Bitcoin has had an eventful 2017.
Starting the year at just under $1,000 per coin, Bitcoin has recently spiked to over $7,000 this month. 2017 has marked an all-time high for bitcoin trading volume. The market for bitcoin never closes, and nearly anyone in the world with an Internet connection can be a participant.
However, some surprising trends are also emerging amid the froth. For example, the pace of bitcoin acceptance as a payment method seems to have slowed among legitimate retailers. Bloomberg reported in July 2017 that of the leading 500 Internet sellers, only three are accepting bitcoin, which is down from five last year. Merchants have not seen much demand for bitcoin payments, and many customers report that they’d rather use fiat currencies and hold their bitcoins for appreciation. A common complaint was that converting bitcoin to other currencies can come with high fees, making it less attractive as a payment system.
It’s becoming clear that bitcoin and cryptocurrencies, in general, are finding more success as an asset class and potential store of value than as a medium of exchange. Just as someone would not buy a Diet Coke with gold bullion, neither are they willing to spend bitcoin directly on goods and services. This limitation could be a blessing or a curse. Owning and trading bitcoin without ever converting to a fiat currency allows for faster transactions, fewer fees, and lower tax exposure – but it also discourages any financial diversification beyond investing in other cryptocurrencies.
While bitcoin is not finding much of a use-case beyond “digital gold,” the blockchain technology that it’s built on is being tested for diverse uses, such as registering marriage certificates, recording stock transactions, shipping container supply, and tracking the ownership of diamonds. And in a nod to the original use for a blockchain, any company or person desiring a private, trackable currency can now have one – provided they can get others to accept it. 2017 has been the year when many mainstream companies started seriously exploring blockchain technology, and the media has been taking note.
