BitCoin was seen to suffer a flash crash, but this didn’t surprise anyone. The popular online currency managed to tumble from $266 to just $55 in just one day of trading.
The experts point out that the reason of flash crash wasn’t only speculating. It was apparently compounded by a huge DDoS attack on Mt. Gox – the biggest BitCoin exchange. The platform suspended trading one day, claiming it would go offline for a 12-hour period of “market cooldown”.
The news came as no surprise for the market observers, because BitCoin grew by over $200 in less than 2 months. Unfortunately, the flash crash could have long-term consequences, further eroding the currency’s rather shaky reputation. Recently, some of legitimate businesses began using BitCoin, so they may feel very cross indeed.
In the meanwhile, a number of analysts have been sounding the alarm for a while now, pointing out that BitCoin is just too volatile and risky to be used by huge services as a mainstream currency. For instance, UBS stockbroker Art Cashin described the crash as “trading tulips in real time”, referring to the first market crash caused by Dutch tulip speculators a few centuries ago, at least according to Gordon Gekko. The media reports said that it’s a rare thing that the industry got to see a bubble-like phenomenon trade tick for tick in real time. Art Cashin emphasized that the future of BitCoin, like any other currency, is going to come down to trust.
As a result, even vocal supporters of the virtual currency started voicing serious concerns. For example, Mike Caldwell, a 35-year-old US engineer, went as far as to mint physical BitCoins at home, protected by tamper proof holographic seals. Caldwell believes that the currency might be in for a bumpy ride and points that BitCoin’s woes are just like the eternal struggle between Hollywood and online pirates, with everyone understanding who is winning that one.
Although it is clear that BitCoin is a very promising concept, the latest crash shows that it’s still a long way from becoming a proper mainstream currency. This is a fate of all young currencies, but hopefully it will be alright soon.
The experts point out that the reason of flash crash wasn’t only speculating. It was apparently compounded by a huge DDoS attack on Mt. Gox – the biggest BitCoin exchange. The platform suspended trading one day, claiming it would go offline for a 12-hour period of “market cooldown”.
The news came as no surprise for the market observers, because BitCoin grew by over $200 in less than 2 months. Unfortunately, the flash crash could have long-term consequences, further eroding the currency’s rather shaky reputation. Recently, some of legitimate businesses began using BitCoin, so they may feel very cross indeed.
In the meanwhile, a number of analysts have been sounding the alarm for a while now, pointing out that BitCoin is just too volatile and risky to be used by huge services as a mainstream currency. For instance, UBS stockbroker Art Cashin described the crash as “trading tulips in real time”, referring to the first market crash caused by Dutch tulip speculators a few centuries ago, at least according to Gordon Gekko. The media reports said that it’s a rare thing that the industry got to see a bubble-like phenomenon trade tick for tick in real time. Art Cashin emphasized that the future of BitCoin, like any other currency, is going to come down to trust.
As a result, even vocal supporters of the virtual currency started voicing serious concerns. For example, Mike Caldwell, a 35-year-old US engineer, went as far as to mint physical BitCoins at home, protected by tamper proof holographic seals. Caldwell believes that the currency might be in for a bumpy ride and points that BitCoin’s woes are just like the eternal struggle between Hollywood and online pirates, with everyone understanding who is winning that one.
Although it is clear that BitCoin is a very promising concept, the latest crash shows that it’s still a long way from becoming a proper mainstream currency. This is a fate of all young currencies, but hopefully it will be alright soon.
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