As declared by the Allianz Global Investors’ Hofrichter, the price of Bitcoin has turned into a fragile bubble on the verge popping off, owing to its fluctuations and other disastrous flaws and can burst at any point of time, resulting in loss and bankruptcy.
The price of Bitcoin has slid dramatically by 2000% over a span of a year from a peak value of 19000 dollars to less than 8700 dollars, which was the value that Bitcoin got traded at on Wednesday, as recorded by the BPI of CoinDesk.
The reasons behind this effervescence include the rise in the volume of trading, the dearth of fiscal regulations and authority, the introduction of similar instruments of finance like Bitcoin futures, the volatility of price, the lack of an inherent worth, the absence of any claims to governmental assets and many more. Added to these are expensive transaction charges and incapability of storage that prove that investing in Bitcoin will incur nothing but ruin. The high amount of energy and electricity required to mine and produce Bitcoin is another factor that contributes to the Bitcoin’s imminent downfall.
What had once been an asset owned by criminals, has now become an internationally traded currency. There are more than two hundred firms launched by CBOE and CME that serve as a platform for the investment of Bitcoin and altcoins.
However, Hofrichter has also voiced the merits of the Blockchain that powers Bitcoin, saying that the cost of verification of transaction is quite low. As Blockchain removes the need for third-party intervention and enables peer to peer transaction, the speed of transaction gets quickened besides the exchange getting securely and permanently archived. Major corporations are developing projects on Blockchain and are applying it to businesses like financial service and management of supply chain.