BitCoin value dropped by almost $30 today as its largest market – MtGox.com – suffered a 1 hour outage. The value of BitCoint went from above $145 to below $117 within the hour before evening out at around $125 to cap off a $20 drop for the day.
It was first believed the BitCoin exchange MtGox.com fell victim to a hacker attack however later reports indicate that the site’s servers could not handle an upsurge in traffic. The upsurge in traffic is believed to be caused by recent European media coverage of BitCoin as an alternative investment market – an alternative believed to be taken up by a lot of Cypriots and Spaniards – as threats of further taxing of people’s bank deposits loom.
A lot of naysayers believe BitCoin is a highly volatile currency subject to fluctuation as a result of a number of factors. This claim is backed up by some experts.
Writes Reuters’ influential financial journalist Felix Salmon in a Wednesday morning blog post on Medium.com
“The value of BitCoins, it turns out, is highly sensitive to media coverage… in July 2010, the influential technology site Slashdot posted a short item about bitcoin which sent the price soaring tenfold — from less than a cent to about 7 cents per bitcoin — also in a few days. And a single post on Time.com in April was enough to double the price of Bitcoins in a week, from 80 cents to $1.60. Even the article you’re reading now is appearing now because of the current bubble, and will, at the margin, help to continue to inflate it…”
I recently talked about BitCoin here on DNExpert outlining how some domainers were using BitCoin to pay for domain names, so much so that NameCheap had adopted BitCoin as an official currency of payment for goods and services.
Considering the volatile nature of the electronic currency, as demonstrated by today’s catastrophic drop in value, one can’t argue against BitCoin being a very risky proposition as an investment alternative.
Would you invest money in BitCoin or have you? Would you accept BitCoins as payment for your domain names?