The Biggest Problem of Bitcoin is Not Devaluation, but Mediocre Performance

When bitcoin dollar price stands at its historic highs around $1100, nobody would expect that only after one year, the value of this virtual currency has lost more than 70%, despite this virtual currency is invisible, unreachable and cos countless people go insane as well as the existence of several tens of millions of dollars investment and financing startups. There are still lots of people take bitcoin as asset means of investment under that circumstance. In fact, this decline level has already been enough to make its investors disappeared in any assets level.

Bitcoin’s price goes down almost every day, which can no longer be news, and the concerns from the media have been quite different than that in its birth time.

People have always been cared and worried about bitcoin, but the more to worry about may not merely be a price move, but what the table shows.

According to the record of Coindesk, a bitcoin information portal website, the past year (Sept. 2013 to Sept. 2014), $ 286 million VC financing was accepted by bitcoin directly or indirectly relevant startups, ten times more than that from Sept. 2012 to Sept. 2012. However, the biggest problem is that the global usage levels of bitcoin like use frequency and transaction volume haven’t surged in the last year as VC financing amount did. (Seen as below)
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What’s more, in the last year, the close down and replacement of silk road, the world's largest trading market Mt.Gox declared bankruptcy, bitcoin founder Satoshi Nakamoto re-floating three or four times, and no one knows who he is etc. Bitcoin industry experienced so much, plus more than 70 times VC financing, that’s $ 286 million entered this industry, but bitcoin is still unable to come into the mainstream view.

Bitcoin evangelists always predict these three things will happen;
1. Bitcoin will become a trading mode in daily consumer (Replace the currency means of circulation function)
2. Bitcoin will be a more advanced way to retain the value (Replace the currency means of store function)
3. Bitcoin will become the basis of a safer and more efficient payment system (Completely replace the currency)

At least from the nearly a year performance from $1100 below $350, replacing store means has no questions. Besides, from the analysis above, the comparison of VC financing amount and transaction level, bitcoin has little currency means of circulation function. Bitcoin trading is still very complicated for these green hands never contact the bitcoin, it’s not that kind of currency “convert my cash into bitcoin and then give it back to me’’. Furthermore, according to the absurd history of Mt.Gox, from prosperity to bankruptcy, it’s difficult for bitcoin to become a currency “convert all my bitcoin into money and give money to me ASAP’’. The principle is easy, if the mainstream use bitcoin less, how can it hold up currency name?

Notably, to verdict this fantastic virtual currency seems some kind of premature, what's more, we cannot simply based on bitcoin performance over the past year's, to predict its future performance in the next coming year. But there’s a vital factor we can refer to, that’s the profit-seeking nature of venture capital. One round VC fund usually calls for one to three years or even longer to get the investment money back and completely quit at last. If bitcoin preforms average, which can only say the performance of bitcoin startups is much poorer than that.

Original Link:http://www.btcside.com/new/detail/2378
Translated by Bitell

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