Bitcoin, the
digital currency that has made news because of its association with illegal online
activities cannot shake off its image that it is an unstable experiment.
Facing mounting scrutiny and government
intervention around the world, recent news for Bitcoin is not good. Last week, Russia's top prosecutor declared
that Bitcoin and all anonymous payment systems are illegal. One of the largest
Bitcoin exchanges in the world, Mt.Gox,
prevented investors from pulling out their bitcoins, citing a
technical glitch. And Apple has
removed the last remaining Bitcoin digital wallet from its app
store. This is in addition to the recent arrest of a Bitcoin exchange CEO was arrested
for money laundering.
The price of bitcoins has fallen from
above $900 to $618 as of Monday. That massive drop makes it a dangerous
investment and difficult to use as a currency. Merchants who accept the
currency have a difficult task of calculating exchange rates when accepting
payments or paying vendors with cash. Some business owners cash out their
Bitcoin accounts on a daily basis to avoid the wild price fluctuations.
Many governments are also trying to
figure out how to deal with Bitcoin. Since the currency is traded in virtual anonymity,
it is difficult for regulators to monitor for illegal activity.
The uncertainty about Bitcoin's future
makes gauging its riskiness a near-impossible task, according to James Rickards, economist and author
of Currency Wars: The Making of the Next Global Crisis. "Bitcoin
could disappear tomorrow with government intervention," Rickards said. This
threat of government intervention has kept Bitcoin from going mainstream.
But some advocates feel that anything
that removes bad actors from the digital landscape will help it to emerge as a
stronger currency that provides more transparency and thus wider acceptance.
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