History: 2011 bitcoin collapse

The blue fox notes (ID:lanhubiji), the author: Timothy B. translation: Lee, Leo, the daily planet authorized forwarding.

 History: 2011 bitcoin collapse

Objective: This article was published in October 19, 2011, the title is “the collapse of bitcoin, compared to the highest point in June fell by more than 90%”, although this is very old, but it reflected the real situation 7 years ago, you can also feel when everyone’s mind. At that time, bitcoin plummeted also soared after, from the highest point down more than 90%, at that time the market is still very small, bitcoin highest point is less than $50, when it fell below $3, the bitcoin community atmosphere of pessimism, even a lot of people talking about it to die before the price can be low. But the magic is that over the past 7 years, bitcoin is still affected, and more people, more expensive, the only constant is the volatility of it is still as big as before. In such a cold winter, over 7 years ago in a short essay, will bring us what feel? Deja vu? Where is the way of the future? What do you see?

Bitcoin is the world’s first point of the digital currency, below $3 on Monday. In June the price reached the highest point, so far has dropped by 90%. (Translation: This is the highest point in June 2011 and October 2011, the price at the time of publication of the June 2011 price of bitcoin price of more than $30, while in October 2011 fell below $3. This decline is not similar with now?)

Supporters argue that bitcoin currency has fundamental advantages compared with the traditional. This system is designed to realize the transfer of funds under the condition of no center mechanism, so that bitcoin users from other bank charges. The bitcoin protocol also provides strong anonymity, the issue of not more than 2100 million, supporters believe that this will give a stable monetary value.

Unfortunately, the value of the money did not prove stable in practice. From April 2011 to June the media reported several wave to promote the value of bitcoin rose to $1 it never rose to more than $30. To reach the highest point after a series of public relations disaster bitcoin.

A bitcoin users claimed that his PC $500 thousand worth of bitcoins stolen; he may have become a victim of bitcoin stealing malware. A few days later, the most popular bitcoin exchange hacking, led to the suspension of trading days, and caused another wave of bad news.

Trading resumed at the end of June, the price is about $17, but after that, bitcoin prices began to decline steadily. In August, the most popular bitcoin bank one of the claims was hacked, and has lost hundreds of thousands of dollars worth of bitcoins. This led to a further price to fall below $7. Bitcoin 9 month below $5, now worth less than $3. (Translation: refers to the 2011 October price)

This is bitcoin destiny? The value of bitcoin (like any legal tender as) is ultimately driven by the relationship between supply and demand. For example, the supply is controlled by the Fed, demand driven by the size of the U.S. economy. Specific currency supply is automatically increased, approaching to 21 million, bitcoin bitcoin trading volume demand by promoting valuation.

This is the fundamental challenge of bitcoin: as far as we know, bitcoin trading volume pricing is also very small. Yes, there are hundreds of businesses that accept bitcoin payments, but most of them don’t seem to pay attention, most of them accept dollars, euros or other currencies. In their business, only very small part will use bitcoin. (Translation: 2011 data at the time, trading volume is also very small.)

This is not surprising. Although there is no formal bitcoin transaction costs, but bitcoin transactions exist with the dollar or Euro trading risk. If bitcoin users store on their computer, there is a risk of malicious software to access the wallet and steal the money. On the contrary, if they will bitcoin as online electronic wallet, then the wallet service may have security vulnerabilities, or the service provider itself may be a liar.

Because there is a risk of volatility. For example, bitcoin on Monday 8 a.m. to noon on the east coast lost about 15% of its value. I buy bitcoin who are expected to spend in the afternoon, may be found in bitcoin denominated prices suddenly rose 15%. In contrast, 2% of the credit card transaction costs seems to be more reasonable.

The value of bitcoin currently only less than 3 dollars, is still higher than the April price of around $1. Theoretically speaking, bitcoin transactions will increase enough to prevent the value of the currency decline. However, the monetary value is built on the basis of its reputation, 5 months of bad news and devaluation caused serious damage. In fact, bitcoin forum mood has been very low, bitcoin fans discuss it announced dead before can go to low price. Out of the chaos will be very difficult.

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