The past year has seen an unprecedented increase in the value of the Bitcoin. Although some financial experts have predicted that the cryptocurrency has a great future, there are many others who have expressed their reservations about Bitcoin, and have advised caution.
The kind of surge that has been witnessed in the value of the Bitcoin (from $966 at the beginning of the year to $7350 on 2nd November 2017) was seen on an earlier occasion too between June 2013 and June 2014 when the price of the bitcoin increased from $100 to $600 (in 2009 a person bought 5000 bitcoins for $27 only; in 2010 the price of the bitcoin was $0.39 only!). However, critics have drawn attention to the fact that the surge was followed by a fall in the price by around 25-35%.
Financial experts and analysts have pointed out that whenever there is a surge in the price of the bitcoin, investors from the world over get attracted to the bitcoin and when enough money has been poured in by them the downslide starts.
Leading financial experts and analysts from around the world have indicated that the Bitcoin could well turn out to be a financial bubble that could burst. Financial expert Mike Novogratz, the partner of Galaxy Investment Partners, has only last month warned that Bitcoin was a bubble waiting to burst. American investor Jordan Belfort has indicated that the Bitcoin is the biggest scam of them all. Prominent Saudi investor, Prince Al-Waleed Bin Talal, has likened the Bitcoin to Enron, the American energy giant that went into liquidation.
The Bitcoin came into existence in the year 2009 as a digital alternative to the traditional currency represented by notes and coins as also debit and credit cards. In the past few months, the USA, European nations, Russia and Japan have initiated steps to introduce cryptocurrencies on the lines of Bitcoin. However, the Bitcoin, an unregulated cryptocurrency, in spite of not enjoying the patronage of any country, has, on its own, continued to increase in value, thereby drawn attention from all over the world. On the other hand, the glaring difference of opinion between financial experts on the efficacy and the longevity of the Bitcoin has left the average lay person in a state of confusion.
Former American Senator, Ron Paul, has drawn attention and expressed his concerns on the Government’s being in a position to carry out surveillance of Bitcoin transactions. According to him, the Bitcoin must have the backing of Gold, so that the economy will not stray away from its course. He has expressed serious reservations on the recent surge in the price of Bitcoin. Saying that it would not be advisable to shift the investment focus from gold to Bitcoin, he has clearly stated that he does not trust the Bitcoin.
Tidjane Thiam, the CEO Credit Suisse, one of the most prominent global financial institutions has dubbed the Bitcoin as a bubble. Addressing a news conference, he said “I think most banks in the current state of regulation have little or no appetite to get involved in a currency which has such anti-money laundering challenges.” Thiam added that investors were only buying into the digital asset “to make money,” and described it as “the very definition of speculation and the very definition of a bubble.”
Both, Warren Buffet and Jamie Dixon, the CEO of one of the world premier financial institutions, JPMorgan Chase, have stated that the Bitcoin is one big fraud and that the currency will not survive for long.