Is bitcoin finding its killer app? Falling prices aren’t the real reason to worry about bitcoin
There are three stories bitcoin’s proponents tell about what bitcoin technology could potentially do for the world: That bitcoin will become a currency used by many people to purchase goods; that it will be a superior method to store value over time; and that it can form the basis of a highly secure and efficient payments system. The volatility of the price chart suggests that storing value, at least so far in its young life, isn’t bitcoin’s strong suit.
And the transaction chart suggests that people aren’t really using bitcoins more often, and efforts to market easy-to-use payments programs to merchants and consumers haven’t meaningfully expanded bitcoin use. If people aren’t using it, and its value is falling, any currency is sunk.
But the real chart that should spell worry for bitcoin investors is this one, which shows that, despite the hurly burly—and more than 100M$ poured into bitcoin start-ups by venture capitalists—actual use of the currency hasn’t really increased. Recent gains in transaction volumes have coincided with a falling price; that is to say, people are selling.