Bitcoin (BTC) has been an incredibly interesting asset to follow over the past couple of years. Last year proved to be the best year the cryptocurrency had seen after starting the year off at under $1,000 and growing to around $20,000 in value. However, this year, the news has been very different. Unfortunately, bitcoin has been seeing some serious pain, and it’s not the only one. Ultimately, the prices of cryptocurrencies across the market have fallen so hard that many are saying that the cryptocurrency bubble is bursting. However, is that the case? What’s going on with BTC and others in the world of crypto? Today, we’ll talk about what’s happening.
What’s Behind The Dramatic Decline In The Bitcoin Price
As mentioned above, while BTC had a great year in the market last year, that simply isn’t the case this year, at least, not so far. Ultimately, bitcoin and other cryptocurrencies have seen some serious pain. The real question is, “Why?” With cryptocurrency being a relatively new concept, there isn’t much by way of historical data to fall back on. Nonetheless, the reason for the decline in the price of bitcoin and other cryptocurrencies is relatively clear. Ultimately, there are a few big issues that the market is facing at the moment:
Regulation – The first, and largest, issue that bitcoin is facing has to do with regulation. At the end of the day, bitcoin and other cryptocurrencies live on what is known as a blockchain. This is a decentralized ledger that tracks everything that happens on the system. However, the decentralized nature of the ledger makes it very hard to regulate cryptocurrencies. While this is the basic concept behind bitcoin and other cryptocurrencies, it’s also the issue they face. The reality is that with the difficulty in regulating cryptocurrencies, governments may ban the use of them all together. That’s exactly what we’re seeing at the moment. Currently, South Korea and China are working on ways to regulate the system. At the same time, it seems as though India has given up these attempts after announcing a coming cryptocurrency ban just yesterday. The reality is that the decentralized nature of bitcoin and other cryptocurrencies that is attracting the attention of investors, consumers, and business is the same issue that is leading to problems with governments.
Transaction Limitations – Another big issue that bitcoin faces has less to do with regulation and more to do with the capabilities of the blockchain. The reality is that with all of the interest in bitcoin, the amount of transactions on the blockchain have climbed. Unfortunately however, the blockchain moves incredibly slow when hit with the massive amount of interest that it’s seeing. As demand grows, we’re starting to see that bitcoin simply doesn’t have the capacity to handle the demand. This is why we’ve seen other cryptocurrencies like Litecoin (LTC) emerge with the ability to process more transactions at a faster rate.
Skeptics – When bitcoin was running for the top, many skeptics warned to stay away from the cryptocurrency market as there will be regulatory issues and other issues in the future. While these skeptics were largely ignored in the past, their words seem to hold more weight these days, pushing bitcoin and others further down.