Bitcoins: the devil’s work or the currency of the future?

The price of the bitcoin digital currency has soared in recent weeks and months. It is breaking new records on an almost daily basis, having only recently exceeded the USD 2,000 mark. The acceptance of bitcoins is rising and the regulation of digital currencies is progressing too. However, bitcoins repeatedly appear in a negative context: the digital currency continues to be shrouded by a veil of illegality.  This is compounded by its extreme ideological background. The first users amidst the 2008 financial crisis were libertarians and anarchists, whose common aim was to topple the existing financial system with bitcoins. The fact that the developer is known only under its pseudonym Satoshi also generates a sense of mistrust. Nonetheless, the price of the bitcoin digital currency has more than doubled in the last two months. There are already several million bitcoin users worldwide and their numbers continue to rise on a daily basis. Nearly 9,000 stores worldwide meanwhile accept bitcoins. The online figure is significantly higher, at an estimated 100,000. These figures show that the bitcoin digital currency is currently more popular than ever. However, little is known about bitcoins and how they operate. This is not least down to the fact that the concept of bitcoins differs fundamentally from that of conventional currencies. Bitcoins (or digital currencies in general) are defined by their independence from any central institution. There is no doubt that the use of bitcoins therefore entails a high level of risk. Their value has fluctuated sharply in the past, the market is comparatively intransparent, there is no “lender of last resort” and the market has been tainted by the reputation of illegality for many years now. However, significant progress has been made recently concerning the last point. A growing number of countries have adopted the regulation of bitcoins or digital currencies, thus making them socially acceptable. The associated increase in transparency and growing liquidity in the market, amongst other things, has reduced the volatility of bitcoins, even if they continue to fluctuate more than other currencies.

It is difficult to predict the future price performance of bitcoins. One decisive factor in their development is the extent to which they manage to establish themselves as a recognised means of payment. Bitcoins will otherwise find it difficult to assert themselves in the long run, solely as an object of speculation with no intrinsic value. There are currently still some factors, such as the limited block size, that prevent the use of bitcoins as a means of payment. However, solutions to these problems are already in place. We can therefore imagine that bitcoins could establish themselves as a kind of niche currency.

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