Bitcoin is having trouble going mainstream

Japanese police recently arrested Mark Kalple, the former CEO of Mt. Gox, the largest bitcoin exchange, on suspicion of being involved in a series of business frauds. The Japanese government said it would impose legal controls on virtual currencies such as bitcoin to prevent them from being used for money laundering and raising funds for terrorist organizations.

Mount Gox announced in February last year that its trading platform was hacked and 850,000 bitcoins were stolen. Now, more and more evidence shows that this is more like an inside job. The move by the Japanese government has undoubtedly dealt a blow to the increasingly "weak" bitcoin market, and the effect of "bad money driving out good money" has become increasingly recognized by people.

As an innovative currency in the Internet age, people initially worried about the information technology risks of Bitcoin, but later found that operational and moral risks were more important. Earlier this year, the Hong Kong Bitcoin exchange "MyCoin" ran away with the money, and the recent Tyson Bitcoin ATM, which was hotly discussed in the United States, was accused of fraud. These events have confirmed this point.

From the perspective of currency function, Bitcoin seems to have a certain market in some developing countries with poor financial systems. For example, Argentina has become an important "testing ground" for Bitcoin. In developed economies such as the United States, Bitcoin is not very popular in trading activities and is only occasionally popular among small merchants.

In fact, compared with its currency attributes, Bitcoin increasingly reflects the characteristics of financial assets. According to the guidance of the US Internal Revenue Service, Bitcoin investors are considered equivalent to stock investors and are subject to taxation in relevant links. In recent years, both Bitcoin and Bitcoin "concepts" have become one of the important asset portfolios of "aggressive" investors. Statistics show that Bitcoin investment really began in 2013, and its total investment value soared to US$3.5 billion in 2014. As of June this year, Bitcoin start-ups have raised more than US$4 billion in investment.

The future of Bitcoin depends largely on the attitude of regulatory authorities in various countries. So far, most countries have been ambiguous and have only released some suggestive information to increase the market's cautious attitude. It is precisely because Bitcoin lacks supervision and is repeatedly involved in illegal activities, coupled with its unstable value, that it has always been difficult to become a mainstream trading currency. Although Bitcoin is likely to eventually become a "martyr" of virtual currency and a special investment asset, its pioneering value is still worth paying attention to.

First, Bitcoin has brought about an attempt to decentralize currency. Bitcoin does not rely on a specific central issuing agency, but uses distributed data throughout the P2P network nodes to record currency transactions. There is no centralized clearing agency, which reflects the embryonic form of electronic currency virtualization and challenges the shortcomings of the current international monetary system.

Secondly, Bitcoin and its "successors" have begun to pay more attention to the payment function of currency. For example, the exploration of distributed clearing protocols by Ripple will help promote the efficiency of emerging electronic payments and reduce transaction costs in the long run. In addition, the emergence of virtual currencies such as Bitcoin has also increased the possibility of in-depth application of blockchain technology. The value of this technology is far greater than Bitcoin itself, and it can effectively promote smart transactions, distributed equity issuance and asset transfer. Securities and fund transfer systems based on blockchain systems are now under development, and even the Nasdaq Group in the United States hopes to apply blockchain technology to the stock market.