple times. It has taken on the look of a penny stock.
What the currency needs now is some semblance of stability. It cannot keep going from one crisis to the next. We will see what the rest of 2014 brings for bitcoin.