Bitcoin prices and a high risk of wealth to the end of the game?

CoinDesk data show that 11 25 April bitcoin prices 10%, a record low of $3447.58, which is the lowest level since the 9 2017 years. In January this year, bitcoin prices as high as $16879, the decline has reached 80%.

In fact, bitcoin price volatility is not what happens. As early as June 2011, there have been 94% decline. The 2013 is also twice slump, decline reached 75% and 87%. It can be seen that the price volatility is one of the basic characteristics of bitcoin. The basic reason is that the value of bitcoin has great uncertainty, and speculative property is too strong, the high risk of gambling near to describe is not excessive.

Since its inception, bitcoin will be controversial, it is difficult to accurately measure the value of. Mainly because the underlying technology support such a virtual currency, namely block chain technology, for most people is still very strange.

There is no doubt that the blockchain technology itself is very important, it can be used as a reliable database to record information is stored, a permanent record of the ideal solution, but also solve the problem of trust in the process of multi point information interaction. That is to say, the block chain technology once mature and put into application, the value outlook is very considerable, it is worth looking forward to.

However, the ideal is full, the road is tortuous. So far, the research on large-scale application of block chain technology, still no breakthrough. However, with the concept of virtual currency derivative, but if appear like bamboo shoots after a spring rain. This is doomed, these virtual currency value rests on a shaky basis. Many investors invest in virtual currency, is actually a kind of speculation, said a serious point, is gambling. Also, the money is not for the development of block chain technology. That is to say, the popular virtual currency is a speculative bubble in some degree.

As an investment object, bitcoin virtual currency and stock is not the same. Stock is on a company’s assets are assets ownership, will give investors a return. As long as the growth performance of the company, then the value of the stock investors truly increased. Even if the stock price fell to market value evaporated, the corresponding physical assets are still. However, bitcoin itself does not create wealth, nor should any physical assets, once prices fall, the wealth is really just evaporate. Similarly, bitcoin monetary function is virtual, different from the precious metals such as gold and silver, is different from the government credit currency.

Financial speculation is an important driving factor of virtual currency price fluctuations. Bitcoin prices rose sharply, cannot do without fueling domestic and international capital speculation. So, for small and medium-sized ordinary investors, the investment risk of bitcoin is great, if you can not afford, it is best not to participate in.

Nevertheless, as a form of wealth allocation, bitcoin still has its value of existence. After all, as a kind of currency, as long as there are enough people believe that it can play the function of money, to some extent, it has the circulation of credit. Also, store of gold and other tangible wealth relative, bitcoin is more convenient to carry.

Bitcoin is widely criticized for investors and security issues, such as hackers stealing coins. Under the current technical conditions, it is difficult to ensure bitcoin holders own bitcoin is being stolen by hackers, and stolen after very difficult to track. But after all, this is a technical issue in time, and other related technical progress, I believe that these problems can be solved properly.

From the point of view of the current market conditions, it is difficult to return to the peak of $20000 bitcoin price volatility in the price, after all have a lot of confidence of investors caused a serious blow. However, as mentioned earlier, the price volatility is a basic feature of bitcoin, perhaps in the speculators participation, its price will usher in a wave rally. But anyway, still does not change the characteristics of high risk game, which is almost gambling.

In short, if the bitcoin speculation as the subject matter, so that speculators to make full preparations for significant fluctuations in the price of bitcoin, small speculators that do not have the ability to bear this risk is still the best of departure. And in the long run, as long as the development of technology can solve the security problem, bitcoin exists then the wealth from the configuration point of view, bitcoin is quite significant, not a stick killed. Whether is the biggest Ponzi scheme, also let the time to answer.

Each disc and (Applied Economics postdoctoral)

Source: Beijing News

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