By Shawna-Kay Scarlett
Bitcoins and virtual currencies alike have had their fair share of shine in the press, receiving raves for being the wave of future currency. On the converse, bitcoins and virtual currencies alike have faced speculation in its serviceability due to concerns of online security, lack of fixed value, and its stark appreciations and depreciations that have taken place in its short history of existence.
Many have also delayed putting that first foot on the bandwagon, in the thought that bitcoins are somehow still in that trial bubble that will at some point burst after its run of trial and error; much like its numerous e-cash technology predecessors. The fact that financial regulators don’t understand the cryptocurrency well enough to regulate it and see it merely as an experiment in the peer-to-peer community, presents yet another hurdle.
Certainly the recent occurrences including the arrest of BitInstant CEO, Charlie Shrem, for money laundering and provision of funding for sale of illegal drugs, also doesn’t help the view of the industry. For the flood of new Bitcoin startups seeking venture capitals and institutions that are irrefutably looking to avoid all involvements in any offences under the Racketeer Influenced and Corrupt Organizations (RICO) Act, this isn’t the kind of exposure that is welcomed.
With the shutdown of the notorious illegal drug market site, Silk Road (where Bitcoin was the only currency accepted), the People’s Bank of China’s ban on financial firms from handling the digital currency and the Bank of Russia’s warning on the use of the currency due to its ties to illegal activity; neither helps the outlook on the prospects and future of Bitcoin. After the People’s Bank of China’s press release, we saw bitcoins which once peaked at values over $1,200 drop to the $600-$700 range, which has since been on a steady, but slow incline.
Bitcoin adoption accelerates as value rises
One cannot however say that the end is near for Bitcoin. We saw where the value of the digital currency surfaced at about $13 at the beginning of 2013. The turnaround for the digital currency really began once the buzz picked up on the technology, in combination with press and interest received from venture capitalists and institutional investors; allowing for the jump to $300. It was namely with China’s introduction to the market that allowed for it’s $1,000 threshold break in November of 2013.
Even after the country’s ban, the digital currency still ended with strong values at the $800 mark to ring in the New Year. Bitcoin’s value may have been driven up by speculation, while it will take an increase in transactional use that really proves it as a healthy currency.
While we can’t ignore the ill practices of others, and what they choose to do with the currency; its operations are not to be compartmentalized. Irrespective of negative impacts caused by past manipulation of the technology, whilst receiving both international and government backlash; non-profits, corporate America, tertiary institutions and big box retailers alike are seeing that Bitcoin is “the next big wave” in online transactions.
Bitcoin has become a source of acceptance for donations by organizations such as Wikileaks and Internet Archive. The non-profit digital library announced they were ready to accept donations in bitcoins as well as allowing employees to receive portions of their salaries in Bitcoin. Bitcoin gained greater recognition last year, when dating site OkCupid and online food ordering service, Foodler, began accepting the digital currency as a valid payment option.
In October of 2013, when Silk Road owner William Ulbricht was arrested, over 27,000 BTC was seized. Valued at the time at around $3.5 million dollars, the US attorney’s office recently revealed that they were ready to unload and auction off the BTC, which is now valued, as of January 2014, at a whopping $25 million. The University of Nicosia in November of 2013, announced it now accepted bitcoins as a valid payment option by students to cover tuition costs, with their CFO stating that bitcoins were the “gold of tomorrow.” As of 2014, companies such as Overstock and Zenga have also announced the preparation to accept and test of the currency for it’s gaming purposes respectively.
Bitcoin good for the homeless?
Is Bitcoin’s existence also for the betterment of the less fortunate? Wired.com recently reported on Jesse Angle, a man living homeless and on the streets of Pensacola, Florida, who gets by daily with the earnings of bitcoins. Finding a space in a local park offering free wifi, he uses the services of BitcoinGet, which pays in bitcoins for driving artificial traffic to videos. Where Angle earns up to 6 cents a day for watching the 12 video max cap, in combination with Bitcoin Tapper, an app which hands out a few pennies worth of bitcoins for free daily, he is able to provide food for himself daily with the use of these services. Having used both methods for the past three to four months, Angle has earned between four to five Bitcoins, equivalent to $500-$630.
Angle learned about bitcoins through the Pensacola charity organization Sean’s Outpost, which in itself has raised over $32,000 in donations through Bitcoin solicitations vs. traditional payment methods, and has been able to buy upwards of 16,000 meals for the homeless of Pensacola. Angle says bitcoins have helped the homeless community tremendously, as with the set up of online wallets, you don’t need a street address or photo ID, and you are able to convert these coins into foods and services all without the use of a provision of personal information. The Android App Gyft on his Metro PCS smartphone allows him to convert his bitcoins into redeemable gift cards, like one he uses commonly for Papa John’s, where he has already purchased and had a pie delivered from the service. He considers himself and his friends “the homeless geeks,” because of their possession and usage of the technology to get by, even though facing current hardships.
So where is the future of Bitcoin heading? It’s evident that there is demand for the cryptocurrency, so irrespective of speed bumps statured in the currency’s path, its community continues to thrust it forward. To those doubting the future of the cryptocurrency, the expert in the space advises, “Buy a bitcoin and use it, because you’ll quickly find that it’s better than every other technology out there.”