Bitcoin exchange given the boot a bit too soon
By Tom Stasiunas, Contributing Writer
The short-lived success of Bitcoin exchange came and went within the last 8 years rather quickly. The digital currency and payment system was founded in 2008 and enjoyed a breakout three years ago before suffering sharp decline, resulting in the filed bankruptcy of Mt. Gox, the Japanese-based Bitcoin hub formerly responsible for about 70% of all Bitcoin exchanges. Now, after several months of decline, Bitcoin has experienced almost two straight months of positive growth, their most since the end of 2013.
Experts and market contributors believe they have identified two main causes for the recent growth. The first is that Bitcoin is now receiving significantly increased credibility from more and more big-name, well established financial institutions signing on to be a part of the market.
Two notable firms, Goldman Sachs and Morgan Stanley, are spearheading that particular charge. These firms are aiming to revamp the trading of loans and securities. Because Bitcoin remains the largest decentralized digital currency, it is experiencing a snowball effect as financial firms see others beginning to utilize the blockchain technology. Meanwhile, investors are acknowledging that they stand to gain if Bitcoin continues its climb. The end result is a rapid growth rate that continues to build on itself.
Another popular explanation stems from the current economic state of China. After decades of meteoric, unprecedented growth, the Chinese economy is experiencing significant turmoil. Due to the uncertainty, many investors are pulling their money out of China and looking to move it elsewhere. Bitcoin, as the biggest fish in the digital currency pond, offers a viable alternative route to accomplishing that end goal. As the yuan becomes devalued, investors will look elsewhere for alternate options.
The European Union also recently passed down a decision to make digital currency tax-exempt in the same way as conventional cash, giving these investors more incentive to utilize the digital route, as they will no longer incur a tax penalty for doing so.
It stands to reason that decentralized digital currency will play at least a sizable role in the future of financial services. As even more firms switch over, it is becoming ever clearer that we may have written off Bitcoin a bit too soon.