After defying everyone last year with an incredible rally, the bitcoin (BTC) price has come under significant selling pressure this year.
In fact, with the BTC price now at US$10,642 per coin according to Coin Market Cap, it has shed close to 24% of its value since the turn of the year and almost 47% of its value since hitting its peak in mid-December.
The reason for this sell-off has largely been down to concerns over government crackdowns across the world.
China is believed to have banned all mining activities in the country and could be on the verge of banning access to cryptocurrency exchanges.
South Korean regulators have also been actively looking into the industry. Yesterday its regulators in announced plans to ban anonymous trading accounts on January 30 in a bid to prevent cryptocurrency-related money laundering.
I believe this is just the start of greater restrictions that will be put in place by regulators all over the world. Which means that bitcoin and its peers are not living up to their promise as being decentralised currencies.
Furthermore, bitcoin was dealt another blow today after U.S. payments company Stripe advised that it will stop processing bitcoin transactions on its network by April 23 2018.
This is very disappointing for cryptocurrency enthusiasts because Stripe has been a big supporter of the industry and was the first major payments company to support bitcoin payments in 2014.
The company has made this move due to its belief that bitcoin has evolved to become better-suited to being an asset than a means of exchange.
Stripe's Tom Karlo explained that: "Transaction confirmation times have risen substantially; this, in turn, has led to an increase in the failure rate of transactions denominated in fiat currencies. (By the time the transaction is confirmed, fluctuations in bitcoin price mean that it's for the "wrong" amount.) Furthermore, fees have risen a great deal. For a regular bitcoin transaction, a fee of tens of U.S. dollars is common, making bitcoin transactions about as expensive as bank wires."
What now?
If bitcoin doesn't have a future as a cryptocurrency then I'm not sure what good it is for anyone, I'm afraid.
The only valuation method that I have felt comfortable with was based upon it grabbing a slice of the daily fiat currency market. But if its use as a fiat currency is not possible, then that valuation goes out of the window.
In light of this, it may be time for one of the altcoins such as Ripple (XRP) or Stellar Lumens (XLM) to replace bitcoin and deliver on the latter's failed promise. Incidentally, Stripe also advised that is looking into offering support for Stellar Lumens.
