Mt. Gox Bitcoin Down 90%: From $1200 to $110.

Bitcoin, the virtual currency occasionally touted as an alternative to the dollar, has recently faded in popularity slightly fter experiencing a major surge of mainstream attention mid-to-late last year. Facing certain hurdles such as government interference and massive hacking incidents, it is to be assumed that Bitcoin would lose some value. However, Bitcoin being sold on the most widely used Exchange has lost a great deal more value than most people probably expected: approximately 90% of it’s peak value has been lost.

This chart is indicative of prices as of the evening on February 20th. Later, they fell to nearly $90. About six months earlier, Mt. Gox Bitcoin was selling for nearly $1200.

This price goes up and down. I do not doubt that it may rally again to hundreds of dollars at some point. Conversely, maybe the troubled Mt. Gox will close up shop for good, and investors will lose millions of dollars.

At any rate, it is irrelevant if the price rebounds. The point is that Bitcoin has been a veritable slot machine for over a year. The price goes way, way up, and oftentimes goes way, way down. People who bought at $50 and resold at $1200 made a fortune. People who bought at $1200 probably lost at least a little money. People still holding their $1200 Bitcoin have lost a fortune, unless the price rallies once again.

Some Bitcoin enthusiasts still maintain that Bitcoin is a viable currency. I still disagree. It’s a slot machine investment. It’s something people buy in the hopes that some other fool will buy it back for a higher price. It’s called the “Greater Fool Theory”. It is Tulip Mania 2.0. Nobody wants a currency that fluctuates like this. Imagine if dollars fluctuated in value this way. It might make life more interesting, but it would certainly make it a lot more difficult to plan anything, financially speaking.

Where currency is concerned, stability is key, not unit value. It doesn’t matter if Bitcoin skyrockets above and beyond $2,000. What’s important is how long it stays there. Stability is key. Until the price of Bitcoin finds long-term stability, it is not even close to approaching any type of viable currency status.

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