Bitcoin price down over 50 percent in 2014

Those looking for a non-conventional investment opportunity or to use a non-traceable, anonymous currency were pretty excited by the bitcoin phenomenon, the digital cryptocurrency which came into existence in 2009. But for those buying into the dream, it has proven to be painful in recent months with the currency showing extreme volatility and considerable downward pressure, at times punctuated by flash crashes.

The price of the bitcoin, started 2014 at $746. Yesterday the price slid to $338, though today it is back at $368, that was a drop of 53% year to date! Partly the fall is explained by a sharp rise in the US dollar this year, but also things haven’t been helped by events such as the collapse of MtGox, the Japanese bitcoin exchange, in February 2014 losing over £200 million in the process for owners of the currency. In October 2013 the FBI shut down the Silk Road online market and seized 144,000 bitcoins worth $28.5 million at the time.

David Morrison: What is your perspective on Bitcoin and its future as a digital currency?

For retailers using the bitcoin as a transaction, the volatility of the currency is a significant drawback and for now it is little used on legitimate web sites. The Bank of England estimates there are around 300 transactions a day among bitcoin users in the UK. Most users simply hold their bitcoins, and retailers who accept them set prices in traditional currencies, using bitcoin only temporarily as a payment method.

Contrarian Investor UK

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